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JP Morgan Unveils USD-Backed Cryptocurrency for B2B Payments

234 points by timcc50 8y ago

simias 8y ago
>The coin will be issued on the Quorum blockchain which was developed by JP Morgan over the last year and is a private blockchain inspired by Ethereum. This means only selected miners will be able to process transactions, unlike public cryptocurrencies where anyone can. [...] >The purpose of the JPM Coin is to allow businesses to make near-instantaneous transactions of value across the internet without having to move fiat money in the background. I genuinely don't understand what the blockchain does here that couldn't be implemented by any random database system. I mean the euros that I have in my bank account are also just a number that could be moved "across the internet" instantly if they so desired. The big innovation with Bitcoin-like blockchains is that transactions can be done trustlessly but the whole "private blockchain with accredited miners" turns it into basically a slow inefficient database with extra steps. Is it just a buzzword to generate interest or is there an aspect of this I'm missing?
- dwiel 8y ago
  I tend to agree with you. I wonder though, does reframing as a crypto help them get around any rules, regulations or taxes?
  - apl002 8y ago
    i was curious about this as well
    - SideburnsOfDoom 8y ago
      No. Why would it?
      - tombert 8y ago
        I know nothing about finance law, but I know that governments typically have a "blind spot" for new technologies. Sometimes this can be a good thing, and I think it's what kind of led to the internet being such an interesting place with things like BitTorrent, but often businesses will see it as a quick loophole.
        SideburnsOfDoom 8y ago
        I know nothing about the law for e.g. violent crime, but if you find a new murder weapon, the law would certainly not have a "blind spot" for your new technology. The law isn't a computer program, it is a human process.
  - GordonS 8y ago
    Surely if it did, regulators would move quickly to close that gap?
  - basch 8y ago
    like the gnu/linux/systemd/gnome/blink argument, this is a great example of why calling linkedlogs/dcash/proofofwork/byzantineFT/cryptokeysasidentity "crypto" kind of muddles the conversation. In JPMorgan's case, using linkedlogs/dcash/cryptokeysasidentity might end up working out really well. They can distribute the tech to other banks, and the killer feature, besides being distributed ends up being cryptokeysasidentity, from a security standpoint. In my book, what they are doing is still "crypto" but it isnt the genius innovation the whole sum of all bitcoin was. (You might argue that its the proof of work that makes something a crypto, and thats fine.) What made bitcoin different was APPLYING a bunch of academic knowledge to a useful to solve problem. https://queue.acm.org/detail.cfm?id=3136559 https://queue.acm.org/detail.cfm?id=3136559 If you look up the definition of TECHNOLOGY, its "the application of knowledge." Bitcoin is a PERFECT EXAMPLE of a technology, not because its digital, electronic, and computery, but because its taking a ton of knowledge from academia and APPLYING it. This new coin is more a reapplication of technology, than any sort of creation.
  - tylersmith 8y ago
    I don't think it's the work "crypto" that helps people skirt regulations. It's the anonymous, permisionless consensus coordination that does. JP Morgan's coin won't have that property, they're just signing off on transactions themselves.
- _bxg1 8y ago
  I don't know much about this area, but I could imagine that even if the mining is selective, the transfers might not be. It could remove some overhead that large banks have to do in verifying transactions and preventing duplicates, etc.
  - freeone3000 8y ago
    mining and transfers are the same thing. that's the core concept - the ledger transaction is the currency.
- pjc50 8y ago
  > what the blockchain does here that couldn't be implemented by any random database system It says "blockchain" on it, so it can be sold to some uniquely gullible investors?
  - reallydude 8y ago
    > what the blockchain does here that couldn't be implemented by any random database system More likely it can be used to circumvent regulations by trading digital goods and investing in futures, instead of liquid assets. Even if it is eventually regulated, the upside potential (no matter how temporary) is an upside.
- deleted 8y ago
  [deleted]
- talawahdotnet 8y ago
  Yea, it definitely has limited immediate value compared to a database as long as it is on a closed network. However it does allow them to experiment with the technology in a controlled fashion. They could have done so quietly but, you know, marketing. I think there is still value in Blockchain networks like Stellar[1] that are not fully decentralized, but are federated and diverse. If this is a first step towards them issuing a stable coin on a network like that then I welcome it. 1. https://www.stellar.org https://www.stellar.org
  - sparkie 8y ago
    "Stable coin" is one of those misnomers where it means exactly the opposite of what one would expect from the existing definition of those words. Something pegged to the US dollar is inherently going to be unstable, because the dollar is unstable. The dollar is not priced in terms of dollars. One dollar today might not be a dollar tomorrow. The instability is mostly due to the conditions of the market, but then those effects are compounded by the whimsical economists printing it for fun. OTOH, Bitcoin is a closed system. At any point in time, you can measure the amount of Bitcoin you have as a fraction of the total amount of Bitcoin which exists, and you can even directly predict how that will change due to inflation for the next 100+ years. I personally prefer the term "fiat coin" or just "shitcoin" is sufficient.
- darawk 8y ago
  I think it may be that the decentralized control structure makes organizations who would normally be in competition with JPMorgan more willing to be on board with using something that they developed. For instance, if you are say, Goldman Sachs, would you want to use a private database at JPMorgan for you and your clients funds? Or would you prefer to use a semi-private blockchain, where although it's not open to the public, each participant in the network has equal stature to one another? I think that is the true innovation here, and I do think that it is important. It solves some of the corporate cooperation issues that prevent certain types of value from being created, because nobody wants to let their competitor control the space.
  - koolba 8y ago
    This already exists. It’s called the DTCC and everybody uses it. https://en.m.wikipedia.org/wiki/Depository_Trust_%26_Clearing_Corporation https://en.m.wikipedia.org/wiki/Depository_Trust_%26_Clearin...
    - darawk 8y ago
      And that company is exactly what this tech. replaces. That company does not provide its services for free. This blockchain product does.
      - 0xffff2 8y ago
        How does this product operate for free? Who's paying for the miners?
        darawk 8y ago
        Sorry, there may be small fees paid to the miners. But those fees will presumably be dramatically less than this current company charges.
        deleted 8y ago
        [deleted]
- ConcernedCoder 8y ago
  One thing it could do would be to let each participent in a transaction verify the transaction itself... which I suppose is a nice feature, maybe everything goes into "escrow" and then is released when everyone ( the participtors in the transaction who can mine? ) can agree on the result.
- deleted 8y ago
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- treis 8y ago
  > random database system Who would own this database?
  - root_axis 8y ago
    JPMorgan
    - treis 8y ago
      Which is the problem that JPM Coin is aiming to solve. For them to use a DB solution requires both parties to the transaction to be customers of JP Morgan. A block chain issued coin doesn't require that and, therefore, has some theoretical advantage. Of course it remains to be seen how true that turns out to be. There is a DB based solution for financial transfers today in SWIFT. It has numerous flaws that a block chain based solution legitimately solves.
      - hcknwscommenter 8y ago
        I am not saying SWIFT is perfect, but please enumerate these flaws and the ways in which blockchain legitimately solves these flaws without introducing an equal number of equally problematic flaws.
        treis 8y ago
        SWIFT transactions can be slow depending on the banks involved. If a bank's SWIFT credentials are compromised the attackers can transfer all the funds a bank controls. With a blockchain coin it would require the private key of the customer to send the coins.
        root_axis 8y ago
        > With a blockchain coin it would require the private key of the customer to send the coins. There are no "customers", this is a private blockchain where only banks participate.
- cm2187 8y ago
  Plus if it is backed by the dollar, it is subject to the same central bank manipulation than the actual dollar.
  - notyourwork 8y ago
    Not really a con based on the use case, right?
    - cm2187 8y ago
      Then why create a currency if it isn't as a currency at all?
- djohnston 8y ago
  the moment you start using a private blockchain you miss the point of cryptocurrency. all of these enterprise coins make me laugh
  - elif 8y ago
    There are a lot of points of cryptocurrency. It's true a private chain has no protection against central control... however it does have protection against double-spends, mutable history, confirmation guarantees, etc.
    - djohnston 8y ago
      right but all of those are more performantly implemented with a cluster of mysql replicas .. the protection against double spends is only as strong as the cluster of machines doing the hashing
