America’s largest monster bank JPMorgan Chase (NYSE: JPM) could be developing a stablecoin.
o explain, JPMorgan Chase’s blockchain development team is testing a solution called the AZTEC protocol, Marko Vidrih reports at Altcoin Magazine. Interestingly, Vidrih suggests the AZTEC protocol can verify data without exposing details of the data.
I think AZTEC is ideal for stablecoins because it could confirm fiat currency backs a stablecoin, without revealing the stablecoin’s owner. Hence, AZTEC could keep stablecoin transactions secret.
In fact, AZTEC supposedly offers zero disclosure. To clarify, if it works as advertised could allow verification of crypto-assets without revealing their ownership. They design AZTEC to make verification and cryptogrpahic confirmation cheaper by using less processing power. In particular, AZTEC relies on a more advanced variety of zero-knowledge proof called range evidence.
Is a JPMorgan Stablecoin coming?
An obvious use for AZTEC is to create stablecoins designed to protect their owners identity. Interestingly, the Maker Dai (DAI) stablecoin already uses the AZTEC protocol, Vidrih reports.
Notably, AZTEC increases security by by deleting blockchain entries during a transaction. The designers hope this will eliminate the blockchain trail and make blockchain transactions harder to track.
Therefore, JPMorgan could be planning to enter the stablecoin business. For instance, JPMorgan Chase could accept stablecoins or create its own stablecoin. Notably, at least one other bank, Japan’s Mizhuno Financial Group is developing its own yen-pegged stablecoin called J-Coin.
Big Banks entering the Stablecoin Business
The Nikkei Asian Review reports Mizhuno and Crypto Garage’s J-Coin could work with a QR code enabled digital wallet. Hence, J-Coin is intended as a mass market product for use by the general public.
Meanwhile one of JPMorgan’s biggest American rivals Goldman Sachs (NYSE: GS) backs the cryptocurrency exchange operator and trading giant Circle. Circle and Coinbase are partnering on the decentralized crypto-asset trading network CENTRE. Importantly, one of CENTRE’s projects is the popular stablecoin USD Coin (USDC).
Therefore, JPMorgan could enter the stablecoin business and potentially offer a stablecoin linked to its quick read (QR) code enabled digital wallet, Chase Pay. Importantly, Chase Pay relies on the same QR code technology as Mizhuno’s J-coin.
Is the AZTEC Protocol Scalable?
However, AZTEC has some serious limitations including the blockchain scalability problem. To explain AZTEC can only process one to three transactions a second.
Conversely, I think a successful commercial payments system will have to process over 1,000 transactions per second to serve a mass market. For example, MyBroadband claims Visa’s (NYSE: V) VisaNet can process 1,667 transactions per second.
Thus, JPMorgan has a lot of work to do before AZTEC becomes a viable payments technology. However, there are groups like the Raiden Network (RDN), and Plasma that are working to make Ethereum scalable. In fact, the Raiden Network is testing its uRaiden micropayments solution live on the Ethereum mainnet.
Will JPMoragn Chase become a major player in Crypto?
JPMorgan’s blockchain development team is testing the AZTEC protocol in the Quorum version of the Ethereum blockchain. Quorum is a closed Ethereum blockchain used to test crypto projects.
It looks as if JPMorgan Chase could become a major player in crypto assets. I have to wonder how popular a JPMorgan Chase stablecoin could be.