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

JP Morgan as soon as all over again brought about a little bit of an upheaval in just cryptocurrency circles last 7 days – this time with the publication of their peer-to-peer (P2P) payments community patent software centered on distributed ledger know-how, like blockchain.

Some crypto enthusiasts branded the transfer as “hypocrisy to the severe.” The criticism is not unfounded but possibly not accurate. The financial institution, and to a better extent, their outspoken CEO, Jamie Dimon, has been responsible for a good deal of dread, uncertainty and doubt surrounding Bitcoin and cryptocurrencies as a entire.

“Bitcoin is a fraud”

The Jamie Dimon/JP Morgan saga of 2017 is still refreshing in the minds of crypto lovers. It all begun with Dimon’s now-notorious text calling Bitcoin a “fraud” in September 2017. Soon soon after that, in a to some degree puzzling shift, JP Morgan procured a chunk of Bitcoin.

Even far more baffling was the actuality that less than a 7 days afterwards, Jamie Dimon lashed out towards Bitcoin, stating that governments would before long ban it. In the identical breath, he fired pictures at the sector as a full, expressing cryptocurrencies are “worth nothing”. Fewer than a month afterwards he called Bitcoin buyers “stupid”, introducing that they “will pay out the cost for it just one day”.

Nevertheless, JP Morgan’s strategies did not always appear to be to line up with the viewpoints of their CEO, as in Nov. 2017 the lender introduced that they prepared to trade Bitcoin futures on the Chicago Mercantile Exchange (CME). In December 2017, a strategist at the financial institution had gone so considerably as to say that regulated futures marketplaces give Bitcoin legitimacy.

By January 2018, Jamie Dimon himself experienced performed a complete 180 on his “Bitcoin-is-a-fraud” remarks and explained he regretted building it. All this occurred within the place of four months and cemented JP Morgan’s perceived standing – and Dimon’s particular standing – as the ultimate Bitcoin and cryptocurrency “villain”. 

Criticism was never ever labeled against blockchain

Whilst their skepticism encompassing Bitcoin and cryptocurrencies is distinct, JP Morgan, and Jamie Dimon, never expressed any animosity in the direction of blockchain’s legitimacy. In point, JP Morgan is just one of the underlying technology’s earliest supporters and testers.

As far back as 1999, the financial institution submitted a patent for an alternative payments community. In 2016 they unveiled Juno and Quorum, two separate blockchain-centered initiatives. JP Morgan is also 1 of more than 300 associates that make up the Enterprise Ethereum Alliance (EEA).

The lender has a sturdy report of assistance for blockchain by itself and their most recent patent application need to occur as no surprise. In point, the financial institution very first submitted the patent – which aims to aid interbank payments making use of blockchain know-how on Oct 30, 2017, a mere two months immediately after Jamie Dimon labeled Bitcoin traders stupid.

The shock may arrive afterwards

The apparent shock or hypocrisy stems from the fact that Bitcoin, blockchain and cryptocurrency are nevertheless currently being applied as interchangeable concepts in mainstream media. This is not correct, just as JP Morgan’s submitting for a patent based mostly on dispersed ledger technology does not mean they are now staunch Bitcoin supporters.

Having said that, the surprise could possibly arrive afterwards. Blockchain has moved on from just remaining the technology that underpins Bitcoin and has potential use situations other than just as a foundation for cryptocurrency networks, which include the tracking of vaccines in healthcare, protected remote voting for the duration of elections, incorruptible and correct history trying to keep of formal government documents, to title a several.

Saying that, JP Morgan is precisely implementing for a patent on a “method for processing community payments working with a dispersed ledger”. This begs the concern can you have a P2P payments community based on blockchain without having employing a electronic token in some shape or variety to system these types of payments?

Some group users do not believe that you can, even arguing that the lender would be in direct competitiveness with Ripple’s cross-border transfer system:

“It’s not the opposition component that is off… it can be the truth that they are describing the precise factor Ripple is presently pushing into the market place. There is no way this patent goes through, and if it does, prior art will protect Ripple as they have this doing the job now. It can be (as a person else stated) like filing a patent for an electrical auto nowadays.”

How does Ripple function?

Ripple connects banking companies close to the world and allows them to offer you genuine-time cross-border payment providers to customers. Cross-border payments in the common feeling call for a number of intermediary companies to execute which implies transactions can get up to four days to comprehensive.

Ripple permits banks to sidestep these intermediaries with their transaction protocol, enabling them to execute transactions immediately, and in carrying out so, chopping down prices and processing moments. The transaction protocol includes a five-phase course of action of payment initiation, pre-transaction validation, cryptographic maintain of money, settlement and confirmation.


Messaging programs are made use of to coordinate facts trade among the originating and beneficiary banking companies and an interledger protocol (ILP) ledger is applied to coordinate the genuine movement of resources. The intention is to pace up processing occasions, improve close-to-finish visibility, maximize transaction approval charges and in the end decreased transaction fees.

What are the similarities with JP Morgan’s proposed blockchain payment network?

The patent application describes a method of “Systems and techniques for the software of distributed ledgers for community payments as financial exchange settlement and reconciliation.”

It goes on to declare, “In one embodiment, a process for processing network payments making use of a dispersed ledger may perhaps include:

  1. a payment originator initiating a payment instruction to a payment beneficiary
  2. a payment originator bank putting up and committing the payment instruction to a dispersed ledger on a P2P community
  3. the payment beneficiary lender posting and committing the payment instruction to the dispersed ledger on a P2P network and
  4. the payment originator bank validating and processing the payment as a result of a payment originator lender inner process and debiting an originator account.”


JP Morgan’s proposed system as a result depicts a payment protocol with immediate conversation or messaging involving beneficiary and originator financial institutions, utilised in conjunction with a reconciliatory dispersed ledger blockchain.

In essence, this is a incredibly identical procedure and course of action to that applied by Ripple, essentially describing an interbank messaging and reconciliation protocol based on dispersed ledger technology in order to reduce highly-priced intermediaries, speed up transaction time and prolong the world wide remittance achieve.

It would also look then, that if JP Morgan is indeed organizing to build the process explained in the patent, they will have to implement it with a cryptocurrency at its main, the extremely thing they have been attempting to discredit for the past several months.

The top issue then turns into no matter if it is achievable to be a strong supporter of blockchain on a single hand, but an similarly powerful opponent of the validity and legitimacy of cryptocurrencies on the other.

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