The biggest US bank has revealed what may be one of the biggest banking network running on a permissioned ethereum fork called Quorum.
“The more banks that join the network, the more dramatic the reduction in payment delays,” said John Hunter, Head of Global Clearing at JP Morgan. “As the network scales, our clients’ payments will be processed faster with less operational expense.”
A list of circa 200 banks has been revealed. None from USA, but it contains some big names from Europe, including Société Générale, UBS, Unicredit, Nationwide and far too many others.
“The expanded network of banks will facilitate global cross-border payments in every major market, including Latin America, Asia, Europe, the Middle East and Africa,” JP Morgan says.
In a video they give a high level view of the project which begun pilots in 2017.
They say instead of information, and thus money, moving through a direct line in hoops where a mistake anywhere might delay the whole process, with blockchain tech information can be accessible to everyone at the same time.
“Historically, correspondent banks communicate one-way, bank-to-bank, but we have transformed their interaction,” said Suresh Shetty, Blockchain Technology Lead for IIN. “When a payment detail is flagged for confirmation, different parties can interact simultaneously, requesting and sharing information.”
International payments are one area where cryptos have a competitive advantage over the banking system, an area JP Morgan is now seemingly tackling by using the ethereum blockchain, but without the eth token.
That likely means JP Morgan is developing expertise in Solidity and other likewise technical capabilities.
It also means this network will not be open to the public, with only the payment communicated on the blockchain, but not quite processed.
That might change. JP Morgan recently announced a dollar pegged coin. Instead of just communicating, they are probably already piloting the sending of crypto-dollars within the banking system.
One obvious problem here is trust, both at the communication level and the crypto-dollar level.
One simply can’t know whether the crypto-dollar is actually backed by dollars, for example. Something which can be taken on trust when all is going well, but not in times of crisis.
At the communication level, the trust problem is whether what they are communicating is true, as in whether they have the funds, reconciliation and so on.
That’s because both for the crypto-dollar and the info only blockchain, this is a bit like scanning a leaflet and putting it on a 1995 website to show it to many more individuals at the same time.
That has its own advantages, but it lacks the inherent qualities of trustlessness, open, and subject to the rules of code.
Yet for JP Morgan to have the capabilities of showing a scanned leaflet does make them more advanced than other banks and their choice of ethereum base code does allow them to tap into the biggest network of blockchain developers.
What it doesn’t do is innovate beyond the available tech capabilities. They’re followers and quite behind some of the things going on in public blockchains, but their bet on the biggest smart contracts platform might provide for some synergy as the race heats up once again.