JP Morgan Adopts a New Take on Blockchain with Quorum

The bank’s new Quorum project has commenced and is being built off the publicly accessible Ethereum network code.

JP Morgan Chase is reported to be working on a new take on blockchain, the technology behind bitcoin which would allow the bank to use a publicly available system for confidential transactions, according to a WSJ report.

Join the industry leaders at the Finance Magnates London Summit, 14-15 November, 2016. Register here!

Join the iFX EXPO Asia and discover your gateway to the Asian Markets

Limited Access

Rather than creating a completely new private blockchain, JP Morgan has found a way to limit access to transactions shared via a network of those who need to know the details, such as parties to the trade or a regulator.

The project called Quorum is being built off the publicly accessible Ethereum network code and joins a technology race with many other Wall Street firms whose goal is to use such systems to save costs and build faster and more stable systems that benefit both customers and the bank itself.

Hacks

It is also regarded as a vote of confidence in Ethereum, the network where a separate application created by venture-capital firm DAO was hacked, leading to the theft of $55 million worth of digital currency. Despite high-profile hacks and other technical problems with bitcoin, Ethereum, and other virtual currencies, banks are still extremely keen on the idea of using the new technologies to cut costs and make a variety of processes simpler and more efficient.

Suggested articles

What to Look for in a Liquidity ProviderGo to article >>

Amber Baldet, program lead for JP Morgan on Quorum and other blockchain projects said, “We have people building the most stress-tested financial systems in the world. Bringing that enterprise expertise to blockchain is one of our strengths.”

Early Stages

Blockchain in the banking sector is still at an embryonic phase and it is unclear how regulators will view the idea of banks working off more public networks. However, if Quorum catches on, it could give the bank a head start over rivals who have invested in separate, private blockchain networks.

The hope among Quorum’s developers is that blockchain can solve some of banks’ most awkward problems by replacing a web of connected databases with a single, shared, immutable record of transactions.

Huge Blockchain Investment

The problems targeted include long and expensive settlement times, system breakdowns and lack of clarity about risk exposures. It has been estimated that banks will spend over $1 billion this year on blockchain investments.

US regulators have yet to take a strong stance on blockchain but have said they are hoping that it would give them a detailed, real-time view of what is happening in opaque markets, while not sacrificing anything relating to the important goal of keeping banks’ data secure from hackers.

Finance Magnates last reported on JP Morgan’s blockchain interests In December 2015 after Digital Asset Holdings (DAH), the blockchain startup led by former JP Morgan executive Blythe Masters received a $7.5 million pledge from the banking group.

Got a news tip? Let Us Know