
JP Morgan rolls out first US bank-backed cryptocurrency to transform paymentsd - KasianFranks
https://www.cnbc.com/2019/02/13/jp-morgan-is-rolling-out-the-first-us-bank-backed-cryptocurrency-to-transform-payments--.html
======
lordnacho
This is what being all marketing and no substance looks like.

What big companies think is cool and innovative is always several years behind
what actually is cool and innovative. And they always miss the point, in this
case what the idea of crypto is.

But big companies are masters of shouting loudly, as in this case where JPMC's
PR has gotten this story out in just about every major outlet. Whether this is
anything beyond a PR exercise I don't know, I get the feeling there are some
quite strong internal forces that will not be interested in actually using
this.

Someone I know works for a big 4 that is also roughly at this point in the
delayed hype cycle. They are furiously selling blockchain solutions to
everyone who will listen, and doing quite well at it. They did a firmwide
review of internal skills recently, and amazingly there are zero staff who
have any idea what a smart contract is. You wouldn't know if reading about
them in the news, but they are getting paid millions and millions for various
projects that are currently undeliverable.

~~~
madeofpalk
I would hope that a big bank is not chasing 'cool and shiny' things, but
rather is chasing useful and 'safe' things.

~~~
tootie
They chase profits. These businesses tend to be very siloed and if they lose
money on a new business venture, it's their money that's lost and not
depositors. They are probably absorbing a tiny fraction of the risk they
absorbed by making shaky but traditional investments in the early 2000s.

------
deweller
In the early days of the internet, companies like Microsoft and Lotus Notes
invested in corporation-controlled private messaging applications instead of
using things like email and the world wide web. But in the end the benefits of
open standards and interoperability made public networks more useful than a
walled garden.

JPM thinks a centrally controlled digital currency is better than a public
currency. Of course there are benefits to JPM in controlling this currency.

The interesting thing to watch is whether public and interoperable digital
currencies prove to be more valuable and useful than a centrally-controlled
one.

~~~
basch
>But in the end the benefits of open standards and interoperability made
public networks more useful than a walled garden.

The world has swung the other way. If I want restaurant reviews, I need
yelp/tripadvisor/googlemaps/facebook to access each database of reviews. To
order a delivery meal I need ubereats/doordash/grubhub/postmates/amazon. To
compare taxi prices, I need to open uber and lyft, and to rent a scooter I
need a new app in each city. To send a message I need
fbmessenger/whatsapp/skype/hangouts. Even Match Group keeps its subsidiaries
as silos, instead of allowing interop. It probably actually INCREASES peoples
desire to hop around the different products, knowing they dont work together.
If gmail and outlook didnt work, id be more likely to have both. Open
standards and interoperability made public networks more useful, but now that
the networks are in place, and access is ubiquitous, walled gardens can spring
up and dominate MUCH faster than distributed protocols.

~~~
rayvy
> Open standards and interoperability made public networks more useful, but
> now that the networks are in place, and access is ubiquitous, walled gardens
> can spring up and dominate MUCH faster than distributed protocols.

And personally, how do you suggest distributed protocols work to keep up with
their centralized alternatives? Obviously one could build a walled garden (UI,
API, Database) much quicker than its decentralized alternative.

~~~
basch
I dont. Consensus and standards take some time to develop. It's about an
attitude, where companies willingly allow 3rd party clients to access their
data, or allowing services to interop.

The quickest to market car isnt always the best or safest product. Consumer
safety laws even the playing field a bit. Im not advocating regulation, but it
is one way to achieve more parity between products.

------
mark_l_watson
Wow, this is big. I disagree with some of the negative comments here, but that
is what I love about HN: diverse opinions.

Being able to not transact large amounts of money and instead using a
permissioned blockchain to prove you have the funds seems like a great use
case to me.

Although mining some ether was fun as was making money on bitcoin, I believe
that the really interesting applications will probably be in permissioned
systems that either like JP Coin allow virtual transactions or support smart
contracts. To get started, taking the eDX course on blockchain for business is
a good start.

I also admit that after working as an AI/machine learning practitioner since
the 1980s that blockchain applications interest me just because it is
something new (for me).

~~~
annonch
I agree that smart contracts are by far the most interesting thing about this
kind of blockchain idea. However since it is permissioned (i.e., not a
blockchain), then JP can just change the rules whenever they want. The novel
idea that came out of blockchain was the permissionless aspect. While there
are tons of problems with blockchain today, you have some assurance that the
smart contract will operate as the terms originally sent to the chain. Having
a JP run a blockchain essentially cant provide any more (meaningful) assurance
than an existing written contract by JP.

Furthermore to say that interesting applications will emerge in permissioned
blockchains is akin to saying ever since 2010 Neural networks will make a
large impact. It may be true but NNs have been around for decades while
Permissioned Blockchains (i.e., distributed ledgers) have also been around for
decades. They are merely; append only, distributed, permissioned data
structures/bases that have some level of throughput and information guarantees

~~~
johnmarcus
Block chains are always permissioned in a way though. The developers create
the rules, and if you have commit access, you can change them. It’s more open,
but it’s still permissioned.

------
Lucadg
That's the intranet of money as opposed to the internet of money.

------
lostmsu
Any technical details? Is it a new currency or an ERC20 token? What is their
proof mechanism?

~~~
max_
The JMP Coin is a fork of Ethereum called "Quorum". Its open source.

