JPMorgan to Tokenize Gold Bars

JPMorgan to Tokenize Gold Bars

Umar Farooq, JPMorgan’s Head of Blockchain Initiatives, recently said in an interview that the banking giant will be ‘tokenizing’ gold bars on the Ethereum network. The assets will be represented on Quorum, JPMorgan’s enterprise blockchain built on Ethereum.

JPMorgan has had their share of criticism of the blockchain-based industry, but it seems that the banking giant has recently reconsidered their relationship with the cryptocurrency space. It has just come out that JPMorgan will be unveiling gold bars as a tokenized asset on their blockchain network, Quorum, according to a recent interview.

The gold bars will be represented on the Ethereum network where more-sustainable miners will have the potential to earn a premium on the global market.

The story broke in the Financial Review earlier today during the media outlet’s interview with Umar Farooq, JPMorgan’s Head of Blockchain Initiatives. “We are the only financial player that owns the entire stack, from the application to the protocol,” Mr. Farooq told the Financial Review.

“We Are Big Believers in Ethereum”

It is JPMorgan’s belief that, in the medium-term, the tokenization of existing commodities is something that is going to be hot in the financial world. “The entire value chain is going to head in that direction,” Mr. Farooq said.

Mr. Farooq spoke of how Quorum will be used to tokenize gold, one example of many assets that JPMorgan’s enterprise blockchain will support:

They wrap a gold bar into a tamper-proof case electronically tagged, and they can track the gold bar from the mine to endpoint – with 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 is looking to be a dominant player in capital market issuances, secondary markets, and token custodial services where, according to Mr. Farooq, there exists the most potential.

Will Ethereum Be the Network of Asset Tokens?

There has been much talk about token-based assets, which would technically fall under the category of ‘tokenized securities.’ Ethereum seems the best poised to represent this growing asset class due to its Ethereum Enterprise Alliance, which Mr. Farooq mentioned as the reason for Quorum choosing Ethereum. Some community members have even begun to develop their own token standards on Ethereum to differentiate tokenized securities from other tokens.

The fact that JPMorgan, the largest bank in the United States, will be using Ethereum to power their own enterprise blockchain is an indicator of what’s to come: a large variety of real assets, tokenized, and represented on the Ethereum network in a virtually instantaneously, high-liquidity market. The news today gives us much room for optimism.

What are your thoughts on Mr. Farooq’s comments? Is the tokenizing of real-world assets the next big step for the cryptocurrency and financial space? Let us know in the comments below.

Image courtesy of JPMorgan Chase & Co.