Onyx: JPMorgan’s Permissioned Blockchain System
JPMorgan’s Onyx is a permissioned blockchain system that uses smart contracts to facilitate transactions. Launched in 2019 alongside JPM Coin, it has become a popular choice for banks and financial institutions to move money, assets, and share information efficiently. Since its launch, Onyx has processed around $300 billion worth of transactions in JPM Coin by institutional and corporate clients.
What is Onyx?
Onyx is a private (permissioned) blockchain designed for wholesale purposes. It offers various services for FinTech startups, financial institutions, banks, and wealthy individuals. Onyx functions as a multi-purpose financial ecosystem, providing features such as tokenization platforms, payment rails, clearing and settling wholesale transactions, and custodial services.
Differences Between Onyx and FedNow
While both Onyx and FedNow share similarities in terms of clearing, settlements, and exchange of information, there are key differences between the two systems. FedNow is a payment rail exclusively available to banks for interbank transactions. On the other hand, Onyx is a multi-purpose ecosystem optimized for businesses and institutions globally. It offers various blockchain-based products that can be leveraged by clients to tokenize financial assets, transfer wholesale and digital assets, or store information in a single system.
JPM Coin and Onyx vs Bitcoin
There is no direct correlation between JPM Coin, Onyx, and Bitcoin or other cryptocurrencies. However, it’s worth noting the double standards of financial institutions like JPMorgan who initially criticized cryptocurrencies but are now capitalizing on blockchain technology themselves. While there are advantages to being an institutional client of JP Morgan’s network, becoming a member requires passing an extensive KYC process.
The Centralized Nature of Onyx
As a centralized network, Onyx does have some potential vulnerabilities. A few powerful nodes could potentially take control of the network and manipulate state changes or introduce incorrect data. However, being built by JP Morgan, the likelihood of such scenarios occurring on Onyx is highly unlikely.
Hot Take: The Evolution of Traditional Banks and Blockchain
The adoption of blockchain technology by traditional banks like JPMorgan demonstrates their recognition of the benefits it offers. While they initially criticized cryptocurrencies, they are now embracing blockchain-based services and asset tokenization. This evolution highlights the potential disruption that decentralized finance (DeFi) has brought to the financial industry and how traditional institutions are adapting to stay relevant.
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