Check it out
[https://github.com/jpmorganchase/quorum](https://github.com/jpmorganchase/quorum)

~~~
jqueryin
It's built on Quorom, it is not itself Quorom.

------
lettergram
I think the only reason this is legal are “cryptocurrencies are classified as
commodity, not currency”. Banks can’t technically make their own currency, but
commodities are okay.

I see this eventually becoming a fairly serious issue with the fed, if this
takes off.

~~~
matt4077
Contrary to libertarian paranoia, alternative currencies are perfectly legal,
and neither the FED, nor the Feds, will come after you guns ablaze. Here’s
Wikipedia on the topic:
[https://en.m.wikipedia.org/wiki/Complementary_currency](https://en.m.wikipedia.org/wiki/Complementary_currency)

To which I would add airline miles, gift cards, and postage stamps.

The distinction to commodities is only relevant for some questions around
taxation, accounting, and investor protection.

------
snr
I mean, sure why the hell not. You could write/buy/subscribe to a strongly
consistent distributed cloud kv store system to do the same more efficiently,
but knock yourself out.

------
dfischer
This tweet from CRW:
[https://twitter.com/ProfFaustus/status/1096018468858667008](https://twitter.com/ProfFaustus/status/1096018468858667008)

I don't have too much to say besides I'm curious how things will develop
around this over the coming months.

~~~
barnbuilder
When that individual says anything truthful or delivers on any of his
promises, it will be the first time. Until then feel free to ignore the troll.

------
otabdeveloper1
> paymentsd

Is this a hipster daemon written in Go? :)

~~~
ntxy
this is actually systemd-paymentsd

[0] man systemd-paymentsd

------
osrec
I don't fully see how Dimon can back this, yet be so against Bitcoin. Based on
the article, JP seems to be essentially building a distributed ledger, not too
dissimilar to the one underpinning bitcoin (apart from the distinct
possibility that it will not be quite as open as bitcoin).

Lol, I guess it's only worthwhile when they do it?

~~~
Nursie
> I don't fully see how Dimon can back this, yet be so against Bitcoin.

Pegged value, privately controlled, governance and oversight built in, no PoW,
no speculators. Effectively all it has in common with BTC is the ability to
send payments from one account to another.

~~~
andirk
Dimon will be against any competitor. These aren't philosophers or even honest
people. Keep that in mind when listening to them. I include btc shills in this
as well. They have an obvious angle that is not influenced by morals, truth,
etc.

------
lebed2045
it's a false statement to call it a cryptocurrency. They simply set a
permission private ledger for institutional usage. It has nothing to do with
decentralized cryptocurrency with stable price, like MakerDao (or SableUnit)

------
bob_theslob646
"While J.P. Morgan's Jamie Dimon has bashed bitcoin as a "fraud," the bank
chief and his managers have consistently said blockchain and regulated digital
currencies held promise."

They are only doing so because it saves them a ton of money.

~~~
JumpCrisscross
> _They are only doing so because it saves them a ton of money_

This is less about cost savings and more about lock-in and liability.
Customers can move their money around by wire or ACH with anyone. They can
only do it with JPM coin through JPMorgan.

With such treasury services, moreover, fraud is a big cost centre. A
cryptocurrency might be a good way to shift liability for unwanted
transactions away from the bank and onto customers.

~~~
bob_theslob646
You are correct, but there is a tremendous incentive for them to save on costs
by using their own blockchain.

"The blockchain potential in financial services is huge, and has several
applications which span across payments, capital markets, trade services,
investment and wealth management, securities and commodities exchanges.

Blockchain technology can be considered as one of the main drivers to achieve
a substantial cost saving.

According to a Santander FinTech study, distributed ledger technology could
reduce financial services infrastructure cost between US$15 billion and $20
billion per annum by 2022, providing the possibility to decommission legacy
systems and infrastructure and significantly reduce IT costs."

[https://www.pwc.com/m1/en/media-
centre/articles/blockchain-n...](https://www.pwc.com/m1/en/media-
centre/articles/blockchain-new-tool-to-cut-costs.html)

[https://www.wsj.com/articles/the-cost-cutting-potential-
of-b...](https://www.wsj.com/articles/the-cost-cutting-potential-of-
blockchain-1520993100)

[https://www.businessinsider.com/heres-how-banks-can-save-
big...](https://www.businessinsider.com/heres-how-banks-can-save-big-with-
blockchain-2017-1)

[https://www.globalcustodian.com/settlements-costs-
fall-27-bi...](https://www.globalcustodian.com/settlements-costs-
fall-27-billion-2030-using-blockchain-research-finds/)

[https://www.ft.com/content/b6171016-171f-11e8-9e9c-25c814761...](https://www.ft.com/content/b6171016-171f-11e8-9e9c-25c814761640)

~~~
consp
All fun and games, but to achieve that you can use existing database solutions
which have transaction verifiability and auditing build in. Even third party
verification is possible if required. This blockchain mania at banks does not
add anything as long as they keep using private ledgers and thus do not
require zero-trust proofs.

~~~
ludjer
Having worked with existing solutions in a top 4 bank in my country I would
rather be a beggar then work with those systems. The banking system needs
change and needs it badly, they are so far behind the rest of the industry.
Blockchain is still way more decentralized then current solutions which mainly
work on a Master/Slave HA mode.

