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JPMorgan blockchain resumes work with its own JPM Coin

Oct 28, 2020 | News
JPMorgan blockchain resumes work with its own JPM Coin

According to information obtained by CNBC, JPMorgan, in collaboration with an unnamed technology company, has re-launched its own payment system based on the JPM Coin stablecoin. For this, even a new division was created - Onyx.

JPMorgan is the largest US bank by capitalization, which makes daily bank transfers in excess of $ 6 trillion, moreover, to more than a hundred countries around the world.

According to Takis Georgakopoulos, the head of the interbank settlements department, more than a hundred employees already work in this unit, and its head is the former chief responsible for the development of blockchain technologies at JPMorgan - Umar Farouk.

“We are already finishing the phase of research and pilot projects, so this initiative is ready to move to full commercialization and further active use,” said Georgakopoulos. So far, the main direction of the project's development is focused on eliminating some common mistakes and difficulties in interbank payments.

All this will be used to recycle the Interbank Information Network (IIN) payment system, created back in 2017, whose clients have already managed to become more than 400 large corporations and banks from different countries. The upgraded system will be renamed Liink.

It is planned that one of the main distinguishing features of the new project will be the ability to check payments before sending them. In fact, the sender will have to pay a few cents for it, but these transactions will be thoroughly checked and the risk of error will be minimized.

Perhaps the main task of the new system will be to eliminate the existing mechanism for interbank payments based on paper checks. Here is the point. So far, banks are forced to employ a huge number of employees to receive, check, process and transmit paper checks. But with the help of the blockchain platform and smart contracts, it will be possible not only to get rid of all of them, which in itself will reduce transaction costs by 4 times, but also to speed up the process to several minutes (not days, as before).

According to Umar Faruku, the test launch will take place in a few months. He also said that JPMorgan, thanks to this experience, can help in the creation and implementation of digital currencies of central banks (CBDC).

All this shows that the project has already overcome the phase of "high expectations", which is typical for many blockchain initiatives. On the one hand, this means increased confidence in its success, on the other, it explains the company's slowness in scaling the technology and putting it on a commercial basis.

Keep in mind that JPMorgan already sold the Ethereum blockchain-based Quorum platform to ConsenSys in April 2020. According to the bank representatives - due to some fundamental flaws inherent in this blockchain.

The increased interest of JPMorgan in projects based on blockchain technology can be explained by the active growth of interest in it at the level of central banks of different countries. Not without reason, Umar Faruk claims that his department will be able to help in the creation and implementation of the CBDC. Large banks are slowly beginning to figure out how to join this global trend and get benefits from it. The world of cryptocurrencies, however, only wins from it - the more secured stablecoins and actively used blockchain technologies are developing, the more stable the market will be and the more actively it will grow.

Published on the EXBASE based on materials from cnbc.com