According to a JPMorgan analyst, public blockchains are still insufficient for carrying out substantial volumes of transactions.On May 7, Umar Farooq, CEO of JPMorgan’s blockchain-based Onyx payment platform, spoke at the BIS Innovation Summit.
“I think you almost need something like [a Unified Ledger]. I mean, it’s actually almost a necessity because if you look at […] public blockchain ledgers, they are not fit for purpose for large transactions today.”
The CEO made these remarks in reaction to the Unified Ledger, an idea that the Bank of International Settlements (BIS) unveiled last year with the goal of facilitating digital assets, tokenized deposits, and money flows across central banks on its network.Farooq went on to say that public blockchain validators cannot be held responsible if a $100 million transaction fails. stated Farooq.
“Who do I sue? […] You need to get somewhere where people can do trusted transactions between financial institutions with some sort of accountability in the system.”
The CEO’s criticism notwithstanding, JPMorgan’s bank-led Onyx platform is designed as a permissioned, private variant of Ethereum, the second-largest public blockchain network globally.Onyx’s permissioned chain allows organizations to undo transactions, in contrast to public blockchains.Additionally, Farooq of JPMorgan suggested that the cryptocurrencies generated on public blockchains provide fictitious incentives meant to attract more users to the networks in order to raise the coin’s price.He pointed out that blockchains ought to be viewed as public goods, just like the internet.
“We need to get to an evolution point where the technology starts to be seen as a public good versus as a means to enrich.”
Traditional financial institutions (TradFi) favor tokenizing assets on public blockchains, despite considerable opposition.Speaking with Cointelegraph, Celisa Morin, who held the position of vice president of platform distribution at Grayscale until the middle of 2022, suggested that more TradFi institutions would tokenize assets on public blockchains as opposed to private ones as a result of BlackRock’s recent move. stated she.
“I think we see a preference for private chains with JPMorgan’s Onyx. But I do think that this was the narrative a few years back. Now, I think it’s very much the public blockchains.”
Morin was speaking of the $100 million tokenized “BUIDL” fund from BlackRock, which debuted on the Ethereum network on March 18.Dune research indicates that the largest tokenization fund globally is BlackRock’s BUIDL fund, which now has approximately $382 million in assets.