Lex Sokolin, the Global Fintech Co-Head and CMO at ConsenSys, confirms that the organization recently acquired Quorum from J.P. Morgan. Quorum is a platform that serves as a private, enterprise version of Ethereum (ETH). As covered, ConsenSys has also received an investment from J.P. Morgan.
Sokolin notes that there’s a lot of jargon or confusing terminology being used in the blockchain industry, and that he wants to try to explain the acquisition in simpler terms, so that people can really understand why the Quorum project is relevant to traditional finance and decentralized finance (DeFi).
He explains that, at the “core of the answer, is the question about the computing paradigm.” He notes that we should ask: “How does software operate? Where does it operate?”
“Who secures [software]? And of course, in the spirit of our common interest, how does this impact financial infrastructure? Ultimately, financial infrastructure is just our collective solution for enabling the above activities using the latest in technology. J.P. Morgan, the global bank, was one of the first large financial institutions to understand and invest in the potential of this technology.”
Sokolin adds that J.P. Morgan had an internal team that developed a version of Ethereum (ETH) that supported the specific requirements of the financial company, including privacy and scalability. ConsenSys has also been making updates to the technology stack to address Fintech related issues experienced by financial institutions when they work with blockchain or distributed ledger tech (DLT)-based platforms, Sokolin said.
He explains that there’s been a steady progression from mainframe computers, to standalone desktop PCs and more compatible laptops that would run using local software. Now, we are leveraging “the magnificence and efficiency” of cloud computing which is accessed via the interfaces of mobile devices.
We also have open-source programmable blockchain or DLT networks that are being secured by computational mining, he adds. He also mentions that “these gears of computational machine [support] core banking, portfolio management, risk assessment, and underwriting in the guise of various companies.”
“[We have] … worlds that today are quite different: the exponential innovation of decentralized finance, trying to outpace regulation and automate away human involvement, and the transformative reformatting that will happen to financial incumbents over time. As DeFi assets approach $10 billion, one narrative we may see is that crypto is a completely separate, new sphere of economics and finance. It does not need to connect to the old world. It simply needs to be left alone to perform.”
“In some sense, this is the distinction between physical cash, credit cards, e-commerce payment processors, NFC-based proximity payments, and QR codes. Each has their own logic and sphere of influence. But in reality, one usually sits on the accomplishments of the other. Even Ant [Group] today is directing its billion users to traditional capital providers, while leveraging modern user experiences.”
He thinks that the ConsenSys Codefi application suite is “evolving towards the natural financial behaviors turned into software.” For example, ConsenSys Codefi apps may be used for “paying, saving, investing, trading, insuring,” Sokolin explains.
He claims that DeFi protocols such as Aave, Compound, Maker, Nexus Mutual, and Yearn do “even more of the work as battle-tested and capital-tested financial primitives.” He believes that all we need to do in the long-term is to “connect into them in a risk-managed way to the existing economy.”