- Legogris 8y ago
  Given a standard for moving assets across chains, this starts to become really interesting. "What can be achieved by HTTP that can't be achieved by any random binary protocol?" Plasma could facilitate this for Ethereum-compatible chains, including Quorum.
- tlrobinson 8y ago
  You are correct that these sort of "private" and "federated" blockchains completely miss the point of Bitcoin (some intentionally, some not). The features they provide were possible before Bitcoin was invented, but no one really cared about finding uses for them until the blockchain hype train rolled through town. That doesn't mean they're completely useless though. If Bitcoin eventually inspires some real innovation in fintech, then great.
  - tylersmith 8y ago
    But the inspirations have almost entirely not come from the stuff that makes Bitcoin and "blockchains" unique. If they realized that people want an easy way to have their assets managed and traded digitally they can do it much better without blockchain baggage.
- deleted 8y ago
  [deleted]
- elif 8y ago
  well how many servers that you interface with financially allow you to audit all of their transactions in a mathematically verifiable way?
- grahamperich 8y ago
  What they're gaining is interoperability with public blockchains. JP Morgan's permissioned blockchain—Quorum—is essentially a fork of Ethereum. They can issue assets on their private chain (which, yes, by itself is no better than a traditional database). However, they can then transfer these assets to and from public blockchains. By doing this, they are gaining access to the greater crypto ecosystem while still maintaining centralized control when they need it. Here's a little example of how this might work in practice: 1. You hold $100k in your JPM money market account 2. You convert $25k of that to JPM's stablecoin on their Quorum chain 3. You withdraw this $25k JPM-coin to the public Ethereum blockchain 4. You use it in Ethereum's burgeoning "Decentralized Finance" or "Open Finance" protocols.. some examples: https://www.dharmalever.com https://www.dharmalever.com, https://compound.finance https://compound.finance, https://www.augur.net/ https://www.augur.net/ 5. You finish what you're doing, and transfer it back to your JPM account
  - root_axis 8y ago
    Where is the benefit? If I wanted $25k in eth, why wouldn't I just buy $25k in eth instead of adding in the extra step of a JPM stablecoin?
- tylersmith 8y ago
  It's absolutely just a buzzword. A blockchain is just a data structure which is useful in Nakamoto Consensus, which is only for censorship resistance. Everything a cryptocurrency can do be done much more efficiently, faster, cheaper, safer, better UX, etc, except for censorship resistance. If you don't want your coin/token to be censorship resistant then you can have a system that's a million times better by just building a web app that uses regular cryptography.
  - stale2002 8y ago
    Not really. If you build a web with a private, centrally controlled database, then you might be messing with the database behind the scenes. A Blockchain makes that database transparent, and makes any secret funny business immediately apparent.
  - basch 8y ago
    That black or white worldview absolutely ignores a middle ground use case for a bunch of collaborative entities that _sort of_ trust each other, are ok being non-anonymous, and want to work together on a shared ledger. Ten firms working towards a common goal can do so without an insane amount of redundant double entry accounting at each firm, they can do the work once and share the results, they can audit and verify the log. And they arent all just accessing one databased stored at one firm. Im not sure people really understand the implications of a team of companies that collaborate often banding together, and eliminating the need for 3rd party audits and 3rd party fund settlement.
    - sparkie 8y ago
      > Im not sure people really understand the implications of a team of companies that collaborate often banding together, and eliminating the need for 3rd party audits and 3rd party fund settlement. I think it is more that people don't understand what existing technologies there are already, but they've heard of this "blockchain" thing, and the black and white view is one where you either need a blockchain or you don't need anything. There are some other interesting technologies and research areas. One example is SMPC. In 2008 (pre-dating Bitcoin), a secure auction with sealed bids was conducted in Denmark for the purchase of beets from independent farmers[1]. This kind of research get drowned out by the blockchain hype because nobody is interested in something which doesn't print their own money. There are also more well understood distributed databases and consensus algorithms which work when you have semi-cooperative parties. I think a lot of these "blockchains" really just want a merkle-tree, and they could probably get by with a database like noms[2] When you have a bunch of cooperating parties, they either need to assume that the parties are cooperative, or you need an arbitration process. The arbitration process is what the blockchain is about (with the record keeping in the blockchain being a kind of toxic waste which is kept around to support that). What do you do when the parties are being uncooperative? If there are only a few parties, then PoW is not a viable solution because one party could outpace others if they have more computing power. If you pick something like Proof-of-stake, then several parties could collude to swindle others. If you have a centralized system, you've not gained anything. Ultimately, the companies involved are always going to take any quarrels to a legal court and have a human decide the outcome - meaning their blockchain is going to have to be "fixed" by manual intervention anyway. [1]:https://eprint.iacr.org/2008/068 https://eprint.iacr.org/2008/068 [2]: https://github.com/attic-labs/noms https://github.com/attic-labs/noms
- tootie 8y ago
  Institutionally-backed money laundering maybe? IDK really.
- dkoston 8y ago
  The blockchain signs each dollar. You could have done this instead by making each dollar a PGP signature and allowing trusted parties to decrypt the signature and claim the dollar. Honestly though, if the chain isn’t public, JPMC can update the code behind-the-scenes so there’s not as much trust as there would be on a public network.
- bouncycastle 8y ago
  > I genuinely don't understand what the blockchain does here that couldn't be implemented by any random database system. A blockchain is...well... a database system itself! There are many different types of database systems, eg. Relational, Graph, Object orientated, document (eg elastic search) and so on. Generally you want to pick one that fits your problem area well, so picking a random database system would not be a good idea. One of the most important data structures they need is a tree for the Merkle proofs to confirm that the data hasn't been tampered and contract execution happened correctly. Tree structures are notoriously difficult to implement in a relational db for example. (BTW, I'm also skeptical of the hype around 'blockchain' just as before when the 'noSQL' hype came around. You will surely have some devs pick the blockchain as their database system for the wrong reasons, just like back in the day when you had devs pick noSQL because it was cool.)
  - cachvico 8y ago
    Why is a Merkle proof difficult to implement in a relational DB? The only required data fields in each row are the parent row ID and a hash, no?
- mirekrusin 8y ago
  It's the other way around, actually. Having small set of authorities that reach consensus via raft/pbft in case of quorum means that ethereum blockchain can be much faster. You still have full transparency of what's happening, you have access to the chain, you can read it, validate it, etc. They just run minting of blocks for you. It's true that if they don't like you, they can refuse to include transactions from you for example - that's the main cons from public consensus like PoW. But they are not worried about it, of course and other participants are usually not worried as well because they know that whoever controls minting nodes have strong incentives to run it fair (otherwise participants would not give a shit to join it). This is different from public chains where those rules don't exist. In big corps integration and security is a massive problem. Blockchain reduces those two problems by orders of magnitude. If you wanted to "implement it by any random database system" - you'd end up with something like ethereum. You can't just spawn your public postgres and publish public api to create new users, can you? Quorum has also some other extensions to ethereum related to privacy (private contracts, anonymity etc) that are attractive to corporations. It's nice to see them open sourcing quorum and publishing something real-world based on it.
- deevolution 8y ago
  I also fail to see the point of this... maybe to prove once and for all that blockchain doesnt make any sense as an institutional/private service?
- smsm42 8y ago
  My thoughts exactly. Isn't this: > make near-instantaneous transactions of value across the internet the definition of what wire transfer does? And why not doing it in "fiat money" (it's an additional level of hilarity for a major bank to use this term, for those who understands) has any value? The value of blockchain transfers is lack of intermediaries and gatekeepers - which advantage the private chain owned by JP Morgan takes away. This is like advertising "we sell gold coins, only instead of hassle of owning heavy metal pieces, we provide you with little pieces of green paper that could be exchanges for gold coins at any gold dealer" - totally missing the point of the whole exercise.
