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Why JP Morgan’s Blockchain Patent Application Is Not That Surprising

JP Morgan as soon as once more led to a little of an upheaval inside cryptocurrency circles closing week – this time with the e-newsletter in their peer-to-peer (P2P) bills community patent software according to allotted ledger generation, like blockchain.

Some crypto fans branded the transfer as “hypocrisy to the extraordinary.” The complaint isn’t unfounded however most likely no longer correct. The financial institution, and to a better extent, their outspoken CEO, Jamie Dimon, has been accountable for numerous concern, uncertainty and doubt surrounding Bitcoin and cryptocurrencies as a complete.

“Bitcoin is a fraud”

The Jamie Dimon/JP Morgan saga of 2017 remains to be recent within the minds of crypto fans. It began with Dimon’s now-infamous phrases calling Bitcoin a “fraud” in September 2017. In a while after that, in a reasonably complicated transfer, JP Morgan bought a piece of Bitcoin.

Much more complicated used to be the truth that not up to per week later, Jamie Dimon lashed out in opposition to Bitcoin, pointing out that governments would quickly ban it. In the similar breath, he fired photographs on the trade as a complete, announcing cryptocurrencies are “price not anything”. Lower than a month later he known as Bitcoin buyers “silly”, including that they “can pay the fee for it sooner or later”.

On the other hand, JP Morgan’s methods didn’t at all times appear to line up with the evaluations in their CEO, as in Nov. 2017 the financial institution introduced that they deliberate to business Bitcoin futures at the Chicago Mercantile Trade (CME). In December 2017, a strategist on the financial institution had long past as far as to mention that regulated futures markets give Bitcoin legitimacy.

By way of January 2018, Jamie Dimon himself had carried out an entire 180 on his “Bitcoin-is-a-fraud” feedback and mentioned he regretted making it. All this took place inside the area of 4 months and cemented JP Morgan’s perceived recognition – and Dimon’s private recognition – as without equal Bitcoin and cryptocurrency “villain”. 

Grievance used to be by no means categorized in opposition to blockchain

Whilst their skepticism surrounding Bitcoin and cryptocurrencies is apparent, JP Morgan, and Jamie Dimon, by no means expressed any animosity in opposition to blockchain’s legitimacy. Actually, JP Morgan is without doubt one of the underlying generation’s earliest supporters and testers.

Way back to 1999, the financial institution filed a patent for an alternate bills community. In 2016 they unveiled Juno and Quorum, two separate blockchain-based tasks. JP Morgan could also be one among over 300 participants that make up the Undertaking Ethereum Alliance (EEA).

The financial institution has a powerful file of toughen for blockchain itself and their newest patent software will have to come as no marvel. Actually, the financial institution first filed the patent – which objectives to facilitate interbank bills the usage of blockchain generation on October 30, 2017, an insignificant two weeks after Jamie Dimon categorized Bitcoin buyers silly.

The marvel may come later

The plain marvel or hypocrisy stems from the truth that Bitcoin, blockchain and cryptocurrency are nonetheless getting used as interchangeable ideas in mainstream media. This isn’t correct, simply as JP Morgan’s submitting for a patent according to allotted ledger generation does no longer imply they’re now staunch Bitcoin supporters.

On the other hand, the marvel may come later. Blockchain has moved on from simply being the generation that underpins Bitcoin and has doable use circumstances as opposed to simply as a foundation for cryptocurrency networks, together with the monitoring of vaccines in healthcare, protected far off vote casting all over elections, incorruptible and correct file preserving of reliable govt paperwork, to call a couple of.

Pronouncing that, JP Morgan is particularly making use of for a patent on a “approach for processing community bills the usage of a allotted ledger”. This begs the query; are you able to have a P2P bills community according to blockchain with out using a virtual token in some form or shape to procedure such bills?

Some neighborhood participants don’t consider that you’ll be able to, even arguing that the financial institution can be in direct festival with Ripple’s cross-border switch platform:

“It is not the contest section this is off… it is the truth that they’re describing the precise factor Ripple is lately pushing into the marketplace. There’s no manner this patent is going via, and if it does, prior artwork will offer protection to Ripple as they have got this operating already. It is (as somebody else mentioned) like submitting a patent for an electrical car lately.”

How does Ripple paintings?

Ripple connects banks around the globe and permits them to provide real-time cross-border cost products and services to consumers. Go-border bills within the conventional sense require various middleman corporations to execute because of this transactions can take as much as 4 days to finish.

Ripple permits banks to sidestep those intermediaries with their transaction protocol, enabling them to execute transactions immediately, and in doing so, slicing down prices and processing instances. The transaction protocol features a five-step technique of cost initiation, pre-transaction validation, cryptographic dangle of finances, agreement and affirmation.


Messaging programs are used to coordinate knowledge trade between the originating and beneficiary banks and an interledger protocol (ILP) ledger is used to coordinate the real motion of finances. The objective is to hurry up processing instances, build up end-to-end visibility, build up transaction approval charges and in the end decrease transaction prices.

What are the similarities with JP Morgan’s proposed blockchain cost community?

The patent software describes a technique of “Techniques and strategies for the applying of allotted ledgers for community bills as monetary trade agreement and reconciliation.”

It is going on to say, “In a single embodiment, a technique for processing community bills the usage of a allotted ledger might come with:

  1. a cost originator starting up a cost instruction to a cost beneficiary;
  2. a cost originator financial institution posting and committing the cost instruction to a allotted ledger on a P2P community;
  3. the cost beneficiary financial institution posting and committing the cost instruction to the allotted ledger on a P2P community; and
  4. the cost originator financial institution validating and processing the cost via a cost originator financial institution inside machine and debiting an originator account.”


JP Morgan’s proposed machine due to this fact depicts a cost protocol with direct verbal exchange or messaging between beneficiary and originator banks, used along with a reconciliatory allotted ledger blockchain.

In essence, this can be a very equivalent machine and procedure to that utilized by Ripple, mainly describing an interbank messaging and reconciliation protocol according to allotted ledger generation as a way to get rid of pricey intermediaries, accelerate transaction time and prolong the worldwide remittance succeed in.

It might additionally appear then, that if JP Morgan is certainly making plans to expand the machine described within the patent, they’ll must put in force it with a cryptocurrency at its core, the very factor they have got been looking to discredit for the previous couple of months.

Without equal query then turns into if it is conceivable to be a powerful supporter of blockchain on one hand, however an similarly sturdy opponent of the validity and legitimacy of cryptocurrencies at the different.

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