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J.P. Morgan’s Blockchain For Financing Auto-Dealers

Blue chip financial services corporation J.P. Morgan has filed a patent with the US Patent & Trademark Office, entitled ‘Systems and methods for distributed ledger-based floorplanning’ and dated November 14, 2019.

According to the ‘abstract’ of the patent:

a method for distributed ledger-based floorplanning may include:

1. Receiving, at the distributed ledger system, an identifier for a trackable resource and resource status data for the trackable resource;

2. writing the identifier and the resource status data to a distributed ledger;

3. receiving, at the distributed ledger, an update to the resource status data for the trackable resource;

4. writing the update to the distributed ledger; and
executing a smart contract based on the update to the resource status data.”

J.P. Morgan, patent ‘Systems and methods for distributed ledger-based floorplanning’

The documentation details a new private blockchain created for financial “floorplanning”, a form of recurrent credit services for clients such as retailers. In particular: it details a system for the management of floorplanning, with specific reference to automobile dealerships.

Through use of a private permissioned blockchain, J.P. Morgan intends to create and implement an experimental distributed ledger solution. It would take advantage of technology such as smart contracts; as well as the immutability, speed and accuracy afforded by blockchain verified reporting.

One potential aspect mentioned in the patent is the implementation of GPS tracking devices to remotely locate vehicles loaned under J.P. Morgan’s finance scheme.

“In embodiments, telematics information from a vehicle (e.g., vehicle status such as mileage, location, etc. from in-vehicle hardware/software) may be used by the lender to streamline the floorplanning process, reducing time and cost…

Embodiments may reduce or eliminate the need for physical audits (e.g., in-person physical counting and reconciliation of in stock and sold inventory), and straight-through reporting of resource status may decrease the number of resources that may be sold out of contract provisions.”

J.P. Morgan, patent

JP Morgan has been active in the cryptocurrency and blockchain industry since at least 2017: when it launched the public, open-source ethereum-based Quorum blockchain as part of its membership within the Enterprise Ethereum Alliance. Its other blockchain partnerships include Hyperledger, and IC3: The Initiative for Cryptocurrencies & Contracts.

Quorum blockchain has subsequently been adopted by Microsoft as the official recommended blockchain for its Microsoft Azure cloud platform in May 2019 which, like Amazon Web Services, is a highly popular middle-ware for software and blockchain applications alike.

It was also the platform upon which the J.P. Morgan coin ‘JPM’ was first issued in February 2019. More like Wells Fargo’s ‘Digital Cash’ than Tether’s USDT, JPM is a digital representation of the U.S. dollar which can be redeemed 1:1 as a means of enabling instantaneous cross-border fiat settlement.

“We are exploring blockchain use cases and piloting solutions across business lines. We are active in the blockchain ecosystem: developing technology, investing in strategic partnerships, and participating in cross-industry consortia.”

J.P Morgan, ‘Blockchain and Distributed Ledger: About’

J.P. Morgan operates a ‘Blockchain Centre of Excellence’ (BCOE), which is the division which “leads efforts for applications of distributed ledger technology” (DLT).

It’s also behind ‘In-Residence’: an incubator / accelerator offering funding and expertise to innovators at various stages of project life cycle, most commonly lasting 6-18 months. Advertised areas of interest include: Treasury Services, Capital Markets,Custody and Funds Services, Financing.