CRYPTOMARKET

J.P Morgan to tokenize gold

Quorum blockchain is an enterprise-grade DLT solution that uses a permissioned implementation of Ethereum supporting data privacy. It has been developed by J.P Morgan. It is now being deployed in a real-world situation for testing on the 29th October according to Financial Review.

J.P Morgan intends to leverage blockchain technology to tokenize gold bars and allow suitable gold miners to earn premiums on globally-traded markets. If the test is successful the bank intends to apply the concept to other assets. This is a move that could usher in blockchain in the future of trading and asset management.

Umar Farooq, head of blockchain initiatives at J.P. Morgan, stated the company is a “big believer in Ethereum,” adding the firm is pioneering ownership of the entire trading mechanism, “from the application to the protocol.”

By using Quorum parties can trade directly without the need of a central exchange or other intermediaries. It will help lower costs and the risks associated with dealing with third-parties.

Farooq believes tokenization of commodities can create new opportunities for global trading markets:

“They can track the gold bar from the mine to endpoint – with the use case being, if you know it’s a socially responsible mine, someone will be willing to pay a higher spread on that gold versus if you don’t know where it comes from. Diamonds is another example.”

If successful, Quorum could be turned into an independent business held by J.P Morgan with use cases in secondary markets, capital markets and for custodian services.

J.P Morgan does not intend to make its blockchain public and will instead keep the Quorum data available only to qualified and authorised participants.

Farooq has stated that the nascency of the market creates disbelief of public networks being the right direction for financial institutions, he concludes “you never know what is going to happen in five years.”

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