TL; DR
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Some of JPMorgan’s systems are changing, but the end result is largely the same with JPMorgan’s Tokenized Collateral Network (TCN), which has a big “McDonald’s Speedee Service System” vibe.
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Financial companies still post shares as collateral. But the process of doing this is now much more efficient, leading to a drastic reduction in costs and time.
Full story
Before Rich and Maurice McDonald, there was no such thing as “fast” food.
The genius of the McDonald brothers was the way theySpeedee service system,” who made the preparation of each burger faster And cheaper.
…certainly, the food yourself largely unchanged by the system. But the process of creating it became far more efficient.
Something similar is happening at JPMorgan, in that some systems change, but the end result is largely the same.
The change comes in JPMorgan’s Tokenized Collateral Network (TCN), which has a big ‘McDonald’s Speedee Service System’ vibe.
Here’s the basic idea of it:
When taking out loans, you must put up collateral (which is “rich man talk” for “making a down payment”).
And in the world of traditional finance, large companies will often use stocks as collateral, rather than cash.
…the only problem is that the systems that support the transfer of shares are not particularly efficient.
What JPMorgan’s Tokenized Collateral Network allows these financial companies to do is:
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Lock their shares/shares.
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In return, receive blockchain-based tokens (where 1 token = 1 share).
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Place these ‘tokenized’ shares as collateral, using blockchain technology (which is MUCH faster and MUCH cheaper than the old system).
So just like a McDonald’s burger before/after the implementation of the ‘Speedee Service System’: the end result is the same, but the process has been improved.
Financial companies still post shares as collateral.
But the process of doing this is now much more efficient, leading to a drastic reduction in costs and time.
Pretty amazing how blockchain is seeping into even the most stodgy parts of the traditional financial world, isn’t it?