>The coin will be issued on the Quorum blockchain which was developed by JP Morgan over the last year and is a private blockchain inspired by Ethereum. This means only selected miners will be able to process transactions, unlike public cryptocurrencies where anyone can.
[...]
>The purpose of the JPM Coin is to allow businesses to make near-instantaneous transactions of value across the internet without having to move fiat money in the background.
I genuinely don't understand what the blockchain does here that couldn't be implemented by any random database system. I mean the euros that I have in my bank account are also just a number that could be moved "across the internet" instantly if they so desired.
The big innovation with Bitcoin-like blockchains is that transactions can be done trustlessly but the whole "private blockchain with accredited miners" turns it into basically a slow inefficient database with extra steps.
Is it just a buzzword to generate interest or is there an aspect of this I'm missing?
I think it may be that the decentralized control structure makes organizations who would normally be in competition with JPMorgan more willing to be on board with using something that they developed. For instance, if you are say, Goldman Sachs, would you want to use a private database at JPMorgan for you and your clients funds? Or would you prefer to use a semi-private blockchain, where although it's not open to the public, each participant in the network has equal stature to one another? I think that is the true innovation here, and I do think that it is important. It solves some of the corporate cooperation issues that prevent certain types of value from being created, because nobody wants to let their competitor control the space.
It's the other way around, actually. Having small set of authorities that reach consensus via raft/pbft in case of quorum means that ethereum blockchain can be much faster. You still have full transparency of what's happening, you have access to the chain, you can read it, validate it, etc. They just run minting of blocks for you. It's true that if they don't like you, they can refuse to include transactions from you for example - that's the main cons from public consensus like PoW. But they are not worried about it, of course and other participants are usually not worried as well because they know that whoever controls minting nodes have strong incentives to run it fair (otherwise participants would not give a shit to join it). This is different from public chains where those rules don't exist. In big corps integration and security is a massive problem. Blockchain reduces those two problems by orders of magnitude. If you wanted to "implement it by any random database system" - you'd end up with something like ethereum. You can't just spawn your public postgres and publish public api to create new users, can you? Quorum has also some other extensions to ethereum related to privacy (private contracts, anonymity etc) that are attractive to corporations. It's nice to see them open sourcing quorum and publishing something real-world based on it.
Yea, it definitely has limited immediate value compared to a database as long as it is on a closed network. However it does allow them to experiment with the technology in a controlled fashion. They could have done so quietly but, you know, marketing.
I think there is still value in Blockchain networks like Stellar[1] that are not fully decentralized, but are federated and diverse. If this is a first step towards them issuing a stable coin on a network like that then I welcome it.
You are correct that these sort of "private" and "federated" blockchains completely miss the point of Bitcoin (some intentionally, some not). The features they provide were possible before Bitcoin was invented, but no one really cared about finding uses for them until the blockchain hype train rolled through town.
That doesn't mean they're completely useless though. If Bitcoin eventually inspires some real innovation in fintech, then great.
> I genuinely don't understand what the blockchain does here that couldn't be implemented by any random database system.
A blockchain is...well... a database system itself!
There are many different types of database systems, eg. Relational, Graph, Object orientated, document (eg elastic search) and so on.
Generally you want to pick one that fits your problem area well, so picking a random database system would not be a good idea.
One of the most important data structures they need is a tree for the Merkle proofs to confirm that the data hasn't been tampered and contract execution happened correctly. Tree structures are notoriously difficult to implement in a relational db for example.
(BTW, I'm also skeptical of the hype around 'blockchain' just as before when the 'noSQL' hype came around. You will surely have some devs pick the blockchain as their database system for the wrong reasons, just like back in the day when you had devs pick noSQL because it was cool.)
One thing it could do would be to let each participent in a transaction verify the transaction itself... which I suppose is a nice feature, maybe everything goes into "escrow" and then is released when everyone ( the participtors in the transaction who can mine? ) can agree on the result.
> make near-instantaneous transactions of value across the internet
the definition of what wire transfer does? And why not doing it in "fiat money" (it's an additional level of hilarity for a major bank to use this term, for those who understands) has any value?
