Opinion | Why is ConsenSys the best target for a JPMorgan acquisition?

Source: Cointelegraph Chinese , original title "Merger and Acquisition of Consensys: This Merger Paves the Way for the Development of JPMorgan Chase"

Author: Shiraz Jagati

Compile: Alex

According to a new report released earlier this week, banking giant JP Morgan is currently pushing ahead with its internal blockchain unit Quorum and Ethereum software developer ConsenSys' merger and acquisition plan. The deal is currently under negotiation and may be finalized before the end of the third quarter of 2020.

Quorum is a blockchain-based network built on the Ethereum ecosystem. It is currently the foundation of the JP Morgan Interbank Information Network, a distributed network that connects more than 300 banks and financial institutions, allowing them to exchange large amounts of payment-related information. The project currently has 25 employees.

In addition, JPM Coin, a digital asset created by JP Morgan to facilitate domestic currency transactions, is also built on Quorum's digital infrastructure network. In this regard, a recent article published by Reuters claimed that through the merger with ConsenSys, JPMorgan Chase wanted not only to solve a series of real-world financial problems, but also to expand the user coverage of its Quorum platform.

Asked about the idea of ​​the merger, Gregory Klumov, chief executive of Stasis, a Euro stablecoin issuer, told Cointelegraph that given that deals of this size usually occur near the end of a bear market So this kind of news should not shock anyone:

At the end of the bear market cycle, mergers and acquisitions are often the most advantageous way out for many companies. This is a symbolic signal that a new market cycle is about to begin.

Merger is smart for JPMorgan

 

To better understand the implications of this latest transaction, Cointegraph contacted Terraform Capital LLC CEO Michael Poutre. In his view, the acquisition of Consensys shows that JPMorgan Chase is trying to acquire a trusted think tank headed by Ethereum co-founder Joseph Lubin, which to date has been a big one for large banks and governments. It was a difficult choice.

He further added that JPMorgan Chase had raised up to six months to complete the transaction, which was a wise move as it allowed the banking giant to "taste the taste of milk for free before buying cows"

I suspect that the internal efforts of JPMorgan Chase, the Quorum project, did not meet the expectations put forward when it was established. For JPM, this is equivalent to a rounding error, and they are attracting top industry veterans who will provide them with the opportunity to develop and launch successful tokens. Consensys had cash flow issues that JPM could resolve immediately; in turn, JPM got the world-class team they desperately needed.

In addition, Putt told Cointelegraph that he has previously worked under Jamie Dimon, CEO of JPMorgan Chase. He is convinced that to complete the transaction, careful and careful planning is required. He also added that

If Quorum doesn't reach the level he wants, Dimon doesn't need to wait, hope and pray that his team can get things done-he sees the opportunity to solve the problem, and he seizes it.

Kick Ecosystem and KickEX Exchange's CEO and founder Anti Danilevski also hold similar views, and also believe that the transaction is in the best interests of both companies.

In his opinion, although the underlying technology of Ethereum is now quite outdated (referring to the various scalability issues of the platform), it is still one of the world's most popular distributed application development systems.

With QuRUM already using the Ethereum network, once the transaction is finalized, JP Morgan will likely promote the use of its blockchain system to many of its existing users-this is also what Danilevsky believes prompted Joseph Lubin (Joseph Lubin) What prompted the deal. He further added that

The transaction may also bring more effectiveness to JP Morgan's JPM Coin and expand the overall utilization of the bank-backed stablecoin.

Consensys' recent layoffs may have nothing to do with potential mergers

 

According to several reports released last week, Consensys is working to reduce the number of employees by about 14% as part of a restructuring plan. This new development has caught the attention of some media companies, prompting them to believe that something bigger may be happening behind the scenes.

In this regard, Alex Axelrod, CEO and founder of Aximetria, a cryptocurrency-centric mobile financial application, told Cointelegraph that he believes the recent layoffs should not be linked to The merger is related. In his view, the two companies already have a large number of market followers and will not be forced to close deals for financial reasons.

Danilevsky took a similar view, noting that the latest layoffs were not the first for ConsenSys and therefore unlikely to be related to the potential partnership at hand. He added:

Cryptocurrencies and blockchain-related companies, such as Bitmain, continue to lay off employees based on market conditions. Although we are currently in a bullish market, it is worth noting that the most recent layoffs were in the human resources, finance and marketing departments, and the development team was not affected.

Nonetheless, Herbrecht believes that the layoffs may be due to JPMorgan Chase's desire to integrate its Quorum team with Consensys' core developers to streamline its internal work-related business.

He also believes that if JPM Coin was created as envisaged, the bank alliance that JP Morgan hopes to establish through the interbank information network is likely to be the most serious attempt to bridge the gap between the traditional financial system and the cryptocurrency industry. Herbrecht added:

With this possible partnership, we can imagine a variety of possible scenarios, one of which is to introduce encryption technology to a whole new audience.

 

Will it affect the market and industry?

 

Although the price of Ethereum seems to rise with this latest development, it is difficult to predict how this transaction will affect the entire market. For example, Klumov believes that the cooperation between leading financial institutions such as JP Morgan and one of the world's most well-known and reputable blockchain service providers will certainly promote the development of the industry to some extent.

In terms of historical precedent, few projects have had a significant monetary impact on the entire industry. Even this latest partnership seems to focus more on efforts to strengthen the adoption of JPMorgan's private blockchain, rather than improving the overall state of the Ethereum project.

Finally, in the past few years, more and more banks have entered the cryptocurrency market with varying degrees of success. For example, companies like Ripple have been able to attract some traditional financial companies to use its local technology products, such as xRapid and xCurrent.

Through industry regulation, banks have more and more opportunities to utilize cryptocurrencies and blockchains, allowing cryptocurrency service providers to merge, thereby creating greater value for the entire market.

As the detailed information currently being disclosed around this so-called partnership is still quite limited, it is difficult to assess its overall impact. In Danilevsky's view, the merger is likely to have no significant financial impact on this emerging industry, especially as JPMorgan's JPM coin has not received the kind of attention the company initially expected. He further added:

Considering that Ethereum is the most popular blockchain for open financial applications, ConsenSys may be the best target company for JP Morgan to acquire further to achieve its goals. It's just hard to see any major changes in the market in the short term.

Finally, Herbrecht noted that in recent months, global interest in open finance (DeFi) applications has been increasing, so developers are increasingly using Ethereum to create new DeFi-related DApps. Therefore, it seems like a good idea for JP Morgan to approach Ethereum's core development team and promote the use of the platform globally.