Why JP Morgan's Blockchain Patent Application Is Not That Surprising

JP Morgan once again caused a bit of an upheaval within cryptocurrency circles last week - this time with the publication of their peer-to-peer payments network patent application based on distributed ledger technology, like blockchain.

As far back as 1999, the bank filed a patent for an alternative payments network.

The bank first filed the patent - which aims to facilitate interbank payments using blockchain technology on October 30, 2017, a mere two weeks after Jamie Dimon labeled Bitcoin investors stupid.

Saying that, JP Morgan is specifically applying for a patent on a "Method for processing network payments using a distributed ledger".

This begs the question; can you have a P2P payments network based on blockchain without utilizing a digital token in some shape or form to process such payments?

How does Ripple work?Ripple connects banks around the world and enables them to offer real-time cross-border payment services to customers.

The transaction protocol includes a five-step process of payment initiation, pre-transaction validation, cryptographic hold of funds, settlement and confirmation.

What are the similarities with JP Morgan's proposed blockchain payment network?The patent application describes a process of "Systems and methods for the application of distributed ledgers for network payments as financial exchange settlement and reconciliation."

It goes on to claim, "In one embodiment, a method for processing network payments using a distributed ledger may include:.a payment originator initiating a payment instruction to a payment beneficiary;.a payment originator bank posting and committing the payment instruction to a distributed ledger on a P2P network;.the payment beneficiary bank posting and committing the payment instruction to the distributed ledger on a P2P network; and.the payment originator bank validating and processing the payment through a payment originator bank internal system and debiting an originator account."

JP Morgan's proposed system therefore depicts a payment protocol with direct communication or messaging between beneficiary and originator banks, used in conjunction with a reconciliatory distributed ledger blockchain.