JPMorgan to Tokenise Gold Using Quorum Blockchain
US investment bank JPMorgan Chase developed Quorum, the enterprise version of the Ethereum blockchain, which will be used to “tokenize” gold bars. This means that ownership will be represented by electronic tokens rather than paper certificates.
Quorum was developed using Ethereum in 2016, it limits access to transaction data to those that are directly relevant.
The advantage of this is that ownership transactions are recorded and executed in an open and permanent manner; ownership can be more easily divided up, and the resulting shares can be bought and sold without the involvement of a third party.
Umar Farooq, head of blockchain initiatives at the investment bank, explained: “They wrap a gold bar into a tamper-proof case electronically tagged, and they can track the gold bar from the mine to end point – 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.”
“We are the only financial player that owns the entire stack, from the application to the protocol. We are big believers in Ethereum,” Farooq explained.
Reportedly, the bank is considering using this network to trade other things to. Farooq said that “the entire value chain is going to head in that direction”.
In June 2018, the central bank of South Africa tested Quorum for itself and found that it could process a day’s worth of transactions in two hours.