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JP Morgan rolls out first US bank-backed cryptocurrency to transform paymentsd (cnbc.com)
100 points by KasianFranks 38 days ago | hide | past | web | favorite | 49 comments



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.


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


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.


Does it have to be cool, though? If banks find a use case for blockchain technology, and they go ahead and implement it in some way so that it is only used by banks, how is that a missed point?


It's not, in fact it would prove a point that seems to have been missed by the cryptocurrency community at large - even if blockchain does become useful, it seems unlikely that big banks or countries are going to start using the existing coins and enrich the current holders.


I wonder what big company is so clueless to pay millions to a big 4 for a useless blockchain toy...


They hire consultants to do that stuff. Or acquire.


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.


>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.


> 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.


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.


It's an interesting move considering that cryptocurrencies were invented by guys specifically to put control of finances back in the hands of individuals and away from companies like JP Morgan.


This does not compete with Bitcoin though, Bitcoin is decentralized and this is centralized. This competes with likes of Ripple and Swift


Given the regulatory environment they operate in, they would have a very hard time, and expose themselves to huge risks adopting something they couldn’t control.


At least on messaging, we mostly swung back to private protocols and centralization (Whatsapp, Slack, Messenger, etc) - maybe email is the big exception and walled gardens always somehow “win”...


It will be interesting to see how Matrix evolves as next generation federated chat.


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).


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


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.


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


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


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

Check it out https://github.com/jpmorganchase/quorum


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


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.


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

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.


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.


This tweet from CRW: 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.


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.


That guy is CSW. I am CRW. I swear he uses my email address to sign up for golf clubs.


> paymentsd

Is this a hipster daemon written in Go? :)


this is actually systemd-paymentsd

[0] man systemd-paymentsd


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?


The difference between a type of invention and a specific implementation is huge. This coin is all about JPMorgan, as a central institution backing and controlling it, being what establishes trust. This is a distributed database, not distributed trust and consensus.


Well, then perhaps they have misunderstood their own needs. If they want to be "the" central party, why can't they just do this with a simple database, rather than issuing coins and whatnot?


This is my biggest issue with typical proposals for a blockchain. If the proposal requires trusting a central authority, it's just a ledger, and might as well be a database. Less complicated, faster, albeit not as cool on your resume.


Yeah, just looked up Umar Farooq, the guy heading this. He's ex-McKinsey... Says it all really.


Because they have been doing that for decades. The issue is that the tech used is relatively slow, antiquated, and expensive. Additionally, the transactions that the coins would be used for are complex and fit nicely with the ledger model of blockchain tech. As pointed out in the article, they are going to initially use their coin on a trial basis to compare it to business-as-usual.


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

Lots of trading happens around banks being asked by customers to provide exposure to stupid things. If your ambition is to be a big bank to everyone, you’ll have to learn to accommodate such requests. Being able to say “I’ll help you do this, but I don’t recommend it” is part of the trade.


> 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.


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.


You're not wrong. Looks like they're just trying to hop on the buzzword bandwagon...



Wow, he's very blasé about the whole topic... Yet his prior opinion was so strong.


I think it was JP Morgan himself who said this (paraphrasing):

"There are two reasons for any action: the reason that sounds good and the real reason."


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)


"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.


> 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.


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.wsj.com/articles/the-cost-cutting-potential-of-b...

https://www.businessinsider.com/heres-how-banks-can-save-big...

https://www.globalcustodian.com/settlements-costs-fall-27-bi...

https://www.ft.com/content/b6171016-171f-11e8-9e9c-25c814761...


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.




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