JPMorgan Chase can’t decide if it hates cryptocurrency or loves it. That is the best way to explain what it really happening between the bank and the cryptocurrency technology of blockchain.
To most people who understand blockchain technology, it’s no secret that transactions can only be stored on a blockchain ledger if there is some sort of proofing of an underlying cryptocurrency taking place – usually proof of work or proof of stake.
For example, no project built on the Ethereum platform can survive unless the underlying platform Ether exists and is being proofed in some way.
This is why it’s very ironic that Chase is considering the Ethereum platform for their own Blockchain project of a bank to bank wire transfer protocol.
It’s also ironic because for any sort of actions to be carried out on the Ethereum Blockchain, the creator of the project must also have the currency Ether to carry out the contracts. This means, if Chase does in fact utilize the Ethereum platform to create it project, they are also holding them Ethereum currency of Ether.
The patent, which was filed in October of 2017 and made public this past thursday states:
In one embodiment, a method for processing network payments using a distributed ledger may include: (1) a payment originator initiating a payment instruction to a payment beneficiary; (2) a payment originator bank posting and committing the payment instruction to a distributed ledger on a peer-to-peer network; (3) the payment beneficiary bank posting and committing the payment instruction to the distributed ledger on a peer-to-peer network; and (4) the payment originator bank validating and processing the payment through a payment originator bank internal system and debiting an originator account.
This news may come as a huge blow to those supporting ripple, as it seems as if this would be a direct competition to the ripple blockchain and its underlying currency XRP.
Ripple has long been toted as being the “blockchain of banks”.
When one of the world’s largest banks has opted to create its own money transfer application that runs on a blockchain other than the Ripple blockchain, it’s only logical other banks are going to abandon it in favor of the chain and application their bigger banking brother is using.
This move may force ripple to have to reevaluate their entire blockchain and strategy.
Whereas it is possible that both solutions could exist, it also seems very unlikely. Banks, although competition to each other, tend to work universally with each other to keep things simple and logic for things like bank to bank money transfers.
At the same time however, its possible that JPMorgan Chase begins to look at alternative blockchains as the Ethereum foundation may come under fire for Ether potentially being an unregistered and unlawful security.
According to Wall Street Journal Ethereum is coming review by the SEC and CFTC.
A former CFTC employee has said both Ethereum and ripple are actually unregistered securities which could cause one or both companies tens if not hundreds of thousands of dollars in fines.
This could potentially cause Chase to reevaluate the actual blockchain they are going to use to build their bank to bank application on.
Also is the never-ending problem of scaling issues which although rumored to be in the works by the Ethereum team, have not yet actually happened making one question whether the Ethereum platform could handing enough transaction for practical use by a global bank.
Although many of these topics have not yet been answered and are still speculations, one thing is clear, JPMorgan Chase cannot expect to make an application on any blockchain without also supporting the underlying currency in some sort of fashion.