WrtCdEvrydy 8y ago
Wasn't their CEO the one most proponent critic of cryptocurrencies.
- raiyu 8y ago
  Still not bullish on Bitcoin but he likes blockchain - is the official by-line
  - jandrese 8y ago
    Basically, he likes blockchain as long as he controls the chain. The problem with Bitcoin was that it was decentralized.
- andreygrehov 8y ago
  He is a bullshitter. His quotes are priceless: https://ei.marketwatch.com/Multimedia/2018/10/31/Photos/MG/MW-GX410_dimon__20181031120021_MG.jpg https://ei.marketwatch.com/Multimedia/2018/10/31/Photos/MG/M...
trophycase 8y ago
Talk about being tone deaf and missing the point...
75dvtwin 8y ago
If I am reading this right (and I am a newb at e currencies), JP coin is basically a payment processor, where balance is kept on blockchain. The coin value itself is linked with almost no flux to USD. But then, I do not see how it is different than https://www.bitrail.io/ https://www.bitrail.io/ (and its new freedom coin: https://freedomcoin.cc/#more https://freedomcoin.cc/#more ) or tether with 2bln market cap https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/ what makes JP's offer more useful to B2B transactions than the above two examples ?
- roywiggins 8y ago
  At a guess: JPMorgan is more reputable than either of those outfits JPMorgan has existing relationships with businesses JPMorgan understands business needs and can tailor their currency to them JPMorgan is a bank.
  - jdmichal 8y ago
    Or, in other words, current coin offerings build workaround of such entities into their value proposition. But there's also a class of potential consumers for whom that might be an anti-value. JPMorgan seems like they're willing to test that potential market.
rayvy 8y ago
It's pretty well known that these BigCorp crypto/blockchain plays are just smoke and mirrors. There is no actual differential value gained here (unless as @dwiel says,they get some sort of loophole crypto tax break). It's a bit saddening to see that the tech has been picked up by the exact institution(s) that the tech was meant to combat. But if anything that just proves that there's meaning behind the concept (regardless of a f'ing coin price). I look forward to the day where the JPM's and the like are put out of business for this sort of thing due superior, user-friendly technology.
- verdverm 8y ago
  How / when will public blockchains achieve better UX / friendliness than say Venmo, Robbinhood, or debit cards?
  - rayvy 8y ago
    I wouldn't say its so much the UX. The UX even on some crypto projects is just fine (see some EOS projects, apps, and dApps). The problem I see is that what incentive do end users have to use crypto/privacy/blockchain/whatever apps vs the centralized alternatives? Currently? None, because no one gives a damn about their privacy/data. I don't think it will be my generation (millennial) that picks this tech up, I think it will be later generations that have seen our missteps when it comes to digital privacy.
    - verdverm 8y ago
      Would focussing efforts on sound data privacy legislation and education go further to protect the people? Or perhaps outlawing targeted advertising?
    - verdverm 8y ago
      Doesn't EOS suffer from the same subpar UX around secret keys? As compared to losing a debit/credit card
      - 8y ago
root_axis 8y ago
This is pointless. The gatekeeper to the private network is a centralized authority.
- ddtaylor 8y ago
  Yup. Most importantly, only JPM controls it's issuance, which means it's no different than a fiat currency or a gift card. One of the things Bitcoin proponents enjoy is the idea that it's a supply that cannot be printed frivolously.
- tombert 8y ago
  I was thinking this too; a large part of the original bitcoin paper is complaining about how centralized authorities like banks are problematic. I don't really see how adding another central authority makes any sense.
  - Barrin92 8y ago
    According to the article at least the purpose is to increase the speed of transactions that the bank settles internally. I can't speak to how feasible this is because I'm not familiar with the tech, but I don't think anyone needs to adopt the politics of the original paper if they have found some other use.
- creeble 8y ago
  Exactly true. The point of a blockchain is trust. If it is controlled by a single party, its sole value collapses. Except marketing value.
  - SI_Rob 8y ago
    Thus the motto of Blockchainism: "In Trust We Trust"
- treis 8y ago
  After the initial selection by JP Morgan new members would (presumably) be added by a consensus of the existing members. That would remove JPM as the sole gatekeeper.
wyldfire 8y ago
This is not an error on JPM's part. It's not that they don't get the whole decentralized part of cryptocoins, it's that they just want to cash in plain and simple.
b_tterc_p 8y ago
Ignoring the lack of positives, can JP Morgan reverse erroneous transactions on this? This is an important part of the financial system. Are they just going to hard fork all the time? Send the money back?
TACIXAT 8y ago
The thing that bothers me about this is that banks have a monopoly on this type of business. Outside of being a bank you need to register as a money service business which is extremely cumbersome.
kuroguro 8y ago
Tether 2.0? :3
- roywiggins 8y ago
  At least JPMorgan is regulated like a bank because it is one.
  - randaouser 8y ago
    The uptake will be great however, what doesnt sit well is the 2008 12Billion bailout. As the same actors will be the nodes that are privileged to write to and maintain the ledger, it has yet to be seen how immutable these transactions will be.
ErikAugust 8y ago
No ads, JavaScript, etc: https://beta.trimread.com/articles/45 https://beta.trimread.com/articles/45
Hongwei 8y ago
Wasn't Jamie Dimon (JP Morgan CEO) a vocal skeptic of bitcoin and crytocurrencies a year ago? https://www.bloomberg.com/news/articles/2017-09-12/jpmorgan-s-ceo-says-he-d-fire-traders-who-bet-on-fraud-bitcoin https://www.bloomberg.com/news/articles/2017-09-12/jpmorgan-...
- 52-6F-62 8y ago
  Yes. Multiple times. I always found it pretty funny as I'd known they were developing their own right alongside it. Granted, I think his criticisms are more specific than being about the technology in general. I think he was more critical of it being penned as some replacement for existing currencies and monetary systems, and the whole use as an investment. But don't quote me there.
- syn0byte 8y ago
  It's like watching a 3-card Monty hustler yelling across the street at the 3 cup and ball guy for being a scam.
andy_ppp 8y ago
I'm sure the governance and reasoning seem just fine right now but are we to trust being locked in to JP Morgan forever? It's certainly the same way I feel about Google AMP polluting the web. Seems very buzzword friendly but I really cannot see why transfers (B2B) aren't perfectly trivial and should be instant, free and totally secure and at the tick rate of the market if in a different FX. What is stopping the banks doing this now with just normal encryption?
- colechristensen 8y ago
  Money transfers happen like Person -> Bank -> Clearinghouse -> Bank -> Person They aren't free and instant because people and systems are involved in making them happen. Funds have to be verified, systems to make sure the money is there, fraud monitoring, regulations, mistake handling, etc etc. A lot of stuff goes on in the middle during the transaction and mechanisms need to be in place to prevent crime and fix mistakes. Blockchains make this process a little better because instead of code setting rules and interacting with APIs, the mathematical characteristics of the blockchain end up doing a lot of the "work" involved and are simply more convenient for everyone. I'm guessing that eventually central banks (like the Federal Reserve) will issue their own cryptocurrencies for banks to facilitate transfers. It's not sexy or rebelling against the man, distributed crypto ledgers just have better properties than crusty databases and APIs.
b0bby_tabl3s 8y ago
How convenient this coming on the tails of blockchain poisoning... Now way they could possibly be correlated.
inscionent 8y ago
This is Hawala but controlled by one entity. Where is the value and why does it need to be done in tokens controlled by JPM?
jpmattia 8y ago
Repeat after me: A blockchain without decentralization is just a database.
- colechristensen 8y ago
  That's the point! JP Morgan is using the blockchain instead of mysql and a pile of code. To them and their customers it has nicer properties. It doesn't at all change the details that a bank is facilitating money flow, just how it is done, and at that a little more efficiently.
  - thaumasiotes 8y ago
    But it doesn't do it more efficiently (or, really, change how it's done). The coin is only available to JP Morgan customers, those who already have bank accounts with JP Morgan. It can only be transferred to other JP Morgan customers. It does the same thing they already do, but less efficiently.
monkeydust 8y ago
Can someone provide a before and after example on how this technology saves money, reduces transaction failure risk or time taken for transaction to occur (either or all of these)?
- dkoston 8y ago
  Before: - you want to transfer $100,000 to another bank - you do a wire or ACH - that’s risky so someone has to verify that you actually have $100,000 After: - each of your dollars are digitally signed using cryptography - to transfer them, you share the hashes - the recipient validates the digital signatures to verify those $100,000 in tokens are legit It’s all about a system of accounting to reduce risk. With less risk, transfers are faster. Think of it like an api to verify account balances that can only be hacked if the SSL cert for the API is hacked by figuring out the private key
