Quorum platform is being used to tokenise gold bars, says JP Morgan’s head of blockchain

Quorum, an enterprise version of the Ethereum blockchain developed by JP Morgan, is being used to tokenise gold bars, The Australian Financial Review reported October 29.

Reports on the development of the Quorum platform first floated in the media back in 2016. According to the official website, Quorum – an enterprise-ready distributed ledger and smart contract platform – is best-suited for applications requiring high speed and high throughput processing of private transactions within a permissioned group of known participants.

Umar Farooq, JP Morgan's New York-based head of blockchain initiatives, told the AFR that in the medium term tokenisation of commodities could create new opportunities for global traders.

"There are people outside our firm using Quorum to tokenise gold, for instance," he said. "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. Diamonds is another example."

Tokenisation of assets using blockchain technology will essentially “digitize” them, allowing them to move on distributed ledgers. This will help facilitate their end-to-end visibility across the value chain.

According to the report, investment banks are also looking into "atomic swaps,” which would enable parties to trade assets under a smart contract without the need for a third party.

Earlier this year, Farooq had said that the bank was considering spinning off Quorum. He told the AFR that platform is being considered for use in capital markets issuance, secondary markets and custody.

The National Bank of Canada recently used Quorum to issue a certificate of deposit to US investors. The platform is also being tested by the Monetary Authority of Singapore for a settlement and clearing system.

In October 2016, JP Morgan announced the launch of the Interbank Information Network (IIN) – a new initiative to use blockchain technology to minimize friction in the global payments process. The network has grown to more than 100 participating banks.