J.P.Morgan Project Quorum Loves the Public Blockchain

For years, J.P.Morgan’s CEO Jamie Dimon has been one of the most vocal critics of Bitcoin. However, that position doesn’t seem to have prevented him from betting big on the technology underneath Bitcoin: the blockchain. More impressively, J.P.Morgan seems to really like PUBLIC BLOCKCHAINS. This week, J.P.Morgan announced a new project called Quorum that relies on the public Ethereum network to share information relevant to regulators and other entities involved in a trade.

Apparently, J.P.Morgan’s engineers have been working with Ethereum to create a model that allow to restrict access to information stored in the Ethereum blockchain to a number of relevant parties. This approach contrasts with the models followed by other banks which have been increasingly relying on private or consortium blockchains. Just a few days ago (I blogged about it here), a group of banks led by Citi announced that they have been piloting a consortium blockchain architecture for sharing reference data related to trades.

A Vote of Confidence on Ethereum

J.P.Morgan’s Quorum represents a huge vote of confidence on the Ethereum platform. This is the same blockchain network that experienced the DAO hack a few months ago which resulted in losses of about $55 million. By leveraging Ethereum, J.P.Morgan’s Quorum is delivering one of the first mission critical applications in a heavily regulated industry to ever run on a public blockchain.

Private Blockchains vs. Private in Public Blockchains

The key to Project Quorum seems to be a security model developed to J.P.Morgan’s engineers that restricts access to blockchain data to group of relevant parties. Needles to say that Bitcoin-Blockchain purists will find this idea outrageous as it negates some of the fundamental transparency principles of the public blockchain.

Despite the theoretical arguments. the Quorum’s strategy might be the best alternative to the proliferation of private blockchain models. Assuming that information privacy is an issue that needs to be addressed for the mainstream adoption of the blockchain, then the industry needs to decide which model is more acceptable: private blockchains or private sections in public blockchains?

Open Sourcing Quorum

J.P.Morgan seems committed to be a good citizen of the blockchain community and announced that it will open source parts of Quorum’s technology. This step will not only help with the transparency of the project but, if successful, will provide a stepping stone for other companies to use the Quorum technology as part of their projects.

Avoiding Private Blockchain Madness

The fact that I found most interesting in the strategy followed by the Quorum project is that it avoid bringing to market another private blockchain for trade settlements. I personally believe that the consortium blockchain model makes a lot of sense for trade settlements but the “consortium” needs to exist. If every banks comes up with their own blockchain solution for trade settlement without following any standards or interoperability tests, we might end up in a situation not much different that the current state of the market.

Ethereum Continues to be the Best Alternative to the Bitcoin Blockchain

J.P.Morgan’s Quorum is a strong validation for the Ethereum platform that continues achieving milestones to become the best blockchain platform in the market. With all the recent challenges expressed by the Bitcoin blockchain, Ethereum has become the favorite platform for enterprises exploring solutions that rely on public blockchain models.

CEO of IntoTheBlock, Chief Scientist at Invector Labs, I write The Sequence Newsletter, Guest lecturer at Columbia University, Angel Investor, Author, Speaker.

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