Two days ago, JP Morgan announced they created its own JPM Coin on a private blockchain. This might be a step in the right direction, but I would be careful of getting too excited, and here’s why:

To start, you can read any number of the articles already out there to learn more, here is one from a quick google search:

So from my analysis, Chase seems to be using a private chain forked (copied) from the Ethereum codebase and called it Quarum.

Quorum™ is an enterprise-focused version of Ethereum.

To be honest, this is not that exciting, it is just a way for banks to become more efficient and keep more money behind the scenes and customers like you and me will not interact with. It is like if a large company just discovered how to use an intranet, and for anyone in the blockchain community, this is not the dream. An open internet-like space is the dream we should be aiming for. Imagine a land where any entrepreneur, developer, artist, or mathematician can tap into a system directly, and build their very own versions of Venmo in just one weekend of hacking. In this scenario, assets worth hundreds of millions of dollars could move around safely and quickly with fees around $0.02, and zero need to interact with third parties.

Not having to interact with third parties is a big deal and an innovation killer. Let’s say we wanted to create a chess game and participants could wager shares of stock as the winnings. The entrepreneur would have to interact with something like a clearing firm (a trusted company that says you have x amount of Starbucks shares). As an entrepreneur, you would have to pay a large sum per month, go through loads of vetting, and interact with code that was written probably over a decade ago. They themselves might be dealing with other third parties and repeat. This is why innovating in the asset space is moving incredibly slow and why splitting a bill at restaurants is still as painful as it was ten years ago. So “public chain” is the key word.

But, there is a neat comment summed up at the end (oh… and RIP Ripple):

JP Morgan’s ultimate goal is to link up to public blockchains

Which might be made possible through projects like Polkadot that are focusing on communication bridges between various blockchains.

So if I built a cuss-word jar app, and every time I say “f*ck”, my phone automatically deducts $0.25 as an Ethereum ERC-20 token like Dai or Gemini’s GUSD that are pegged or backed by the US dollar. Maybe I would want to pay off a loan from my Chase Bank and could just send these tokens to some JP Morgan portal that converts my token with USD value to its own JPM coin.

The future is going to get weird once blockchains become faster and non-technical users get comfortable with digital assets and can tell you what a private key is. My hunch is that banks know this isn’t too far off of fantasy, and if this happens, a banks value proposition will be reduced to safe despite boxes. Yes, they do provide loans and are backed by FDIC, but at the end of the day, these are all just algorithms that can be solved through smart contracts.

No one really knows when or if that will happen, however, everyone with skin in the game of asset management knows now is the time to start learning as much as we can before the herd truly comes.

Side note, decentralization is also a major issue with a private chain. There really isn’t any, and folks would argue that it’s not even a cryptocurrency, but you can do your own research on that as that’s another rabbit hole. Our attention spans can only handle so much.

Warning Shameless plug:

I’m taking the plunge myself building AllTheThings a blockchain punch card that enables any company to mint anything like a ticket to a party, a month pass on a railway or a free coffee as an ERC-721 token that can be redeemed, gifted, or traded non-fungible token exchange. These tokens are allocated to customers when they spend at their store with traditional bank transactions.

Thanks!

I’m Nate, put everything in storage and have been traveling the world surfing big waves and learning about blockchain since March 2018.