JPMorgan Adds Privacy Element to JPMCoin

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JPMorgan, the banking giant who announced their own cryptocurrency in February 2019, has added a privacy layer to the blockchain that will host the coin. The privacy layer will obscure both the amount being sent and who is sending it, which goes even further than privacy coins such as Monero that are often criticized as being the preserve of criminals. JPMorgan has created an extension to the Zether protocol, a fully decentralized, cryptographic protocol for private payments they will use on top of Quorum, their in-house private version of Ethereum.

Zero-Knowledge Proofs Get an Upgrade

Zether utilizes zero-knowledge proofs (ZKPs), a technology that allows some level of secrecy within the transaction but that cannot, as yet, disguise the identities of the senders. As Oli Harris, JPMorgan’s head of Quorum and crypto-assets strategy told CoinDesk however, this is no longer the case:

In the basic Zether, the account balances and the transfer accounts are concealed but the participants’ identities are not. So we have solved that. In our implementation, we provide a proof protocol for the anonymous extension in which the sender may hide herself and the transactions recipients in a larger group of parties.

A potential drawback of adding extra privacy layers to blockchains is the extra computing power they can take up, given the extra work required to process transactions. This can slow down blockchains, but Harris states that this has so far not materialized, calling the performance “quite good”.

JPMCoin to Challenge XRP?

JPMCoin will be a stablecoin backed by the bank’s U.S. dollar reserves, which will initially be used only between JPMorgan and its clients, but there is every chance that the coin could be adopted by other institutions. Gaining the kind of adoption that tokens like XRP could only dream of, potentially scuppering their business model, JPMCoin could be a game changer. XRP has been trying to crack the big banks for years with limited success, and there is much more chance of the really big boys siding with a known quantity like JPMorgan than XRP.