  - arcticfox 8y ago
    Thanks, this is super clear. But what prevents a double spend in this situation? I assume at some point the new owner commits the hashes to a blockchain under their own key.
    - dkoston 8y ago
      JPMC will have to track the redemptions on a blockchain ir database to prevent double spend. As mentioned above, this is an internal efficiency system for JPMC, it doesn’t provide any consumer benefits unless they pass on the reduced costs
  - lordnacho 8y ago
    If you lose your private key, you lose your JPM dollars. How many people want to have $100K in notes? Because that's similar and a lot harder to lose than something stored on a computer. Or, if you send the £100K to a valid address that nonetheless is the wrong one. Money in a black hole. If you screwed up the note to send $100K via ACH, something could still be done about it.
SI_Rob 8y ago
I predict this will be abandoned (or the blockchain figleaf dropped in favor of an explicitly centralized and far simpler/cheaper store) in 2, maybe 3 years. Or about as long as it takes for the fundamentally unsolvable problems of decentralized governance to become pathological to group integrity. If you are a junior stakeholder in this nominally decentralized system you eventually have to accept that you have no influence over the direction of the protocol's development, or get together with a group of similarly disadvantaged peers and fork your own implementation where your relative influence is more comparable. Until that consortium, too, falls apart due to leverage-seeking behavior by individuals within it, or ossifies into a de facto centralized network, but one saddled with a bunch of expensive and now superfluous blockchain game-theory casino infrastructure.
- lioeters 8y ago
  Those are strong words, "fundamentally unsolvable problems of decentralized governance". I'm not dis/agreeing with your scenario: I also think it's quite likely that this JPMorgan crypto would ossify into a de facto centralized network. But the phrase "fundamentally unsolvable" feels like it needs some harder proof or logical explanation. There are many instances of (and variations on) "decentralized governance", like open-source projects, technical or social organizations, etc. Would you say all those attempts are doomed to failure? (Or maybe that they could continue to operate despite being potentially unstable/flawed based on fundamentally unsolvable problems. Or perhaps that they all tend to become centralized.) Thinking of attempts at decentralized governance in a larger sense (including but beyond specific applications in the crypto sphere), it does seem that most of them are failing due to some inherent structural issues. I wonder whether it can be demonstrated that all such decentralized governance systems are fundamentally flawed (similar to Gödel's incompleteness theorem..?).
dkoston 8y ago
I’m going to try to distill this down to it’s easiest form. - JPMC will now create a digital signature (token) for every dollar that enters its network. - Those digital signatures can be exchanged by any trusted authority - JPMC will exchange a single dollar to those trusted authorities for a single digital signature Using the blockchain allows JPMC to trust each dollar that goes through both their network and partner networks as they cryptographically trust that forgery is almost impossible. They also can trust that when a “wire” comes in that the funds are actually available. This is purely an accounting system backed by cryptography that allows much more trust.
- tylersmith 8y ago
  This could be very useful, but it doesn't require blockchains in any way.
  - stale2002 8y ago
    "Blockchains" are an implementation detail that covers a large category of related things. For a centralized service, Blockchains are still useful for things like transparency.
  - dkoston 8y ago
    Correct. Especially since it’s centralized, they could have used any secure form of asymmetric encryption to offer the same guarantees
  - dkoston 8y ago
    edit: didn’t like my analogy I’d prefer you posted something constructive rather than just saying “doesn’t need blockchain”. Of course it doesn’t. Storing data doesn’t require a relational database, or a key value store either. All have pros and cons. Saying “doesn’t require blockchain” is obvious and adds no value. It’s like coming into a workshop explain what a saw is and saying “other cutting tools also exist”. You seem to be making the leap that because I’m explaining what something is without saying whether or not I think it’s the right move that I think it is. I don’t know whether or not it was cheaper and more effective for JPMC to fork ethereum or to build their own accounting system from scratch and I doubt you have the correct information to make that assumption either. Maybe JPMC doesn’t have a team capable of writing accounting software (seems unlikely). What’s more likely is they are looking for headlines because they know blockchain is hyped technology. It would have probably not made the news if they announced they were adding another settlement system beyond Zelle, ACH, and wire. So, they probably chose this because they think it will reduce costs and move their stock price while building a bespoke software accounting system would have been more costly and wouldn’t have provided as much hype. Businesses don’t make decisions about technology completely based on its technical merits. Many times they choose technology because someone recommended to them, or it’s cheap, or they can’t build it themselves, or that’s not their primary business, etc.
jackfoxy 8y ago
Does this in any way address the issue of coin theft / key loss? For instance, can I keep these coins on deposit with JPM, grant them access to my keys, conduct all the transactions through JPM's more traditional security infrastructure, and be assured JPM will make me whole if something bad happens I did not authorize, with a transparent and fair arbitration methodology. Or does this invalidate the whole purpose of crypto-coin?
- colechristensen 8y ago
  Since JP Morgan is the one backing the coins with USD, and controlling who mines, they can do whatever they want to fix errors or crime. If something goes wrong they can just mark the "bad" coins as tainted and refuse to exchange them for USD and give you new coins to fix the problem. Paper money was created because it was more convenient than lugging around precious metals, this is just the same. It has no value on the market by itself, it's just a way for a bank to account for stored value.
httpz 8y ago
So basically a B2B Venmo on a blockchain?
dkoston 8y ago
Another point I want to make that I think a lot of people on HN miss is that you cannot do this with a database alone. This is the equivalent of a token table where the token is a cryptographic hash. However, it’s the cryptography that you are trusting, not the database. The simple analogy is that you are using PGP to sign a message where the contents are a dollar. Only the person who can decrypt that message gets the dollar so you only give the hash to the person you want to have the dollar. If there are actually dollars involved, this is a real thing.
- drcode 8y ago
  That's not true, you are definitely trusting the database: In order to spend money, you need the cryptography to work but you ALSO need the canonical chain/database to record your transaction... you can't just send your signed message to another person to perform a transaction, the central entity mining the chain needs to still cooperate.
  - dkoston 8y ago
    maybe there was ambiguity in my post but I’m saying that this adds an additional layer of trust outside the database which is the signed token In this case you’re trusting JPMC, the database, their engineers, the cryptography, etc. For this use case, there is a major issue. Since you have no access to the token yourself, it’s just marketing hype
tracker1 8y ago
I'm not sure why they would use the USD as the backing for such a thing over say Gold/Silver, etc. Say 1oz gold at X level purity for every coin. Bringing back the Fort Knox currency backing would imho be much stronger than any fiat currency.
- philwelch 8y ago
  Because this is a bank, not the Ron Paul campaign.
- aristophenes 8y ago
  Right because gold is much more stable than the US Dollar /s
  - tracker1 8y ago
    It isn't?
pylus 8y ago
Is that stable coin?
czbond 8y ago
E Corp!
charliebrownau 8y ago
Wasnt the whole point of Virtual coins was to move away from Western Dollars and USD ?
charliebrownau 8y ago
Current Global Trade System is broken and unfair * USA company makes/invents/creates product * Product made in china for USD$2 per hour worker rate * item shipped almost for free globally * item set GLOBALLY of USA RRP * Item then converted from USD into AUD/JP/NZ/CA * them then ADDED tax in AUD/JP/NZ/CA * Item in USA for USD$200 ends up AUD$400 and NZD$425 and JP$385 ===============================
philwelch 8y ago
A lot of people are missing the point and arguing past each other here. Bitcoin and the like couple two distinct things: 1. A distributed ledger of transactions with no single point of failure that can cryptographically prove possession of the currency itself. 2. An anarchic monetary system that serves the needs of illicit commerce and inspires the imaginations of libertarians and erstwhile goldbugs. JPM has decoupled these two aspects. And I think it’s an interesting move. Most people either love or hate cryptocurrency because of the second aspect, but the first may very well still be a good technical solution to the problem of electronically shifting money around—even if you’re just shifting around USD.
opportune 8y ago
pointy haired boss who read a couple forbes articles about blockchain succeeds in missing the entire point
GrumpyNl 8y ago
Nice, they are in control , so they can generate money out of air.

