JPMorgan Chase has created a platform based on blockchain technology enabling to ‘tokenize’ gold bars. The key factor of such move is to enable miners to get premium from the international bullion market. This meant that fresh trading opportunities could be created with the help of the distributed ledger technology (DLT) in the upcoming years.
Originally, the DLT was employed to develop bitcoin, and now it is being looked at by different financial institutions with various options. However, they have refrained from using the technology to move money across the border. On the other hand, the banks are trying to use it for other purposes like establishing ‘crypto’ assets, though not for currencies, and improve the efficiency level of information besides managing liquidity at global levels.
JPMorgan has developed enterprise type Quorum-based on the Ethereum DLT thus enabling the smart contracts operation. Alternatively, there is a computer program automating the processes subject to a set of rules. According to Umar Farooq, the company’s head for blockchain initiatives,
“We are the only financial player that owns the entire stack from the application to the protocol.”
He also said that the company believes in Ethereum.
The American firm indicated that Ethereum is a decentralized DLT relative to enterprises systems although Quorum is adapted for financial services customers only. The newly developed initiative will offer not only high-grade privacy but also performance. The tokenizing of assets effectively meant digitizing them enabling to move on DLT. Significantly, this was a key topic during Sydney’s Sibos conference last week.
The key factor is that there is no need for any intermediary for trading between parties concerned. This would mean there is no role for either exchange or a broker. The latest initiative will cut risks and costs and finally see the scope for merging specific securities of isolated markets. Farooq indicated that commodities tokenization could offer fresh opportunities and that people outside the company are using its Quorum to tokenize gold. This suggests that a stage is set for tokenizing the real estate or art sector.
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