JPMorgan clients are using the bank’s Ethereum-based blockchain platform Quorum to tokenise real-world assets such as gold.
The head of the US banking giant’s blockchain initiatives, Umar Farooq, says the idea behind tokenising the precious metal was to encode and track gold bars along each step of the supply chain to ensure the provenance and purity.
“They wrap a gold bar into a tamper-proof case electronically tagged, and they can track the gold bar from the mine to endpoint,” Farooq says. “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.”
Quorum has many more uses
Farooq states Quorum is not limited to being pegged to precious metals. He adds that groups who for now asked to remain in anonymity are considering using the blockchain platform in use cases in secondary and capital markets issuances.
“The entire value chain is going to head in that direction,” he comments.
Farooq also spoke of the difficulties that may surface years down the road as public blockchain platforms like Bitcoin and Ethereum continue to evolve alongside private blockchains like Quorum.
“We are all building private networks, but there is a long-term thought process of what happens when you get to a point where you need to do private-public convergence, a connection,” Farooq says. “At that point, if you are in some ways a derivative of a public platform, it could become easier.”