Another Banking Giant Takes A Leap Into The Cryptocurrency Market

Last week, one of the largest banks in the United States, J.P. Morgan, announced that they will be tokenizing gold bars on the Ethereum blockchain. The platform, known as Quorum, will be an open source, enterprise blockchain built on top of Ethereum. This announcement was made by J.P. Morgan's head of blockchain initiatives Umar Farooq.

Farooq went on to say, “We are the only financial player that owns the entire stack, from the application to the protocol. We are big believers in Ethereum.” This is a huge 180 from J.P. Morgan’s original views as the CEO Jamie Dimon has had some very critical comments about Bitcoin and cryptocurrency. Dimon has even gone as far as to say that Bitcoin is a “scam” or a “fraud”. Ever since this comment, J.P. Morgan has gone on to file several patents in the blockchain space.

In the interview, Farooq suggests that the company is slowly starting to** adopt blockchain technology**. By allowing the representation of gold bars on the Ethereum network, miners will have the option of earning a premium on a global market. Farooq also stated that depending on how the test run with gold goes, other assets and commodities might be tokenized in a similar fashion. Quorum also plans to be a key player in secondary markets, capital market issuances, and token custodial services.

On the Quorum blockchain, all transactions are openly recorded and executed. The use of a blockchain also allows for fractional ownership of assets (such as gold bars) that can be easily traded without the need for a third party. In a test run conducted by the central bank of South Africa, they reported the platform could process a day’s worth of transactions in just two hours. J.P. Morgan hopes that the tokenization of existing commodities is an idea that will be widely accepted in the financial world.

Another benefit to using Quorum is increased clarity in where the gold originates. From the interview: “They wrap a gold bar into a tamper-proof case electronically tagged, and they can track the gold bar from the mine to endpoint – with the use case being, if you know it’s a socially responsible mine, someone will be willing to pay a higher spread on that gold versus if you don’t know where it comes from.”

This is exciting news from the banking giant as we are starting to see more and more adoption of blockchain technology. It’s no wonder that we are seeing this rate of adoption, as blockchain technology is making the exchange of value safer, cheaper, and more efficient.