234 points by timcc50 8y ago

>The coin will be issued on the Quorum blockchain which was developed by JP Morgan over the last year and is a private blockchain inspired by Ethereum. This means only selected miners will be able to process transactions, unlike public cryptocurrencies where anyone can. [...] >The purpose of the JPM Coin is to allow businesses to make near-instantaneous transactions of value across the internet without having to move fiat money in the background. I genuinely don't understand what the blockchain does here that couldn't be implemented by any random database system. I mean the euros that I have in my bank account are also just a number that could be moved "across the internet" instantly if they so desired. The big innovation with Bitcoin-like blockchains is that transactions can be done trustlessly but the whole "private blockchain with accredited miners" turns it into basically a slow inefficient database with extra steps. Is it just a buzzword to generate interest or is there an aspect of this I'm missing?

dwiel 8y ago
I tend to agree with you. I wonder though, does reframing as a crypto help them get around any rules, regulations or taxes?
- apl002 8y ago
  i was curious about this as well
  - SideburnsOfDoom 8y ago
    No. Why would it?
    - tombert 8y ago
      I know nothing about finance law, but I know that governments typically have a "blind spot" for new technologies. Sometimes this can be a good thing, and I think it's what kind of led to the internet being such an interesting place with things like BitTorrent, but often businesses will see it as a quick loophole.
      - SideburnsOfDoom 8y ago
        I know nothing about the law for e.g. violent crime, but if you find a new murder weapon, the law would certainly not have a "blind spot" for your new technology. The law isn't a computer program, it is a human process.
- GordonS 8y ago
  Surely if it did, regulators would move quickly to close that gap?
- basch 8y ago
  like the gnu/linux/systemd/gnome/blink argument, this is a great example of why calling linkedlogs/dcash/proofofwork/byzantineFT/cryptokeysasidentity "crypto" kind of muddles the conversation. In JPMorgan's case, using linkedlogs/dcash/cryptokeysasidentity might end up working out really well. They can distribute the tech to other banks, and the killer feature, besides being distributed ends up being cryptokeysasidentity, from a security standpoint. In my book, what they are doing is still "crypto" but it isnt the genius innovation the whole sum of all bitcoin was. (You might argue that its the proof of work that makes something a crypto, and thats fine.) What made bitcoin different was APPLYING a bunch of academic knowledge to a useful to solve problem. https://queue.acm.org/detail.cfm?id=3136559 https://queue.acm.org/detail.cfm?id=3136559 If you look up the definition of TECHNOLOGY, its "the application of knowledge." Bitcoin is a PERFECT EXAMPLE of a technology, not because its digital, electronic, and computery, but because its taking a ton of knowledge from academia and APPLYING it. This new coin is more a reapplication of technology, than any sort of creation.
- tylersmith 8y ago
  I don't think it's the work "crypto" that helps people skirt regulations. It's the anonymous, permisionless consensus coordination that does. JP Morgan's coin won't have that property, they're just signing off on transactions themselves.
_bxg1 8y ago
I don't know much about this area, but I could imagine that even if the mining is selective, the transfers might not be. It could remove some overhead that large banks have to do in verifying transactions and preventing duplicates, etc.
- freeone3000 8y ago
  mining and transfers are the same thing. that's the core concept - the ledger transaction is the currency.
pjc50 8y ago
> what the blockchain does here that couldn't be implemented by any random database system It says "blockchain" on it, so it can be sold to some uniquely gullible investors?
- reallydude 8y ago
  > what the blockchain does here that couldn't be implemented by any random database system More likely it can be used to circumvent regulations by trading digital goods and investing in futures, instead of liquid assets. Even if it is eventually regulated, the upside potential (no matter how temporary) is an upside.
deleted 8y ago
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talawahdotnet 8y ago
Yea, it definitely has limited immediate value compared to a database as long as it is on a closed network. However it does allow them to experiment with the technology in a controlled fashion. They could have done so quietly but, you know, marketing. I think there is still value in Blockchain networks like Stellar[1] that are not fully decentralized, but are federated and diverse. If this is a first step towards them issuing a stable coin on a network like that then I welcome it. 1. https://www.stellar.org https://www.stellar.org
- sparkie 8y ago
  "Stable coin" is one of those misnomers where it means exactly the opposite of what one would expect from the existing definition of those words. Something pegged to the US dollar is inherently going to be unstable, because the dollar is unstable. The dollar is not priced in terms of dollars. One dollar today might not be a dollar tomorrow. The instability is mostly due to the conditions of the market, but then those effects are compounded by the whimsical economists printing it for fun. OTOH, Bitcoin is a closed system. At any point in time, you can measure the amount of Bitcoin you have as a fraction of the total amount of Bitcoin which exists, and you can even directly predict how that will change due to inflation for the next 100+ years. I personally prefer the term "fiat coin" or just "shitcoin" is sufficient.
darawk 8y ago
I think it may be that the decentralized control structure makes organizations who would normally be in competition with JPMorgan more willing to be on board with using something that they developed. For instance, if you are say, Goldman Sachs, would you want to use a private database at JPMorgan for you and your clients funds? Or would you prefer to use a semi-private blockchain, where although it's not open to the public, each participant in the network has equal stature to one another? I think that is the true innovation here, and I do think that it is important. It solves some of the corporate cooperation issues that prevent certain types of value from being created, because nobody wants to let their competitor control the space.
- koolba 8y ago
  This already exists. It’s called the DTCC and everybody uses it. https://en.m.wikipedia.org/wiki/Depository_Trust_%26_Clearing_Corporation https://en.m.wikipedia.org/wiki/Depository_Trust_%26_Clearin...
  - darawk 8y ago
    And that company is exactly what this tech. replaces. That company does not provide its services for free. This blockchain product does.
    - 0xffff2 8y ago
      How does this product operate for free? Who's paying for the miners?
      - darawk 8y ago
        Sorry, there may be small fees paid to the miners. But those fees will presumably be dramatically less than this current company charges.
        deleted 8y ago
        [deleted]
ConcernedCoder 8y ago
One thing it could do would be to let each participent in a transaction verify the transaction itself... which I suppose is a nice feature, maybe everything goes into "escrow" and then is released when everyone ( the participtors in the transaction who can mine? ) can agree on the result.
deleted 8y ago
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treis 8y ago
> random database system Who would own this database?
- root_axis 8y ago
  JPMorgan
  - treis 8y ago
    Which is the problem that JPM Coin is aiming to solve. For them to use a DB solution requires both parties to the transaction to be customers of JP Morgan. A block chain issued coin doesn't require that and, therefore, has some theoretical advantage. Of course it remains to be seen how true that turns out to be. There is a DB based solution for financial transfers today in SWIFT. It has numerous flaws that a block chain based solution legitimately solves.
    - hcknwscommenter 8y ago
      I am not saying SWIFT is perfect, but please enumerate these flaws and the ways in which blockchain legitimately solves these flaws without introducing an equal number of equally problematic flaws.
      - treis 8y ago
        SWIFT transactions can be slow depending on the banks involved. If a bank's SWIFT credentials are compromised the attackers can transfer all the funds a bank controls. With a blockchain coin it would require the private key of the customer to send the coins.
        root_axis 8y ago
        > With a blockchain coin it would require the private key of the customer to send the coins. There are no "customers", this is a private blockchain where only banks participate.
cm2187 8y ago
Plus if it is backed by the dollar, it is subject to the same central bank manipulation than the actual dollar.
- notyourwork 8y ago
  Not really a con based on the use case, right?
  - cm2187 8y ago
    Then why create a currency if it isn't as a currency at all?
djohnston 8y ago
the moment you start using a private blockchain you miss the point of cryptocurrency. all of these enterprise coins make me laugh
- elif 8y ago
  There are a lot of points of cryptocurrency. It's true a private chain has no protection against central control... however it does have protection against double-spends, mutable history, confirmation guarantees, etc.
  - djohnston 8y ago
    right but all of those are more performantly implemented with a cluster of mysql replicas .. the protection against double spends is only as strong as the cluster of machines doing the hashing
Legogris 8y ago