The value of blockchain transfers is lack of intermediaries and gatekeepers - which advantage the private chain owned by JP Morgan takes away. This is like advertising "we sell gold coins, only instead of hassle of owning heavy metal pieces, we provide you with little pieces of green paper that could be exchanges for gold coins at any gold dealer" - totally missing the point of the whole exercise.
I don't know much about this area, but I could imagine that even if the mining is selective, the transfers might not be. It could remove some overhead that large banks have to do in verifying transactions and preventing duplicates, etc.
It's absolutely just a buzzword. A blockchain is just a data structure which is useful in Nakamoto Consensus, which is only for censorship resistance.
Everything a cryptocurrency can do be done much more efficiently, faster, cheaper, safer, better UX, etc, except for censorship resistance. If you don't want your coin/token to be censorship resistant then you can have a system that's a million times better by just building a web app that uses regular cryptography.
The blockchain signs each dollar. You could have done this instead by making each dollar a PGP signature and allowing trusted parties to decrypt the signature and claim the dollar.
Honestly though, if the chain isn’t public, JPMC can update the code behind-the-scenes so there’s not as much trust as there would be on a public network.
It's pretty well known that these BigCorp crypto/blockchain plays are just smoke and mirrors. There is no actual differential value gained here (unless as @dwiel says,they get some sort of loophole crypto tax break). It's a bit saddening to see that the tech has been picked up by the exact institution(s) that the tech was meant to combat. But if anything that just proves that there's meaning behind the concept (regardless of a f'ing coin price).
I look forward to the day where the JPM's and the like are put out of business for this sort of thing due superior, user-friendly technology.
> I look forward to the day where the JPM's and the like are put out of business for this sort of thing due superior, user-friendly technology
That seems like a good thing for cryptocurrency fans to start working on. Part of that would be looking at the big problems which have prevented it so far, which aren’t really technical as much as philosophical: practical reasons to switch (which is to say being competitive on pricing), barriers to adoption (i.e. until most people you know use a system its benefits are mostly hypothetical), and not having a fraud story other than “we’ll say you should have had better opsec”.
I’m going to try to distill this down to it’s easiest form.
- JPMC will now create a digital signature (token) for every dollar that enters its network.
- Those digital signatures can be exchanged by any trusted authority
- JPMC will exchange a single dollar to those trusted authorities for a single digital signature
Using the blockchain allows JPMC to trust each dollar that goes through both their network and partner networks as they cryptographically trust that forgery is almost impossible. They also can trust that when a “wire” comes in that the funds are actually available.
This is purely an accounting system backed by cryptography that allows much more trust.
I wanted to reply to my above comment to clarify because people are somehow thinking that just because I wanted to take the time to explain what this is that I support it.
I probably don’t. This is an internal accounting system used by JPMC and potentially other banks. I don’t give a crap about what they use for accounting unless it works well and provides consumer benefits. I don’t care if it’s MySQL and PGP or a person with punch cards.
Whether or not I support this depends on if JPMC:
1. Gets adoption so this works with a bunch of banks and people and businesses can send me or I can send them money
2. Results in a reduction in settlement times versus ACH and wire
3. Comes at a lower cost to the consumer than wire or ACH
4. Comes with the same guarantees
I’m pretty skeptical as services like Zelle and Venmo provide way less guarantees than wire and ACH
After the initial selection by JP Morgan new members would (presumably) be added by a consensus of the existing members. That would remove JPM as the sole gatekeeper.
I was thinking this too; a large part of the original bitcoin paper is complaining about how centralized authorities like banks are problematic. I don't really see how adding another central authority makes any sense.
Yup. Most importantly, only JPM controls it's issuance, which means it's no different than a fiat currency or a gift card. One of the things Bitcoin proponents enjoy is the idea that it's a supply that cannot be printed frivolously.
I predict this will be abandoned (or the blockchain figleaf dropped in favor of an explicitly centralized and far simpler/cheaper store) in 2, maybe 3 years.
Or about as long as it takes for the fundamentally unsolvable problems of decentralized governance to become pathological to group integrity. If you are a junior stakeholder in this nominally decentralized system you eventually have to accept that you have no influence over the direction of the protocol's development, or get together with a group of similarly disadvantaged peers and fork your own implementation where your relative influence is more comparable.
