Blockchain technology has been much talked about since the market booms of 2017. Apart from Bitcoin’s higher highs, the technology has also been mentioned and applied in several sectors. We have seen it applied in data management, security, finance and even logistics. We haven’t seen it make money in business applications until now. JP Morgan’s JPM Coin will be a first in this regard after it started being used commercially by a large tech company to make cross-border payments.
The positive development led the firm to create a new division that will focus on its Blockchain and digital currency efforts. The new division according to the global head of wholesale payments at the firm; Takis Georgakopoulos will be known as Onyx and will have 100 dedicated staffers.
“We are launching Onyx because we believe we are shifting to a period of commercialization of those technologies, moving from research and development to something that can become a real business.”
JP Morgan to change Blockchain fortunes?
Though the Blockchain has attracted billions of dollars thanks to its usefulness in several industries, little has been seen in the way of tangible results. The move by JP Morgan could act as a signal that it’s still early days and the best is yet to come. Just like firms like Ripple are trying to do, JP Morgan is trying to provide a solution in the area of wholesale payments across long distances.
The difference between JP Morgan and Ripple is that one is still relatively new, while the latter is a traditional heavyweight. With JP Morgan moving more than $6 trillion a day, across more than a hundred countries, it can shape opinion in the industry in a way that most firms can’t.
The mechanics of the project is to have a network of more than 400 financial institutions linked in a way that eliminates the need for cumbersome paperwork. According to newly appointed CEO AT Onyx, Umar Farooq, banks could charge a few cents to confirm data for each transaction which will help save money on remedial mistakes. The initiative will also have a reward system that will incentivize entities who participate. The initiative also seeks to render paper checks obsolete by creating a digital provision for that.
The end of paper checks?
According to Farooq, digital checks will increase the volume of checks being cleared while saving 75 percent of the cost.
“We’re talking about hundreds of millions of checks being sent,” Georgakopoulos said. “Using a version of blockchain with the participants being the main issuers of checks and the main operators of lockboxes, it’s possible we can save 75 percent of the total cost for the industry today, and make checks available in a matter of minutes as opposed to days.”
The top brass at JP Morgan are elated about the project and are confident of a positive outcome overall. According to them, the Blockchain is past its volatile stage and has arrived at a maturing stage where real solutions will start being seen.