JPMorgan ex claims public blockchains are insufficient for processing large transactions
Umar Farooq, CEO of JPMorgan’s blockchain-based payment platform, Onyx, expressed his opinion on the limitations of public blockchains during the BIS Innovation Summit on May 7. According to Farooq, these blockchains are not suitable for handling significant transaction volumes. He specifically referenced the Unified Ledger concept introduced by the Bank of International Settlements (BIS) last year, which aims to facilitate central bank money flows and digital assets on its network.
Farooq highlighted the lack of accountability in public blockchain validators, stating that if a $100 million transaction were to fail, there would be no way to hold them responsible. In contrast, JPMorgan’s Onyx platform is built as a private and permissioned version of Ethereum, the second-largest public blockchain network globally. Unlike public blockchains, Onyx’s permissioned chain allows institutions to reverse transactions.
Furthermore, Farooq criticized the false incentives created by cryptocurrencies on public blockchains, which aim to attract more users and drive up the price of the coins. He compared blockchains to the internet, suggesting that they should be regarded as a public good.
In response to Farooq’s comments, Celisa Morin, former vice president of platform distribution at Grayscale, mentioned that traditional financial institutions (TradFi) may increasingly opt to tokenize assets on public blockchains rather than private ones. Morin referred to BlackRock’s recent initiative, the $100 million tokenized “BUIDL” fund launched on the Ethereum network on March 18. The fund currently holds over $382 million, making it the world’s largest tokenization fund, according to Dune data.
Overall, Farooq’s remarks shed light on the limitations of public blockchains for handling large transactions and the potential shift towards tokenizing assets on these networks by traditional financial institutions.