Public blockchains are still not adequate for executing large amounts of transactions, according to a JPMorgan ex.
During the BIS Innovation Summit on May 7, Umar Farooq, CEO of JPMorgan’s Onyx blockchain-based payment platform, said:
“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’s comments came in response to the Unified Ledger, a concept introduced by the Bank of International Settlements (BIS) last year that aims to support central bank money flows, tokenized deposits and digital assets on its network.
Farooq further explained that if a $100 million transaction were to fail, public blockchain validators can’t be held accountable. Farooq said:
“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.”
Despite the CEO’s criticism, JPMorgan’s bank-led Onyx platform is built as a private, permissioned version of Ethereum, the world’s second-largest public blockchain network. Unlike public blockchains, Onyx’s permissioned chain enables institutions to reverse transactions.
Moreover, JPMorgan’s Farooq argued that the cryptocurrencies issued on public blockchains create false incentives aiming to drive more users to the networks to push the price of the coin up. He noted that blockchains, like the internet, should be considered a public good:
“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.”