Given a standard for moving assets across chains, this starts to become really interesting. "What can be achieved by HTTP that can't be achieved by any random binary protocol?" Plasma could facilitate this for Ethereum-compatible chains, including Quorum.
tlrobinson 8y ago
You are correct that these sort of "private" and "federated" blockchains completely miss the point of Bitcoin (some intentionally, some not). The features they provide were possible before Bitcoin was invented, but no one really cared about finding uses for them until the blockchain hype train rolled through town. That doesn't mean they're completely useless though. If Bitcoin eventually inspires some real innovation in fintech, then great.
- tylersmith 8y ago
  But the inspirations have almost entirely not come from the stuff that makes Bitcoin and "blockchains" unique. If they realized that people want an easy way to have their assets managed and traded digitally they can do it much better without blockchain baggage.
deleted 8y ago
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elif 8y ago
well how many servers that you interface with financially allow you to audit all of their transactions in a mathematically verifiable way?
grahamperich 8y ago
What they're gaining is interoperability with public blockchains. JP Morgan's permissioned blockchain—Quorum—is essentially a fork of Ethereum. They can issue assets on their private chain (which, yes, by itself is no better than a traditional database). However, they can then transfer these assets to and from public blockchains. By doing this, they are gaining access to the greater crypto ecosystem while still maintaining centralized control when they need it. Here's a little example of how this might work in practice: 1. You hold $100k in your JPM money market account 2. You convert $25k of that to JPM's stablecoin on their Quorum chain 3. You withdraw this $25k JPM-coin to the public Ethereum blockchain 4. You use it in Ethereum's burgeoning "Decentralized Finance" or "Open Finance" protocols.. some examples: https://www.dharmalever.com https://www.dharmalever.com, https://compound.finance https://compound.finance, https://www.augur.net/ https://www.augur.net/ 5. You finish what you're doing, and transfer it back to your JPM account
- root_axis 8y ago
  Where is the benefit? If I wanted $25k in eth, why wouldn't I just buy $25k in eth instead of adding in the extra step of a JPM stablecoin?
tylersmith 8y ago
It's absolutely just a buzzword. A blockchain is just a data structure which is useful in Nakamoto Consensus, which is only for censorship resistance. Everything a cryptocurrency can do be done much more efficiently, faster, cheaper, safer, better UX, etc, except for censorship resistance. If you don't want your coin/token to be censorship resistant then you can have a system that's a million times better by just building a web app that uses regular cryptography.
- stale2002 8y ago
  Not really. If you build a web with a private, centrally controlled database, then you might be messing with the database behind the scenes. A Blockchain makes that database transparent, and makes any secret funny business immediately apparent.
- basch 8y ago
  That black or white worldview absolutely ignores a middle ground use case for a bunch of collaborative entities that _sort of_ trust each other, are ok being non-anonymous, and want to work together on a shared ledger. Ten firms working towards a common goal can do so without an insane amount of redundant double entry accounting at each firm, they can do the work once and share the results, they can audit and verify the log. And they arent all just accessing one databased stored at one firm. Im not sure people really understand the implications of a team of companies that collaborate often banding together, and eliminating the need for 3rd party audits and 3rd party fund settlement.
  - sparkie 8y ago
    > Im not sure people really understand the implications of a team of companies that collaborate often banding together, and eliminating the need for 3rd party audits and 3rd party fund settlement. I think it is more that people don't understand what existing technologies there are already, but they've heard of this "blockchain" thing, and the black and white view is one where you either need a blockchain or you don't need anything. There are some other interesting technologies and research areas. One example is SMPC. In 2008 (pre-dating Bitcoin), a secure auction with sealed bids was conducted in Denmark for the purchase of beets from independent farmers[1]. This kind of research get drowned out by the blockchain hype because nobody is interested in something which doesn't print their own money. There are also more well understood distributed databases and consensus algorithms which work when you have semi-cooperative parties. I think a lot of these "blockchains" really just want a merkle-tree, and they could probably get by with a database like noms[2] When you have a bunch of cooperating parties, they either need to assume that the parties are cooperative, or you need an arbitration process. The arbitration process is what the blockchain is about (with the record keeping in the blockchain being a kind of toxic waste which is kept around to support that). What do you do when the parties are being uncooperative? If there are only a few parties, then PoW is not a viable solution because one party could outpace others if they have more computing power. If you pick something like Proof-of-stake, then several parties could collude to swindle others. If you have a centralized system, you've not gained anything. Ultimately, the companies involved are always going to take any quarrels to a legal court and have a human decide the outcome - meaning their blockchain is going to have to be "fixed" by manual intervention anyway. [1]:https://eprint.iacr.org/2008/068 https://eprint.iacr.org/2008/068 [2]: https://github.com/attic-labs/noms https://github.com/attic-labs/noms
tootie 8y ago
Institutionally-backed money laundering maybe? IDK really.
dkoston 8y ago
The blockchain signs each dollar. You could have done this instead by making each dollar a PGP signature and allowing trusted parties to decrypt the signature and claim the dollar. Honestly though, if the chain isn’t public, JPMC can update the code behind-the-scenes so there’s not as much trust as there would be on a public network.
bouncycastle 8y ago
> I genuinely don't understand what the blockchain does here that couldn't be implemented by any random database system. A blockchain is...well... a database system itself! There are many different types of database systems, eg. Relational, Graph, Object orientated, document (eg elastic search) and so on. Generally you want to pick one that fits your problem area well, so picking a random database system would not be a good idea. One of the most important data structures they need is a tree for the Merkle proofs to confirm that the data hasn't been tampered and contract execution happened correctly. Tree structures are notoriously difficult to implement in a relational db for example. (BTW, I'm also skeptical of the hype around 'blockchain' just as before when the 'noSQL' hype came around. You will surely have some devs pick the blockchain as their database system for the wrong reasons, just like back in the day when you had devs pick noSQL because it was cool.)
- cachvico 8y ago
  Why is a Merkle proof difficult to implement in a relational DB? The only required data fields in each row are the parent row ID and a hash, no?
mirekrusin 8y ago
It's the other way around, actually. Having small set of authorities that reach consensus via raft/pbft in case of quorum means that ethereum blockchain can be much faster. You still have full transparency of what's happening, you have access to the chain, you can read it, validate it, etc. They just run minting of blocks for you. It's true that if they don't like you, they can refuse to include transactions from you for example - that's the main cons from public consensus like PoW. But they are not worried about it, of course and other participants are usually not worried as well because they know that whoever controls minting nodes have strong incentives to run it fair (otherwise participants would not give a shit to join it). This is different from public chains where those rules don't exist. In big corps integration and security is a massive problem. Blockchain reduces those two problems by orders of magnitude. If you wanted to "implement it by any random database system" - you'd end up with something like ethereum. You can't just spawn your public postgres and publish public api to create new users, can you? Quorum has also some other extensions to ethereum related to privacy (private contracts, anonymity etc) that are attractive to corporations. It's nice to see them open sourcing quorum and publishing something real-world based on it.
deevolution 8y ago
I also fail to see the point of this... maybe to prove once and for all that blockchain doesnt make any sense as an institutional/private service?
smsm42 8y ago
My thoughts exactly. Isn't this: > make near-instantaneous transactions of value across the internet the definition of what wire transfer does? And why not doing it in "fiat money" (it's an additional level of hilarity for a major bank to use this term, for those who understands) has any value? The value of blockchain transfers is lack of intermediaries and gatekeepers - which advantage the private chain owned by JP Morgan takes away. This is like advertising "we sell gold coins, only instead of hassle of owning heavy metal pieces, we provide you with little pieces of green paper that could be exchanges for gold coins at any gold dealer" - totally missing the point of the whole exercise.

