JP Morgan Chase is working on a new way to leverage the blockchain technology that supports bitcoin and allow the bank to design a publicly available system to complete confidential transactions.
Instead of creating a completely new private blockchain — as many banks exploring the blockchain have done — JPMC is instead working on ways to limit access to transactions shared via a network to people who need to know the details (those making the trade, for example — or regulators).
Quorum — the in-house name of the project — is constructed via the Ethereum network code and run directly by Chief Executive James Dimon. JPMC plans to share its new code for its system with outside developers, a move designed to hopefully entice top developers looking to build the next generation of blockchain tech.
Ethereum is a publicly available network – and not one without some troubles in is past. A separate app for the network created by venture-capital firm DAO was hacked, leading to the theft of $55 million worth of digital currency.
Ethereum noted at the time that the hack didn’t affect the core network — but the issue created a major rift between those who wanted to undo the hack and others who wanted to maintain blockchains as inherently unchangeable after the fact.
“We have people building the most stress-tested financial systems in the world,” Amber Baldet, program lead for J.P. Morgan on Quorum and other blockchain projects. “Bringing that enterprise expertise [to blockchain] is one of our strengths.”
J.P. Morgan’s main focus with Ethereum now is to solve the central problem banks and blockchains have — building transactions that are private enough for traders, but public enough for regulators.
Skeptics are far from convinced this is possible — or that this would use would even be much of an improvement for banks.
Much of this situation is additionally muddied by the fact that regulators in the U.S. have no clear position to point to on the blockchain other than their firm stance that bitcoin isn’t currency. Many agencies have lauded the blockchain technology’s potential to give them a detailed, real-time view of what is going on in opaque markets while keeping data secure from the wrong parties who might want to access it.
Federal Reserve governor Lael Brainard, for example, has noted that she is “optimistic” about the tech, but added that they “must be robust in practice, not just in theory, to attacks on security, and must be able to maintain appropriate confidentiality for records and data.”