JPMorgan Chase & Co recently tested blockchain payments between Earth-orbiting satellites and found that digital devices can take advantage of the technology behind virtual currencies for transactions.
The Internet of Things (IoT), where devices are interconnected, mostly connect consumer electronics, including smart speakers such as the Amazon Echo and Google Home.
Banks, therefore, want to be ready to process payments when smart devices start transacting autonomously. Umar Farooq, CEO of blockchain business JPMorgan Onyx, believes space is the perfect place to give it a try.
The Internet of Things Payments Test
Farooq said that the idea is to study IoT payments in a completely decentralized way. In the firm’s opinion, there is no place more decentralized and separate from the earth than outer space. “Second, we were nervous, and it was much more fun testing the IoT,” he said.
The bank’s blockchain team did not send its satellite into space to start the space experiment but worked with the Danish company GOMspace, allowing third parties to launch the software on their satellites.
Farooq said satellite tests show that blockchain networks can enable transactions between everyday objects. The tests also show that it’s possible to create a market for satellites to transmit data in exchange for payment. More private companies launch their own devices into space, said Tyrone Loban, head of Onyx’s blockchain.
Examples of IoT payments that could become a reality more quickly include smart refrigerators ordering and paying for milk on e-commerce websites or driverless cars paying for gasoline, Farooq said.
JPMorgan Explores Blockchain Technology
Blockchain, which first emerged as software integrated with cryptocurrency, is a shared digital ledger to record transactions. Financial firms have invested millions of dollars in finding uses for technology in the hope they can cut costs and simplify more complex IT processes such as processing securities or international payments.
JPMorgan is one of the most active banks on the blockchain, announcing its own distributed book called Quorum in 2016, sold to blockchain company ConsenSys last year.
The bank is also developing a digital coin called JPM Coin. It created Onyx in 2020. Onyx has more than 100 employees, and its blockchain application is almost generating revenue for the bank.
Citi, Wells Fargo, US Bancorp, PNC, Fifth Third Bank, and Signature Bank are some of the banks that have reported using blockchain. Meanwhile, none of the banks covered by Bank of America (BofA) will facilitate crypto transactions or allow customers to hold crypto accounts at this time.
However, the Civic Finance Group said it was theoretically open to letting customers have crypto at some point but needed to develop robust money-laundering infrastructure.
Several banks have announced that they expect regulators to clarify the terms of cryptocurrency management services before adopting the digital currency.