Until that consortium, too, falls apart due to leverage-seeking behavior by individuals within it, or ossifies into a de facto centralized network, but one saddled with a bunch of expensive and now superfluous blockchain game-theory casino infrastructure.
Those are strong words, "fundamentally unsolvable problems of decentralized governance".
I'm not dis/agreeing with your scenario: I also think it's quite likely that this JPMorgan crypto would ossify into a de facto centralized network.
But the phrase "fundamentally unsolvable" feels like it needs some harder proof or logical explanation. There are many instances of (and variations on) "decentralized governance", like open-source projects, technical or social organizations, etc. Would you say all those attempts are doomed to failure? (Or maybe that they could continue to operate despite being potentially unstable/flawed based on fundamentally unsolvable problems. Or perhaps that they all tend to become centralized.)
Thinking of attempts at decentralized governance in a larger sense (including but beyond specific applications in the crypto sphere), it does seem that most of them are failing due to some inherent structural issues. I wonder whether it can be demonstrated that all such decentralized governance systems are fundamentally flawed (similar to Gödel's incompleteness theorem..?).
Ignoring the lack of positives, can JP Morgan reverse erroneous transactions on this? This is an important part of the financial system. Are they just going to hard fork all the time? Send the money back?
Can someone provide a before and after example on how this technology saves money, reduces transaction failure risk or time taken for transaction to occur (either or all of these)?
- that’s risky so someone has to verify that you actually have $100,000
After:
- each of your dollars are digitally signed using cryptography
- to transfer them, you share the hashes
- the recipient validates the digital signatures to verify those $100,000 in tokens are legit
It’s all about a system of accounting to reduce risk. With less risk, transfers are faster. Think of it like an api to verify account balances that can only be hacked if the SSL cert for the API is hacked by figuring out the private key
Another point I want to make that I think a lot of people on HN miss is that you cannot do this with a database alone.
This is the equivalent of a token table where the token is a cryptographic hash. However, it’s the cryptography that you are trusting, not the database.
The simple analogy is that you are using PGP to sign a message where the contents are a dollar. Only the person who can decrypt that message gets the dollar so you only give the hash to the person you want to have the dollar.
If there are actually dollars involved, this is a real thing.
That's not true, you are definitely trusting the database: In order to spend money, you need the cryptography to work but you ALSO need the canonical chain/database to record your transaction... you can't just send your signed message to another person to perform a transaction, the central entity mining the chain needs to still cooperate.
I'm sure the governance and reasoning seem just fine right now but are we to trust being locked in to JP Morgan forever? It's certainly the same way I feel about Google AMP polluting the web.
Seems very buzzword friendly but I really cannot see why transfers (B2B) aren't perfectly trivial and should be instant, free and totally secure and at the tick rate of the market if in a different FX. What is stopping the banks doing this now with just normal encryption?
Money transfers happen like Person -> Bank -> Clearinghouse -> Bank -> Person
They aren't free and instant because people and systems are involved in making them happen. Funds have to be verified, systems to make sure the money is there, fraud monitoring, regulations, mistake handling, etc etc. A lot of stuff goes on in the middle during the transaction and mechanisms need to be in place to prevent crime and fix mistakes.
Blockchains make this process a little better because instead of code setting rules and interacting with APIs, the mathematical characteristics of the blockchain end up doing a lot of the "work" involved and are simply more convenient for everyone.
I'm guessing that eventually central banks (like the Federal Reserve) will issue their own cryptocurrencies for banks to facilitate transfers.
It's not sexy or rebelling against the man, distributed crypto ledgers just have better properties than crusty databases and APIs.
Does this in any way address the issue of coin theft / key loss?
For instance, can I keep these coins on deposit with JPM, grant them access to my keys, conduct all the transactions through JPM's more traditional security infrastructure, and be assured JPM will make me whole if something bad happens I did not authorize, with a transparent and fair arbitration methodology.
Or does this invalidate the whole purpose of crypto-coin?
