Another gargantuan institution announces its entrance into the blockchain space. This time it’s the $2.5 trillion giant, JPMorgan Chase, the bank whose CEO, Jamie Dimon, bashed bitcoin in 2017 while scooping up the digital currency as it plunged during one of its many corrections.
Unlike most other large financial institutions, however, JPMorgan is not setting up a crypto exchange, nor is it aiming to offer products tied to existing crypto assets. It aims, among other things, to tokenize gold bars using its own verticalized blockchain protocol and application, Quorum.
So what does this mean for gold in the near future? Absolute lack of privacy! As an example take a look at IBM’s dumbed-down commercial that’s running nationwide, indoctrinating the world to what blockchains uses are…
An Ethereum-based blockchain (not IBM), Quorum has been designed to power automated smart contract functionalities on an enterprise scale. According to CCN, Quorum “will afford sustainable miners the opportunity of earning a premium on the global market,” potentially opening up new trading opportunities in addition to its smart contract function.
It’s important to remember that the emergence of cryptocurrencies onto the “mainstream” financial space led to a major schism between the digital currencies (the stuff speculators were trading and HODLers were investing in) and the blockchain tech that powered them. Though most financial institutions refused to adopt the currencies, they found plenty of use for the distributed ledger technologies (blockchain) that operationalized the tokens.
Blockchain soon found willing adopters across multiple industries such as healthcare, aviation, cybersecurity, artificial intelligence, IoT, in addition to one of its earliest industry adopters, banking and finance.
For a firm whose public stance toward the crypto space has generally been one of skepticism, JPMorgan Chase’s decision to explore distributed ledgers over digital currencies come as no surprise. After all, its potentialities are well aligned with attributes that financial institutions may generally view as competitively advantageous: it eliminates unnecessary maintenance costs, it increases transactional efficiency, speed, and accountability, and it makes smart contracts possible.
Yet blockchain adoption may also be a way for JPMorgan Chase to test the market.
The fact is, if Quorum digitally converts gold bars, moving them into smart-contract-like distributed ledgers, then it still essentially “tokenizes” gold.
A blockchain-backed gold bar is not too far from a gold-backed blockchain token.
To make this work, Quorum may require intermediary parties such as exchanges and brokers. It can open up the space for trading and direct transactions between parties while reducing inefficiencies, costs, and risks.
Another advantage that Quorum enjoys is that they own the entire process, from protocol to application; a kind of vertical integration in the blockchain/tokenization process. As Umar Farooq, head of JPMorgan Chase’s blockchain initiative, states: “We are the only financial player that owns the entire stack, from the application to the protocol.”
Should crypto investors be enthusiastic about JP Morgan Chase’s Quorum? Absolutely.
Should crypto investors be highly skeptical of JPMorgan Chase? Absolutely.
Remember, JPMorgan Chase was fined $65 million earlier this year for a number of infractions, one being the charging of excessive fees to customers buying cryptocurrencies on credit…thing is that JPM never informed the customers about the fees.
Not the best opening gesture to gain trust in a new market, despite their innovations.