J.P. Morgan uses Ethereum-based quorum for the tokenisation of gold bars in the pilot experiment

Tokenizing Gold Bars

The investment bank in New York will use blockchain technology for the tokenisation of gold bars to enable miners to earn rewards on markets traded globally. If the tests are successful, the bank aims to apply similar concepts to different types of assets, in a move that indicates the adoption of blockchain in the future of trading and asset management.

Quorum is custom built smart contracts enables high-level security and performance capabilities for customers, as well as a quick and verifiable method for tracking your investment. In addition to these advantages, a profitable use of blockchain technology consists in digitizing various types of resources and transferring them to distributed registers, mitigating the need to transport amounts of physical resources between bourses and custodians.

Umar Farooq, head of the blockchain initiatives of J.P. Morgan, stated that the company is a "big supporter of Ethereum, "The addition of the company is a pioneer of ownership of the entire trading mechanism," from application to protocol ".

With development, interested parties can conduct negotiations directly without the need for a stock exchange or other intermediaries. The agreement can help reduce the costs and risks associated with third parties, while ultimately translating into markets that allow multiple businesses traded under a single token.

Farooq believes that the tokenisation of raw materials can create new opportunities for global trading markets:

"They can follow the gold bar from the mine to the endpoint – with the case of use, if you know it's a socially responsible mine, someone will be willing to pay a higher spread on that one. gold against if you do not know where it comes from. Diamonds is another example. "

J.P. Morgan's Shifting Blockchain Stance

If it proves to be successful as an entity, the Quorum could constitute an independent activity under the J.P. Morgan, finding employment in secondary markets, issuance of capital markets, secondary markets and custody services.

While the bank's managing director Jamie Dimon famously defined the bitcoin "a fraud" last year, he expressed his regret at the statements made at the beginning of 2018, adding that "blockchain is real ".

It is interesting to note that J.P. Morgan joined the Ethereum Enterprise Alliance in 2018, an independent body that works to meet the blockchain standards in the Ethereum ecosystem. At the time, Farooq said that the bank's booth would benefit from "updates made to the public blockchain and exploiting the growing developer community".

Meanwhile, the bank does not intend to make its blockchain available for public viewing, instead of keeping Quorum data accessible to qualified and authorized participants. Farooq cites the birth of the market creates disbelief of public networks that are the right direction for financial institutions, while concludes with "you never know what will happen in five years".