[Bit]coin flipping: Blockchain-Ethereum mix goes over big with mega-bank JP Morgan
Mixing Batter or dough image via Shutterstock
Who said one cannot mix blockchain with Ethereum? Mega-bank JP Morgan is developing a blockchain onto Ethereum which would enable it to make use of a publicly available system for private transactions. In short, Quorum is trying to bring together two imperfect concepts and solve the problems that prevent them from truly going mainstream.
J.P. Morgan Chase may have found a way to solve blockchain’s transparency issues and make both regulators and other parties happy; the former will be able to see everything while the latter will still have the chance to shield the details of their transactions from curious eyes. Quorum (the system) was first introduced during a meeting of the Hyperledger technical steering committee in late September.
Amber Baldet, blockchain lead for the Wall Street bank told Fortune they are working with Ethereum because banks are already familiar with it. This is a great pat on Ethereum’s back, especially after a recent hacking incident — a code exploit was used to rob the DAO of over $60 million worth of Ether (the cryptocurrency behind Ethereum).
The benefits of a Blockchain-Ethereum cocktail
One of the benefits of Quorum is that the nodes which run the system need to receive permission to join, which could prevent unauthorized operators from entering the system. However, requiring permission automatically eliminates one huge benefit of blockchain — to enable parties to interact freely. Although there will be a two-way communication, it will highly depend on the higher authority that grants permission.
David Voell, engineering lead for the bank’s corporate and investment banking group explained during the Hyperledger presentation that the technology hides the (entire) content of the private transaction data by showing a scrambled version. This way, the private and public data coexist on the blockchain but are analyzed separately.
The slideshow is available online.
Moving forward with blockchain
U.S. Federal Reserve governor Lael Brainard said in a speech about six months ago that even though she was “optimistic” about new technologies such as blockchain, they “must be robust in practice, not just in theory, to attacks on security, and must be able to maintain appropriate confidentiality for records and data.”
Indeed, there is some potential that the new technologies could enable improved authorized access to certain data records in a much more efficient and comprehensive manner than has previously been possible, thereby potentially reducing costs associated with complying with the Bank Secrecy Act.
Governor Brainard emphasized that the U.S. Federal Reserve must “give promising technologies the serious consideration they merit, seek to understand their opportunities and risks, and actively engage in dialogue about their potential uses and evolution.”