Since JP Morgan is the one backing the coins with USD, and controlling who mines, they can do whatever they want to fix errors or crime. If something goes wrong they can just mark the "bad" coins as tainted and refuse to exchange them for USD and give you new coins to fix the problem.
Paper money was created because it was more convenient than lugging around precious metals, this is just the same. It has no value on the market by itself, it's just a way for a bank to account for stored value.
The thing that bothers me about this is that banks have a monopoly on this type of business. Outside of being a bank you need to register as a money service business which is extremely cumbersome.
I'm not sure why they would use the USD as the backing for such a thing over say Gold/Silver, etc. Say 1oz gold at X level purity for every coin. Bringing back the Fort Knox currency backing would imho be much stronger than any fiat currency.
A lot of people are missing the point and arguing past each other here.
Bitcoin and the like couple two distinct things:
1. A distributed ledger of transactions with no single point of failure that can cryptographically prove possession of the currency itself.
2. An anarchic monetary system that serves the needs of illicit commerce and inspires the imaginations of libertarians and erstwhile goldbugs.
JPM has decoupled these two aspects. And I think it’s an interesting move. Most people either love or hate cryptocurrency because of the second aspect, but the first may very well still be a good technical solution to the problem of electronically shifting money around—even if you’re just shifting around USD.
[+] [-] simias|7 years ago|reply
[...]
>The purpose of the JPM Coin is to allow businesses to make near-instantaneous transactions of value across the internet without having to move fiat money in the background.
I genuinely don't understand what the blockchain does here that couldn't be implemented by any random database system. I mean the euros that I have in my bank account are also just a number that could be moved "across the internet" instantly if they so desired.
The big innovation with Bitcoin-like blockchains is that transactions can be done trustlessly but the whole "private blockchain with accredited miners" turns it into basically a slow inefficient database with extra steps.
Is it just a buzzword to generate interest or is there an aspect of this I'm missing?
[+] [-] darawk|7 years ago|reply
[+] [-] pjc50|7 years ago|reply
It says "blockchain" on it, so it can be sold to some uniquely gullible investors?
[+] [-] mirekrusin|7 years ago|reply
[+] [-] dwiel|7 years ago|reply
[+] [-] talawahdotnet|7 years ago|reply
I think there is still value in Blockchain networks like Stellar[1] that are not fully decentralized, but are federated and diverse. If this is a first step towards them issuing a stable coin on a network like that then I welcome it.
1. https://www.stellar.org
[+] [-] tlrobinson|7 years ago|reply
That doesn't mean they're completely useless though. If Bitcoin eventually inspires some real innovation in fintech, then great.
[+] [-] bouncycastle|7 years ago|reply
A blockchain is...well... a database system itself!
There are many different types of database systems, eg. Relational, Graph, Object orientated, document (eg elastic search) and so on.
Generally you want to pick one that fits your problem area well, so picking a random database system would not be a good idea.
One of the most important data structures they need is a tree for the Merkle proofs to confirm that the data hasn't been tampered and contract execution happened correctly. Tree structures are notoriously difficult to implement in a relational db for example.
(BTW, I'm also skeptical of the hype around 'blockchain' just as before when the 'noSQL' hype came around. You will surely have some devs pick the blockchain as their database system for the wrong reasons, just like back in the day when you had devs pick noSQL because it was cool.)
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] ConcernedCoder|7 years ago|reply
[+] [-] smsm42|7 years ago|reply
> make near-instantaneous transactions of value across the internet
the definition of what wire transfer does? And why not doing it in "fiat money" (it's an additional level of hilarity for a major bank to use this term, for those who understands) has any value?
The value of blockchain transfers is lack of intermediaries and gatekeepers - which advantage the private chain owned by JP Morgan takes away. This is like advertising "we sell gold coins, only instead of hassle of owning heavy metal pieces, we provide you with little pieces of green paper that could be exchanges for gold coins at any gold dealer" - totally missing the point of the whole exercise.
[+] [-] _bxg1|7 years ago|reply
[+] [-] tylersmith|7 years ago|reply
Everything a cryptocurrency can do be done much more efficiently, faster, cheaper, safer, better UX, etc, except for censorship resistance. If you don't want your coin/token to be censorship resistant then you can have a system that's a million times better by just building a web app that uses regular cryptography.
