Saturday, 17 November 2018

Why is JP Morgan suddenly changing their tune about Blockchain technology?

Because they are smart.

The problem with most banks is the same problem as with all large companies. They are very slow to innovate, rigid and bad at innovating. Why is that?

1. Because large companies always have CEOs that are only looking for the next 8 yearsHow Long Should a CEO’s Tenure Be? | Talent Economy. They are not interested in building a long term vision for the company looking ahead 20–40 years, because building a long term vision requires a lot of upfront investment, which reduces the profits they made over their tenure, thus reduces their perfomance metrics, thus reduces their salary for their next CEO position.

That’s the first hurdle. CEOs only want to make as much money as possible from their existing business model and it’s a great risk for them to abandon their current business model and invest in something new.

See Apple, where they rode themselves to death with their existing business model before Steve Jobs came in and did something completely new.

2. The second factor is that people who want to be at the edge of innovation and invent something new, do not work at Fortune 500 companies.


What is JP Morgan doing differently? They are smart.

They looked at it from a game-theory perspective.

1. Is the chance that the blockchain will complete mess up all banks within the next 3 years zero? No, it isn’t.

2. Is it 100%? No it isn’t.

3. Is it possibly between 20% and 50%? Possibly. Should we be prepared if this scenario comes true? Yes, we should.

That’s why JP Morgan decided to protect themselves against a possible banking mayhem within the next few years.


Why does only JP Morgan do this and not other banks?

Because JP Morgan has hired the best people, they have built a small research center for blockchain, which doesn’t have to do much with banking. Most large companies don’t do this seriously, but more as something to satisfy their board. JP Morgan takes this serious and has published several studies about blockchain and Bitcoin before.
Because they realize that there is a lot of money to be made in blockchain technology and cryptocurrencies
However, while JP Morgan seems to be the global banking leader in blockchain technology, many other banks seemed to have caught up on the trend as well.

Looking at the top 15 global banks, most of them seem to have dabbled in blockchain this year.

Let me rank the global banks by blockchain knowledge

1. JP Morgan seems to have an actual blockchain research center. Blockchain and Distributed Ledger (ICBC's First Blockchain Patent Is Now Public - CoinDesk)

2. Mitsubishi UFJ Financial Group Bank to Switch on Blockchain Payments in 2020 (Japan's Biggest Bank to Switch on Blockchain Payments in 2020)

3. Bank of America Here's Why Bank of America Has Filed Nearly 50 Blockchain-Related Patents

4. Citigroup and Nasdaq Announce Pioneering Blockchain and Global Banking Integration)

5. ICBC's First Blockchain Patent Is Now Public

6. The Agricultural bank of China Trials Blockchain for Issuance of Land-Backed Loans - CoinDesk

7. Wells Fargo Develops Blockchain Banking Prototype

8. Commerzbank is planning the use of blockchain technology https://www.handelsblatt.com/fin...

9. Deutsche Bank has written some articles Kryptowährungen und Blockchain - Deutsche Bank

10. Crédit Agricole experimenting with Ripple blockchain money transfer technology)

11. BNP Paribas and EY explore private blockchain to optimize the bank’s global internal treasury operations - BNP Paribas

12.There is almost no information on China Construction Bank Corporation and the blockchain

13. HSBC seems to be least informed about blockchain

14. JPB is actively against blockchain $100 Bitcoin? Japan Post Bank's CIO Blasts 'Bubble' Value - CoinDesk

So, as you can see, only JP Morgan, Bank of America, Mitsubishi UFJ Financial Group are really prepared for a possibly incoming blockchain mayhem, but some banks start to get the drift as well.

By Marius Kramer
source: Quora
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