Investment banking firm JP Morgan Chase & Co. filed for a patent for its blockchain-powered payment system between banks.
The patent application includes the description of traditional cross-border payments. In this kind of payment system, there must be a number of communications between the banks and clearing houses. Because of that, real-time payments settlement is not possible.
The multinational investment bank proposes using a distributed ledger (the blockchain) to make real-time payments. Using this distributed ledger eliminates the third party that holds the trail of the transactions.
The patent includes the originator bank (where the payment comes in), the payment beneficiary bank (the bank that receives the payment), the peer-to-peer network (where the two banks will meet in the network and participate), and the distributed ledger (this will cut the third party in keeping the audit trail).
This distributed ledger in banks will completely rehaul payment structures, clearing, and settlement systems for banks internally and cross-borders.