JPMorgan is creating a cryptocurrency pegged to the dollar

JPMorgan Chase CEO Jamie Dimon. (credit: Steve Jurvetson)

JPMorgan Chase is developing a new cryptocurrency called JPM Coin whose value will be tied to the US dollar, the bank said on Thursday. The new private blockchain platform is designed to help large JPMorgan clients move money around the world. The new cryptocurrency will be built atop JPMorgan's Quorum blockchain technology, a variant of Ethereum that has been modified to serve the needs of a major financial institution like JPMorgan.

The Ethereum network is public and open to anyone; Quorum is a private blockchain where a network owner can control who has access. All transactions on the Ethereum network are visible to everyone on the network. In contrast, nodes in the Quorum network can create encrypted transactions (and smart contracts) that are only visible to parties to the transaction.

Quorum also jettisons the wasteful proof-of-work algorithm that secures the Ethereum network in favor of a simpler scheme that relies on majority voting among network nodes. Public blockchain networks like Ethereum use proof-of-work algorithms to guard against Sybil attacks, in which someone tries to take over a network by creating a lot of zombie nodes. But Sybil attacks aren't a concern in a permissioned blockchain like Quorum, because each node is tied to a real-world identity that has been vetted by the network owner.

Read 8 remaining paragraphs | Comments