First came the enthusiasm, now the REAL tests! JPMorgan begins blockchain trial with over 2,000 clients

If 2015 was the year in which most of the interbank electronic trading and FX giants suffered tremendous losses within their traditional core business activities, 2016 looks set to be the year in which the very same intebank dealers will leap forward in terms of technological innovation, especially with regard to the database based on the […]

JPMorgan-begins-blockchain-trial-with-over-2,000-clients

If 2015 was the year in which most of the interbank electronic trading and FX giants suffered tremendous losses within their traditional core business activities, 2016 looks set to be the year in which the very same intebank dealers will leap forward in terms of technological innovation, especially with regard to the database based on the Bitcoin protocol that maintains a continuously growing list of data records that is known as Blockchain.

Blockchain is inexorably linked to Bitcoin, as the blocks that hold timestamped batches of recent valid transactions are used in the mining process. Each block includes the hash of the prior block, linking the blocks together.

The linked blocks form a chain, with each additional block reinforcing those before it, thus giving the database type its name. The original definition was written by Satoshi Nakamoto and found in the original source code of Bitcoin.

This, in effect means that as institutional interest grows in adapting Blockchain technology for use in mainstream banking activity, Bitcoin, by its very integral nature, must come along with it, marking a stark transformation from Bitcoin’s status two or three years ago as the darling of mavericks and anarchists looking to create a peer-to-peer method of circumventing the systems created by exactly the same banks (and central banks) that are now embracing Blockchain.

In January, FinanceFeeds reported that many major banks had invested several million dollars in the development and testing of Blockchain technology which could be used in order to automate certain procedures, from ledger to fund transfers, simplifying the technological method by which banking operations are carried out and eventually reducing costs.

Yesterday, JPMorgan Chase & Co. (NYSE:JPM) actually took the plunge and began to test the appliction of Blockchain technology for the purposes of moving money between London and Tokyo.

The current tests have been conducted across approximately 2,200 of JPMorgan’s clients as the latest evolution in the company’s testing of Blockchain technology in conjunction with Digital Asset Holdings, a New York based Blockchain technology startup which is operated by former JPMorgan executive Blythe Masters.

The amount of venture capital investment into Blockchain development startups over the last year has been vast, and Digital Asset Holdings is no exception, the firm having gained a $60 million round of funding from a group of investors which included IBM and Goldman Sachs.

The amount of investment into such startups has been record-breaking, with 21 Inc having secured an unprecedented $116 million funding round early last year.

In New York in the summer of 2015, Andrew Saks-McLeod met with several Bitcoin technology leaders, all of whom alluded to the future of Blockchain as an integral component within the technology used by mainstream financial institutions.

Daniel Gallancy, CEO and Founding Member of SolidX Partners, Jaron Lukasiewicz, CEO of Coinsetter and Todd McDonald, Partner at R3 all concurred that the future of Bitcoin lay within its Blockchain technology.

Mr. McDonald explained:

“We view the exciting part of Bitcoin as the discovery of the actual Blockchain itself, and the ideal situation is to wake the banks up to Bitcoin as a distributor in the financial world so that the blockchain can be opened up into aspects of the financial industry such as central clearing.”

Adding further to this, Mr. Lukasiewicz focused on exactly the methoodology by which Blockchain can be used for ledger and money transfer, exactly as is now being adopted by banks such as JPMorgan.

“It is essential to understand how the Blockchain technology is competitive, and who is using it. There is growth in the remittance use these days, so it is slowly displacing Western Union and MoneyGram at sometimes similar rates, and can be even done at much less cost, a tenth, but no consumers really try that. Companies are also trying to rival Transferwise which is taking Bitcoin into direct competition with deliverable FX” said Mr. Lukasiewicz.

Mr. Gallancy then explained:

“The settlement and record keeping uses of the Blockchain are important. The majority of technology in Bitcoin is not appreciated outside Bitcoin industry. We are seeing alot more interest in Blockchain than in Bitcoin, but heres the catch: For a traditional Blockchain, you cannot have one without the other. Bitcoin is the economic unit which enables miners to provide security to the blockchain. Without that, the security components cannot do their work.”

“For record keeping, and quasi-database functions, bearing in mind the amounts of Bitcoin involved, there are inherent scarce resources in the Blockchain and as we see more settlement and record keeping functionality, which would use resources, some of which include space on the blocks, this would push the price of Bitcoin up as there would be limited supply on the blocks, and increased use, despite Bitcoin’s presence only there because it cannot be separated from Blockchain.”

Clearly with the large institutions now putting this technology to live application, albeit a trial, the future of Blockchain appears to be set and these industry professionals were indeed correct in their predictions.

An interesting matter is that despite the downward direction that many of the traditional banking activities have taken over the past year which have dented the balance sheets of the major institutions to the tune of several billion dollars, investment in new methodology (which ironically began as peer-to-peer technology!) is important to them, which in itself is an indicator that this is a major priority for the future of banking operations.

Read this next

Uncategorized

Investors transfers $424 million out of bitcoin funds in six weeks

Despite bitcoin’s decent surge last week, which took the primary cryptocurrency up 70% from the year’s low, digital asset investment products saw outflows for the 6th consecutive week.

Digital Assets

OKX has $9 billion in ‘clean assets’, shows latest proof of reserves

OKX, formerly known as OKEx, has released its fifth proof-of-reserves report amid increasing demand of crypto investors asking for transparency from exchanges they trade with.

Digital Assets

Circle seeks France license to launch Euro stablecoin

Circle, the issuer of the second-largest stablecoin by market capitalization, is seeking to get a dual registration in France as it aims to on-shore its flagship product for the European market – EUROC – a reserve-backed stablecoin.

Digital Assets

CryptoWallet.com Among Minority of Successful Companies to Renew Coveted Estonian License

CryptoWallet.com has successfully renewed its virtual currency service license from Estonia’s FIU for the third year in a row, despite regulatory changes that have made it harder for virtual asset providers to meet the required standards.

Inside View, Institutional FX

Time for brokers to add options trading as volumes explode on high volatility

“Usually, adding options to the typical CFDs and equities offering leads to fragmentation of the platform technology as many brokers will need additional back-end and front-end components, and that could be an important barrier for them. Apart from that, legal hassle and costs associated with proper licensing of market data could be a barrier at first. We are seeing this trend among market data vendors and exchanges to make it easier and more affordable.”

Metaverse Gaming NFT

GCEX’s DeFi education and prime brokerage offering available in DubaiVerse

“We are excited to be part of the developments of The Sandbox and to join other top players in the region, including our regulator, Dubai’s Virtual Asset Regulatory Authority (VARA), as part of the DubaiVerse. This is a great opportunity to bridge the gap between Web3 early adopters and GCEX clients, building a community around Web3 and digital assets.”

Digital Assets

Circle wants Fed to back USDC stablecoin after “very serious stress test” with collapse of SVB

The collapse of Silicon Valley Bank allegedly proves Circle’s point that there is a need for its USDC stablecoin to be backed by the U.S. Federal Reserve with its U.S. dollars held at the Fed.

Digital Assets

Google searches for Crypto.com and Gate.io exploded by 300% amid FTX collapse

“The findings emphasize the importance of staying on top of market trends and being able to pivot strategies quickly and also offer valuable insights into the current state of the market and the behavior of traders, providing investors with valuable information to make informed decisions about their investments.”

Institutional FX

iS Prime reports £35m turnover, £16.2 million pre-tax profits, £37 cash balances

“We have plans in place to evolve the business over the next year, driving further growth for both iS Prime and for our clients.”

<