[+] [-] dkoston|7 years ago|reply
Honestly though, if the chain isn’t public, JPMC can update the code behind-the-scenes so there’s not as much trust as there would be on a public network.
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] deevolution|7 years ago|reply
[+] [-] rayvy|7 years ago|reply
I look forward to the day where the JPM's and the like are put out of business for this sort of thing due superior, user-friendly technology.
[+] [-] acdha|7 years ago|reply
That seems like a good thing for cryptocurrency fans to start working on. Part of that would be looking at the big problems which have prevented it so far, which aren’t really technical as much as philosophical: practical reasons to switch (which is to say being competitive on pricing), barriers to adoption (i.e. until most people you know use a system its benefits are mostly hypothetical), and not having a fraud story other than “we’ll say you should have had better opsec”.
[+] [-] verdverm|7 years ago|reply
[+] [-] dkoston|7 years ago|reply
- JPMC will now create a digital signature (token) for every dollar that enters its network.
- Those digital signatures can be exchanged by any trusted authority
- JPMC will exchange a single dollar to those trusted authorities for a single digital signature
Using the blockchain allows JPMC to trust each dollar that goes through both their network and partner networks as they cryptographically trust that forgery is almost impossible. They also can trust that when a “wire” comes in that the funds are actually available.
This is purely an accounting system backed by cryptography that allows much more trust.
[+] [-] dkoston|7 years ago|reply
I probably don’t. This is an internal accounting system used by JPMC and potentially other banks. I don’t give a crap about what they use for accounting unless it works well and provides consumer benefits. I don’t care if it’s MySQL and PGP or a person with punch cards.
Whether or not I support this depends on if JPMC:
1. Gets adoption so this works with a bunch of banks and people and businesses can send me or I can send them money
2. Results in a reduction in settlement times versus ACH and wire
3. Comes at a lower cost to the consumer than wire or ACH
4. Comes with the same guarantees
I’m pretty skeptical as services like Zelle and Venmo provide way less guarantees than wire and ACH
[+] [-] tylersmith|7 years ago|reply
[+] [-] root_axis|7 years ago|reply
[+] [-] treis|7 years ago|reply
[+] [-] tombert|7 years ago|reply
[+] [-] ddtaylor|7 years ago|reply
[+] [-] creeble|7 years ago|reply
The point of a blockchain is trust. If it is controlled by a single party, its sole value collapses.
Except marketing value.
[+] [-] SI_Rob|7 years ago|reply
Or about as long as it takes for the fundamentally unsolvable problems of decentralized governance to become pathological to group integrity. If you are a junior stakeholder in this nominally decentralized system you eventually have to accept that you have no influence over the direction of the protocol's development, or get together with a group of similarly disadvantaged peers and fork your own implementation where your relative influence is more comparable.
Until that consortium, too, falls apart due to leverage-seeking behavior by individuals within it, or ossifies into a de facto centralized network, but one saddled with a bunch of expensive and now superfluous blockchain game-theory casino infrastructure.
[+] [-] lioeters|7 years ago|reply
I'm not dis/agreeing with your scenario: I also think it's quite likely that this JPMorgan crypto would ossify into a de facto centralized network.
But the phrase "fundamentally unsolvable" feels like it needs some harder proof or logical explanation. There are many instances of (and variations on) "decentralized governance", like open-source projects, technical or social organizations, etc. Would you say all those attempts are doomed to failure? (Or maybe that they could continue to operate despite being potentially unstable/flawed based on fundamentally unsolvable problems. Or perhaps that they all tend to become centralized.)
Thinking of attempts at decentralized governance in a larger sense (including but beyond specific applications in the crypto sphere), it does seem that most of them are failing due to some inherent structural issues. I wonder whether it can be demonstrated that all such decentralized governance systems are fundamentally flawed (similar to Gödel's incompleteness theorem..?).
[+] [-] b_tterc_p|7 years ago|reply
[+] [-] 75dvtwin|7 years ago|reply
The coin value itself is linked with almost no flux to USD.