WrtCdEvrydy 8y ago

Wasn't their CEO the one most proponent critic of cryptocurrencies.

raiyu 8y ago
Still not bullish on Bitcoin but he likes blockchain - is the official by-line
- jandrese 8y ago
  Basically, he likes blockchain as long as he controls the chain. The problem with Bitcoin was that it was decentralized.
andreygrehov 8y ago
He is a bullshitter. His quotes are priceless: https://ei.marketwatch.com/Multimedia/2018/10/31/Photos/MG/MW-GX410_dimon__20181031120021_MG.jpg https://ei.marketwatch.com/Multimedia/2018/10/31/Photos/MG/M...

trophycase 8y ago

Talk about being tone deaf and missing the point...

75dvtwin 8y ago

If I am reading this right (and I am a newb at e currencies), JP coin is basically a payment processor, where balance is kept on blockchain. The coin value itself is linked with almost no flux to USD. But then, I do not see how it is different than https://www.bitrail.io/ https://www.bitrail.io/ (and its new freedom coin: https://freedomcoin.cc/#more https://freedomcoin.cc/#more ) or tether with 2bln market cap https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/ what makes JP's offer more useful to B2B transactions than the above two examples ?

roywiggins 8y ago
At a guess: JPMorgan is more reputable than either of those outfits JPMorgan has existing relationships with businesses JPMorgan understands business needs and can tailor their currency to them JPMorgan is a bank.
- jdmichal 8y ago
  Or, in other words, current coin offerings build workaround of such entities into their value proposition. But there's also a class of potential consumers for whom that might be an anti-value. JPMorgan seems like they're willing to test that potential market.

rayvy 8y ago

It's pretty well known that these BigCorp crypto/blockchain plays are just smoke and mirrors. There is no actual differential value gained here (unless as @dwiel says,they get some sort of loophole crypto tax break). It's a bit saddening to see that the tech has been picked up by the exact institution(s) that the tech was meant to combat. But if anything that just proves that there's meaning behind the concept (regardless of a f'ing coin price). I look forward to the day where the JPM's and the like are put out of business for this sort of thing due superior, user-friendly technology.

verdverm 8y ago
How / when will public blockchains achieve better UX / friendliness than say Venmo, Robbinhood, or debit cards?
- rayvy 8y ago
  I wouldn't say its so much the UX. The UX even on some crypto projects is just fine (see some EOS projects, apps, and dApps). The problem I see is that what incentive do end users have to use crypto/privacy/blockchain/whatever apps vs the centralized alternatives? Currently? None, because no one gives a damn about their privacy/data. I don't think it will be my generation (millennial) that picks this tech up, I think it will be later generations that have seen our missteps when it comes to digital privacy.
  - verdverm 8y ago
    Would focussing efforts on sound data privacy legislation and education go further to protect the people? Or perhaps outlawing targeted advertising?
  - verdverm 8y ago
    Doesn't EOS suffer from the same subpar UX around secret keys? As compared to losing a debit/credit card
    - 8y ago

root_axis 8y ago

This is pointless. The gatekeeper to the private network is a centralized authority.

ddtaylor 8y ago
Yup. Most importantly, only JPM controls it's issuance, which means it's no different than a fiat currency or a gift card. One of the things Bitcoin proponents enjoy is the idea that it's a supply that cannot be printed frivolously.
tombert 8y ago
I was thinking this too; a large part of the original bitcoin paper is complaining about how centralized authorities like banks are problematic. I don't really see how adding another central authority makes any sense.
- Barrin92 8y ago
  According to the article at least the purpose is to increase the speed of transactions that the bank settles internally. I can't speak to how feasible this is because I'm not familiar with the tech, but I don't think anyone needs to adopt the politics of the original paper if they have found some other use.
creeble 8y ago
Exactly true. The point of a blockchain is trust. If it is controlled by a single party, its sole value collapses. Except marketing value.
- SI_Rob 8y ago
  Thus the motto of Blockchainism: "In Trust We Trust"
treis 8y ago
After the initial selection by JP Morgan new members would (presumably) be added by a consensus of the existing members. That would remove JPM as the sole gatekeeper.

wyldfire 8y ago

This is not an error on JPM's part. It's not that they don't get the whole decentralized part of cryptocoins, it's that they just want to cash in plain and simple.

b_tterc_p 8y ago

Ignoring the lack of positives, can JP Morgan reverse erroneous transactions on this? This is an important part of the financial system. Are they just going to hard fork all the time? Send the money back?

TACIXAT 8y ago

The thing that bothers me about this is that banks have a monopoly on this type of business. Outside of being a bank you need to register as a money service business which is extremely cumbersome.

kuroguro 8y ago

Tether 2.0? :3

roywiggins 8y ago
At least JPMorgan is regulated like a bank because it is one.
- randaouser 8y ago
  The uptake will be great however, what doesnt sit well is the 2008 12Billion bailout. As the same actors will be the nodes that are privileged to write to and maintain the ledger, it has yet to be seen how immutable these transactions will be.

ErikAugust 8y ago

No ads, JavaScript, etc: https://beta.trimread.com/articles/45 https://beta.trimread.com/articles/45

Hongwei 8y ago

Wasn't Jamie Dimon (JP Morgan CEO) a vocal skeptic of bitcoin and crytocurrencies a year ago? https://www.bloomberg.com/news/articles/2017-09-12/jpmorgan-s-ceo-says-he-d-fire-traders-who-bet-on-fraud-bitcoin https://www.bloomberg.com/news/articles/2017-09-12/jpmorgan-...

52-6F-62 8y ago
Yes. Multiple times. I always found it pretty funny as I'd known they were developing their own right alongside it. Granted, I think his criticisms are more specific than being about the technology in general. I think he was more critical of it being penned as some replacement for existing currencies and monetary systems, and the whole use as an investment. But don't quote me there.
syn0byte 8y ago
It's like watching a 3-card Monty hustler yelling across the street at the 3 cup and ball guy for being a scam.

andy_ppp 8y ago

I'm sure the governance and reasoning seem just fine right now but are we to trust being locked in to JP Morgan forever? It's certainly the same way I feel about Google AMP polluting the web. Seems very buzzword friendly but I really cannot see why transfers (B2B) aren't perfectly trivial and should be instant, free and totally secure and at the tick rate of the market if in a different FX. What is stopping the banks doing this now with just normal encryption?

colechristensen 8y ago
Money transfers happen like Person -> Bank -> Clearinghouse -> Bank -> Person They aren't free and instant because people and systems are involved in making them happen. Funds have to be verified, systems to make sure the money is there, fraud monitoring, regulations, mistake handling, etc etc. A lot of stuff goes on in the middle during the transaction and mechanisms need to be in place to prevent crime and fix mistakes. Blockchains make this process a little better because instead of code setting rules and interacting with APIs, the mathematical characteristics of the blockchain end up doing a lot of the "work" involved and are simply more convenient for everyone. I'm guessing that eventually central banks (like the Federal Reserve) will issue their own cryptocurrencies for banks to facilitate transfers. It's not sexy or rebelling against the man, distributed crypto ledgers just have better properties than crusty databases and APIs.

b0bby_tabl3s 8y ago

How convenient this coming on the tails of blockchain poisoning... Now way they could possibly be correlated.

inscionent 8y ago

This is Hawala but controlled by one entity. Where is the value and why does it need to be done in tokens controlled by JPM?

jpmattia 8y ago

Repeat after me: A blockchain without decentralization is just a database.

colechristensen 8y ago
That's the point! JP Morgan is using the blockchain instead of mysql and a pile of code. To them and their customers it has nicer properties. It doesn't at all change the details that a bank is facilitating money flow, just how it is done, and at that a little more efficiently.
- thaumasiotes 8y ago
  But it doesn't do it more efficiently (or, really, change how it's done). The coin is only available to JP Morgan customers, those who already have bank accounts with JP Morgan. It can only be transferred to other JP Morgan customers. It does the same thing they already do, but less efficiently.

monkeydust 8y ago

Can someone provide a before and after example on how this technology saves money, reduces transaction failure risk or time taken for transaction to occur (either or all of these)?

dkoston 8y ago
Before: - you want to transfer $100,000 to another bank - you do a wire or ACH - that’s risky so someone has to verify that you actually have $100,000 After: - each of your dollars are digitally signed using cryptography - to transfer them, you share the hashes - the recipient validates the digital signatures to verify those $100,000 in tokens are legit It’s all about a system of accounting to reduce risk. With less risk, transfers are faster. Think of it like an api to verify account balances that can only be hacked if the SSL cert for the API is hacked by figuring out the private key
- arcticfox 8y ago
  Thanks, this is super clear. But what prevents a double spend in this situation? I assume at some point the new owner commits the hashes to a blockchain under their own key.
  - dkoston 8y ago
    JPMC will have to track the redemptions on a blockchain ir database to prevent double spend. As mentioned above, this is an internal efficiency system for JPMC, it doesn’t provide any consumer benefits unless they pass on the reduced costs
- lordnacho 8y ago
  If you lose your private key, you lose your JPM dollars. How many people want to have $100K in notes? Because that's similar and a lot harder to lose than something stored on a computer. Or, if you send the £100K to a valid address that nonetheless is the wrong one. Money in a black hole. If you screwed up the note to send $100K via ACH, something could still be done about it.

