It appears that the anticipation buildup of the potential usefulness of blockchain technologies in business applications has finally arrived. For the first time this week, JPMorgan Chase’s digital currency JPM Coin is being used in a commercial setting to send payments around the globe by a large technology client.
This latest development has been the final push behind JPMorgan’s latest business creation called Onyx, to house the digital currency. The new unit already has over 100 full-time staff, and will be the first breakthrough in the commercialization of blockchain technologies. Thus far, much of the hype behind digital currencies has been in the research and development stage, which nonetheless has still attracted billions of dollars in investments. However, JPMorgan’s latest application will pave the way for tangible results, and likely boost the mainstream adoption of cryptocurrencies.
According to global head of wholesale payments Takis Georgakopoulos, who in a telephone interview with CNBC noted that the commercial adoption of JPM Coin will reduce a lot of issues associated with wholesale payments, and lead to hundreds of millions of dollars in savings. Cross-border payments for example, are heavily reliant on an intricate web of correspondent banks, which sometimes can create costly errors in account information. However, if those errors can be eliminated via ensuring that all account information is correct before the payment is sent, then such expensive rejections could be prevented.
Another benefit of utilizing digital currency in the banking system is reducing the time-consuming and costly task of processing paper checks. Normally, armies of employees are needed to sort through mail at physical locations, which can add days onto the transaction. But, if the information associated with checks can be digitized via blockchain, then up to 75% of savings can be accumulated, while making checks available within minutes as opposed to days.
Moreover, the latest utilization of JPM Coin in a commercial setting also paves the way for the exploration of payment rails for central banks. Recently, several central banks have expressed interest in starting their own digital currencies, including the Federal Reserve. In fact, the People’s Bank of China is currently running a digital currency pilot project, which has already processed 3.13 million transactions since its launch. Nonetheless, the popularity of digital currencies such as Bitcoin have been steadily increasing, and as more business settings for their commercial utilization are launched, the banking system as we know it could change radically.
Information for this briefing was found via CNBC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.