Odaily Frontline｜JP Morgan Chase Blockchain History: From Juno to JPM Coin
This article comes fromCointelegraph, original author: Stuart Popejoy, Will Martino
Odaily Translator |
Odaily Translator |
While JPMorgan Chase CEO Jamie Dimon once expressed skepticism about cryptocurrencies, JPMorgan Chase was actually one of the first financial institutions to “learn to love blockchain.” In 2015, JPMorgan created a division dedicated to exploring emerging technologies such as blockchain.
We worked to adapt existing public blockchains for enterprise use and learned from these challenges, including what it takes to successfully guide financial institutions toward decentralized technologies. We also found that the right place to move blockchain forward wasn't from within the bank because we couldn't make the decisions needed to really drive innovation. So we left the JPMorgan team in 2016 to form Kadena, a hybrid blockchain platform company, and apply our knowledge to realize the promise of blockchain.
Juno：JPM Coin v.0
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JPMorgan Chase had no intention of building a blockchain at all. The company's brand revolves around finance and banking, not software and technology. At the same time, JPMorgan Chase also knows the importance of adopting valuable financial technology and making strategic investments in future innovations. We launched JPMorgan's New Products division in 2015 to evaluate and advise on potential technology vendors, from cloud to big data solutions.
Within six months, blockchain quickly became our main focus. Using our experience as programmers and technologists, we evaluated everything in the market at the time, including Ethereum, Digital Asset, Ripple, and Hyperledger. It was clear that the blockchain options on the market at the time were not technically suitable for real-world enterprise use cases.
Based on our assessment, we decided to build our own blockchain within JP Morgan. We wanted to show JPMorgan that this technology could work, if only someone could get it right. Our project Juno started as a demo. We built it on Byzantine Fault Tolerance (or BFT), a variant of the Raft consensus algorithm known as Tangaroa. Juno is designed to be a viable private blockchain with sufficient transaction processing per second and node support for important enterprise use cases, including true BFT secure consensus.
Juno remains an example of an early private blockchain. It shows us that blockchain can deliver on its promise. Despite all the progress we had made, JPMorgan was not ready to fully support blockchain at the time. At the time, its reluctance to announce Juno and the payments pilot program made us realize that large financial institutions are not the best place to grow a blockchain. It wasn't until after we left (and probably because we left) that JPMorgan realized that it needed to get serious about its technology to retain talent. JPMorgan then turned the fledgling tech group into a Blockchain Center of Excellence.
Quorum
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While we were building Juno, another team in our department was working on a project integrating the Ethereum Virtual Machine (EVM) and sidechains. This project eventually became Quorum, JPMorgan’s current blockchain platform. Built on the code base of Ethereum, Quorum is a permissioned blockchain designed to meet the needs of financial institutions and enterprises.
Quorum's challenges are a by-product of its reliance on the EVM and Solidity, the Ethereum smart contract language, and its insecure design issues are one of the reasons why we decided not to use the EVM to build Kadena's current blockchain stack. Quorum's decision to base it on Ethereum is an ecosystem strategy, not a strategic choice based on security or scalability. Quorum will always be limited by Ethereum's "original sin": the Ethereum founders never had the interest or experience to design a platform ready for real-world business operations.
Perhaps what puts Quorum at greatest risk is that the technology is managed by a major bank, rather than a dedicated technology company. For JPMorgan, Quorum will always be a product, not its core business. In the long run, we expect the bank to take its time and strategically look for a mature blockchain platform for its workflow. However, we should commend JPMorgan for its selfless stewardship of Quorum. The bank has already demonstrated the potential of blockchain and built something that has been successfully deployed and used by key partners.
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JPMorgan's Stablecoin Now
We consider the Juno payments pilot to be the earliest version of JPM Coin, the stablecoin the bank announced earlier this year. JPM Coin attempts to solve two problems in financial markets: expensive and inefficient settlement processes and the volatility of cryptocurrencies. JPM Coin seeks to solve two problems in financial markets: expensive and inefficient settlement processes, and the volatility of cryptocurrencies. The way JPM Coin achieves its goals is impressive but not remarkable.
To address the volatility of cryptocurrencies, stablecoins can be "pegged" to the value of an asset, redeemable at a fixed price. For example, JPM Coin is a stable currency linked to the US dollar, which can be exchanged for 1 US dollar from a JPMorgan Chase bank account. However, stablecoins also have disadvantages: a stablecoin can only be pegged if there are sufficient assets and reserves behind it. Just as George Soros once brought down the Bank of England, with enough financial firepower it is possible to break the stablecoin peg. Additionally, controversy arises when a stablecoin like Tether may not hold as much reserves as it claims.Odaily Note:Soros sniping the pound
Refers to the event in 1992 when Soros forced Britain to withdraw from the European exchange rate system.
For JPMorgan Chase, sufficient capital reserves are not a problem. Unlike Facebook's Libra stablecoin, which will be pegged to a basket of floating currencies, JPM Coin is pegged to a single sovereign currency. While Facebook’s Libra has raised serious and rightful concerns for its extraterritoriality, JPM Coin is far more innocuous. Ultimately, JPM Coin could serve as a token that you can exchange for money already in your JPMorgan account. Today, however, JPM Coin can be used to track cash for compliance efficiency, without doing much else at the moment.
The existence of JPM Coin has great significance for the blockchain and financial world. In five years, we expect every company to want to build their own version of JPM Coin. JPMorgan Chase has proven that it is leading the way in blockchain implementation.
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Key Takeaways from Participating in the JP Morgan Blockchain Team
One of the biggest takeaways from our careers in fintech and regulators is understanding how the financial system actually works and what is needed to drive blockchain adoption. The hubris of Facebook’s Libra and Silicon Valley’s attempt to “disrupt finance” stems from a lack of systematic knowledge of how the financial system works in the real world and the actual rules and consequences. In order to successfully "disrupt" something, you must have a deep understanding of what is being disrupted. In order to understand what it takes for enterprise blockchain adoption, we must first build a blockchain for one of the largest financial institutions in the world.
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Stuart Popejoy is the co-founder and president of Kadena, and Will Martino is the co-founder and CEO of Kadena. In 2016, Will Martino co-founded the company with Stuart Popejoy to provide entrepreneurs and enterprises with fast, secure and scalable smart contracts. Prior to founding Kadena, Will worked with Stuart at JPMorgan Chase's Blockchain Center of Excellence, where they led the firm's first blockchain, Juno. Stuart also wrote algorithmic trading scripts for JPMorgan, which provided the basis for him to create Pact, Kadena's simple smart contract language with formal verification.