SI_Rob 8y ago

I predict this will be abandoned (or the blockchain figleaf dropped in favor of an explicitly centralized and far simpler/cheaper store) in 2, maybe 3 years. Or about as long as it takes for the fundamentally unsolvable problems of decentralized governance to become pathological to group integrity. If you are a junior stakeholder in this nominally decentralized system you eventually have to accept that you have no influence over the direction of the protocol's development, or get together with a group of similarly disadvantaged peers and fork your own implementation where your relative influence is more comparable. Until that consortium, too, falls apart due to leverage-seeking behavior by individuals within it, or ossifies into a de facto centralized network, but one saddled with a bunch of expensive and now superfluous blockchain game-theory casino infrastructure.

lioeters 8y ago
Those are strong words, "fundamentally unsolvable problems of decentralized governance". I'm not dis/agreeing with your scenario: I also think it's quite likely that this JPMorgan crypto would ossify into a de facto centralized network. But the phrase "fundamentally unsolvable" feels like it needs some harder proof or logical explanation. There are many instances of (and variations on) "decentralized governance", like open-source projects, technical or social organizations, etc. Would you say all those attempts are doomed to failure? (Or maybe that they could continue to operate despite being potentially unstable/flawed based on fundamentally unsolvable problems. Or perhaps that they all tend to become centralized.) Thinking of attempts at decentralized governance in a larger sense (including but beyond specific applications in the crypto sphere), it does seem that most of them are failing due to some inherent structural issues. I wonder whether it can be demonstrated that all such decentralized governance systems are fundamentally flawed (similar to Gödel's incompleteness theorem..?).

dkoston 8y ago

I’m going to try to distill this down to it’s easiest form. - JPMC will now create a digital signature (token) for every dollar that enters its network. - Those digital signatures can be exchanged by any trusted authority - JPMC will exchange a single dollar to those trusted authorities for a single digital signature Using the blockchain allows JPMC to trust each dollar that goes through both their network and partner networks as they cryptographically trust that forgery is almost impossible. They also can trust that when a “wire” comes in that the funds are actually available. This is purely an accounting system backed by cryptography that allows much more trust.

tylersmith 8y ago
This could be very useful, but it doesn't require blockchains in any way.
- stale2002 8y ago
  "Blockchains" are an implementation detail that covers a large category of related things. For a centralized service, Blockchains are still useful for things like transparency.
- dkoston 8y ago
  Correct. Especially since it’s centralized, they could have used any secure form of asymmetric encryption to offer the same guarantees
- dkoston 8y ago
  edit: didn’t like my analogy I’d prefer you posted something constructive rather than just saying “doesn’t need blockchain”. Of course it doesn’t. Storing data doesn’t require a relational database, or a key value store either. All have pros and cons. Saying “doesn’t require blockchain” is obvious and adds no value. It’s like coming into a workshop explain what a saw is and saying “other cutting tools also exist”. You seem to be making the leap that because I’m explaining what something is without saying whether or not I think it’s the right move that I think it is. I don’t know whether or not it was cheaper and more effective for JPMC to fork ethereum or to build their own accounting system from scratch and I doubt you have the correct information to make that assumption either. Maybe JPMC doesn’t have a team capable of writing accounting software (seems unlikely). What’s more likely is they are looking for headlines because they know blockchain is hyped technology. It would have probably not made the news if they announced they were adding another settlement system beyond Zelle, ACH, and wire. So, they probably chose this because they think it will reduce costs and move their stock price while building a bespoke software accounting system would have been more costly and wouldn’t have provided as much hype. Businesses don’t make decisions about technology completely based on its technical merits. Many times they choose technology because someone recommended to them, or it’s cheap, or they can’t build it themselves, or that’s not their primary business, etc.

jackfoxy 8y ago

Does this in any way address the issue of coin theft / key loss? For instance, can I keep these coins on deposit with JPM, grant them access to my keys, conduct all the transactions through JPM's more traditional security infrastructure, and be assured JPM will make me whole if something bad happens I did not authorize, with a transparent and fair arbitration methodology. Or does this invalidate the whole purpose of crypto-coin?

colechristensen 8y ago
Since JP Morgan is the one backing the coins with USD, and controlling who mines, they can do whatever they want to fix errors or crime. If something goes wrong they can just mark the "bad" coins as tainted and refuse to exchange them for USD and give you new coins to fix the problem. Paper money was created because it was more convenient than lugging around precious metals, this is just the same. It has no value on the market by itself, it's just a way for a bank to account for stored value.

httpz 8y ago

So basically a B2B Venmo on a blockchain?

dkoston 8y ago

Another point I want to make that I think a lot of people on HN miss is that you cannot do this with a database alone. This is the equivalent of a token table where the token is a cryptographic hash. However, it’s the cryptography that you are trusting, not the database. The simple analogy is that you are using PGP to sign a message where the contents are a dollar. Only the person who can decrypt that message gets the dollar so you only give the hash to the person you want to have the dollar. If there are actually dollars involved, this is a real thing.

drcode 8y ago
That's not true, you are definitely trusting the database: In order to spend money, you need the cryptography to work but you ALSO need the canonical chain/database to record your transaction... you can't just send your signed message to another person to perform a transaction, the central entity mining the chain needs to still cooperate.
- dkoston 8y ago
  maybe there was ambiguity in my post but I’m saying that this adds an additional layer of trust outside the database which is the signed token In this case you’re trusting JPMC, the database, their engineers, the cryptography, etc. For this use case, there is a major issue. Since you have no access to the token yourself, it’s just marketing hype

tracker1 8y ago

I'm not sure why they would use the USD as the backing for such a thing over say Gold/Silver, etc. Say 1oz gold at X level purity for every coin. Bringing back the Fort Knox currency backing would imho be much stronger than any fiat currency.

philwelch 8y ago
Because this is a bank, not the Ron Paul campaign.
aristophenes 8y ago
Right because gold is much more stable than the US Dollar /s
- tracker1 8y ago
  It isn't?

pylus 8y ago

Is that stable coin?

czbond 8y ago

E Corp!

charliebrownau 8y ago

Wasnt the whole point of Virtual coins was to move away from Western Dollars and USD ?

charliebrownau 8y ago

Current Global Trade System is broken and unfair * USA company makes/invents/creates product * Product made in china for USD$2 per hour worker rate * item shipped almost for free globally * item set GLOBALLY of USA RRP * Item then converted from USD into AUD/JP/NZ/CA * them then ADDED tax in AUD/JP/NZ/CA * Item in USA for USD$200 ends up AUD$400 and NZD$425 and JP$385 ===============================

philwelch 8y ago

A lot of people are missing the point and arguing past each other here. Bitcoin and the like couple two distinct things: 1. A distributed ledger of transactions with no single point of failure that can cryptographically prove possession of the currency itself. 2. An anarchic monetary system that serves the needs of illicit commerce and inspires the imaginations of libertarians and erstwhile goldbugs. JPM has decoupled these two aspects. And I think it’s an interesting move. Most people either love or hate cryptocurrency because of the second aspect, but the first may very well still be a good technical solution to the problem of electronically shifting money around—even if you’re just shifting around USD.

opportune 8y ago

pointy haired boss who read a couple forbes articles about blockchain succeeds in missing the entire point

GrumpyNl 8y ago

Nice, they are in control , so they can generate money out of air.