But then, I do not see how it is different than
https://www.bitrail.io/ (and its new freedom coin: https://freedomcoin.cc/#more )
or
tether with 2bln market cap https://coinmarketcap.com/currencies/tether/
what makes JP's offer more useful to B2B transactions than the above two examples ?
[+] [-] Hongwei|7 years ago|reply
https://www.bloomberg.com/news/articles/2017-09-12/jpmorgan-...
[+] [-] 52-6F-62|7 years ago|reply
Granted, I think his criticisms are more specific than being about the technology in general.
I think he was more critical of it being penned as some replacement for existing currencies and monetary systems, and the whole use as an investment.
But don't quote me there.
[+] [-] syn0byte|7 years ago|reply
[+] [-] WrtCdEvrydy|7 years ago|reply
[+] [-] monkeydust|7 years ago|reply
[+] [-] dkoston|7 years ago|reply
- you want to transfer $100,000 to another bank
- you do a wire or ACH
- that’s risky so someone has to verify that you actually have $100,000
After:
- each of your dollars are digitally signed using cryptography
- to transfer them, you share the hashes
- the recipient validates the digital signatures to verify those $100,000 in tokens are legit
It’s all about a system of accounting to reduce risk. With less risk, transfers are faster. Think of it like an api to verify account balances that can only be hacked if the SSL cert for the API is hacked by figuring out the private key
[+] [-] ErikAugust|7 years ago|reply
[+] [-] dkoston|7 years ago|reply
This is the equivalent of a token table where the token is a cryptographic hash. However, it’s the cryptography that you are trusting, not the database.
The simple analogy is that you are using PGP to sign a message where the contents are a dollar. Only the person who can decrypt that message gets the dollar so you only give the hash to the person you want to have the dollar.
If there are actually dollars involved, this is a real thing.
[+] [-] drcode|7 years ago|reply
[+] [-] andy_ppp|7 years ago|reply
Seems very buzzword friendly but I really cannot see why transfers (B2B) aren't perfectly trivial and should be instant, free and totally secure and at the tick rate of the market if in a different FX. What is stopping the banks doing this now with just normal encryption?
[+] [-] colechristensen|7 years ago|reply
They aren't free and instant because people and systems are involved in making them happen. Funds have to be verified, systems to make sure the money is there, fraud monitoring, regulations, mistake handling, etc etc. A lot of stuff goes on in the middle during the transaction and mechanisms need to be in place to prevent crime and fix mistakes.
Blockchains make this process a little better because instead of code setting rules and interacting with APIs, the mathematical characteristics of the blockchain end up doing a lot of the "work" involved and are simply more convenient for everyone.
I'm guessing that eventually central banks (like the Federal Reserve) will issue their own cryptocurrencies for banks to facilitate transfers.
It's not sexy or rebelling against the man, distributed crypto ledgers just have better properties than crusty databases and APIs.
[+] [-] jackfoxy|7 years ago|reply
For instance, can I keep these coins on deposit with JPM, grant them access to my keys, conduct all the transactions through JPM's more traditional security infrastructure, and be assured JPM will make me whole if something bad happens I did not authorize, with a transparent and fair arbitration methodology.
Or does this invalidate the whole purpose of crypto-coin?
[+] [-] colechristensen|7 years ago|reply
Paper money was created because it was more convenient than lugging around precious metals, this is just the same. It has no value on the market by itself, it's just a way for a bank to account for stored value.
[+] [-] inscionent|7 years ago|reply
[+] [-] TACIXAT|7 years ago|reply
[+] [-] httpz|7 years ago|reply
[+] [-] GrumpyNl|7 years ago|reply
[+] [-] tracker1|7 years ago|reply
[+] [-] philwelch|7 years ago|reply
Bitcoin and the like couple two distinct things:
1. A distributed ledger of transactions with no single point of failure that can cryptographically prove possession of the currency itself.
2. An anarchic monetary system that serves the needs of illicit commerce and inspires the imaginations of libertarians and erstwhile goldbugs.
JPM has decoupled these two aspects. And I think it’s an interesting move. Most people either love or hate cryptocurrency because of the second aspect, but the first may very well still be a good technical solution to the problem of electronically shifting money around—even if you’re just shifting around USD.