According to NASDAQ, JP Morgan is quietly testing a private chain with a small number of clients.
The nation’s largest bank has been testing the program in recent months to move U.S. dollars for about 2,200 clients between the two financial centers using a version of the “blockchain” technology that underpins bitcoin, said Daniel Pinto, head of J.P. Morgan’s corporate and investment bank. The bank wants to see whether the blockchain technology, known as the “distributed ledger,” can be repurposed for currency clearing and settlement to give clients faster turnaround times and reduce the bank’s risk.
Financial Director, a website for industry insiders, explains the importance of distributed ledgers in this post.
This is where the Blockchain differs from simple bank servers. Servers, by and large have worked well. But, if servers were to fail – as they have been known to in the past – they may be unable to share the cash or unable to complete the transaction; something helpfully illustrated by RBS’s IT collapse in 2012, which saw customers unable to withdraw money and accounts frozen.
Blockchain’s capability has led to excitable comparisons with other great inventions of our times. EY’s UK head of assurance Hywel Ball said Blockchain “will do to corporate reporting and financial transactions what the internet did for knowledge. It could fundamentally change the role of the finance function and has huge implications for us as auditors.”