Jibrel Network Is Bridging The Gap Between Crypto And Traditional Markets
Compliance never looked this sexy.
Much has been made of all the ways blockchain and cryptocurrencies can potentially displace existing infrastructure. For all the ways it can't—and there are many—Jibrel is leading the way in integrating the cutting edge technology with traditional assets, laying the foundation for blockchain implementations on a global scale.
How? First: by setting the standard for cryptofiats with smart contracts. Cryptofiats refer to government-issued cryptocurrencies, typically backed by the central bank of said government. In other words, they're dollars, euros, or any other fiat currency underlaid by blockchain technology.
"The use case for Jibrel is simple: if you want to use smart contracts in the real world, you need cryptofiats," Jibrel Co-Founder and Project Lead Yazan Barghuthi said in an interview with the author. "We can agree that blockchains are amazing, and that the properties cryptocurrencies have are amazing—and we can agree that those two things when combined with smart contracts are amazing. That being said, people pay their bills, their loans, and their mortgages in dollars, euros, and pounds. They don’t pay them in ETH or BTC."
For a refresher on smart contracts, take a look at this piece in Motherboard. "Blockchains are a database, a new way of storing data in a particular contract,"Barghuthi said. "Smart contracts are a way to execute certain commands in a decentralized way, and be able to remove trusted intermediaries, or middlemen, from the equation."
With a smart contract, respective parties set terms and agree to them through blockchain, and these agreements are executed automatically henceforth. Ethereum introduced the concept, but now a host of other blockchain networks employ them, including Cardano, NEO, TRON, Qtum, among many others. Each of these networks implements smart contracts through their own "in-house" tokens. What Jibrel is doing is figuring out how you could enable this same system, but with traditional currencies. This applies for everyday use—the way you as an individual might use Venmo or PayPal—but maybe more importantly optimizes how governments and financial service companies can conduct transactions.
"A huge benefit of smart contracts that people don’t touch on enough is how it removes subjectivity," Barghuthi said. "And you can imagine why that would be something incredibly useful with some of the bloated processes or bureaucratic processes in financial services."
A way to consider how something like this would be useful for all of us: the 2008 financial crisis was precipitated by sub-prime bonds receiving high ratings based on a structure that incentivized rating agencies to rate bad products as AAA. This type of human error is exactly what Jibrel stands to eliminate.
"If the loan data and rating methodology were recorded on the blockchain, these processes would be enforced without middlemen, but most importantly without subjectivity, without corruptibility, and human error in general," Barghuthi said. "It’s almost like the natural progression of cash. As much as we can work with [governments] to create the optimum crypto fiat standard—even if this is a technology that we open source—this is where the market is headed, this is something everyone should be looking at. It’s what we believe to be the future—tokens in the backend"
Barghuthi sees this as the optimal way to future-proof Jibrel as blockchain moves from a hyped technology to one that is just the functional backbone of existing systems.
"Does the user need to know that he’s holding an Ethereum wallet, that these are stored in tokens?" Barghuthi said. "When we converted the dollar to online banking and we had a digital dollar, did we create a new asset class called the digital dollar? No we didn’t—it was still a dollar, it was merely a digital representation of it. If you are trading gold tokens, you’re a commodities broker. If you’re dealing with share tokens, you’re a securities broker. You’ll never be able to circumvent regulation in the long run. So the true value is in demoting these tokens to a backend system, where the user doesn’t know that it’s powered by cryptography."
This all may sound understandable enough, but ensuring that this is a practical solution for users across many different verticals requires a self-regulating receipt-based system. For that, Jibrel is also rolling out CryptoDepository Receipts, (CryDRs). These are tokens that represent a traditional financial asset’s value, which will be denominated in Jibrel Network Token (JNT). So, if you own $50 USD in gold, a USD CryDR will hold $50 worth of JNT.
Because there is effectively an infinite set of possibilities in terms of how these CryDRs might need to be structured, they have smart regulation baked in, so that real-world regulations can be easily translated into solidity code (a coding language for Ethereum smart contracts). This will be especially appealing for those who see the writing on the wall in terms of regulation in crypto markets.
"We're translating real-world regulation into solidity code and deploying it so that these token transfers can always be KYC compliant without a regulator intervening," Barghuthi said. "It’s governance without governance. We can ensure that we still meet the KYC standards, the anti-money laundering, the anti-terrorism financing standards—all without killing the decentralized dream."
This also means that fiat CryDRs can be used for trading and hedging, as well as creating automated bonds, commodities, securities, and debt instruments.
jCash, jWallet and the Jibrel Network Token Sale (JNT)
To round out this system, Jibrel needed to create a system for these assets to transfer among currencies easily, as well as a safe place to store the sensitive information. That's where jCash and jWallet come into play.
For its first roll-out, jCash, an ERC-20 token, will offer USD, GBP, EUR, RUB, AED, and CNY CryDRs.
"All transfers on jCash are always AML KYC compliant,"Barghuthi said. "We do get a bit of backlash from the community, like, 'Yeah, but the whole point about bitcoin is it’s off-grid, etc.' Okay you can stay off-grid, and that’s a $500 billion market. But if you go on-grid, you can start tackling the issues with the $34 trillion global economy."
jWallet was conceived after the Jibrel team surveyed the crypto wallet landscape and decided that they needed to build one with a higher degree of security.
"We actually sat down and analyzed how all these wallets were built, and we’ve come to so many steps where we’re like, 'Why did they build it like this?'"Barghuthi said. "So as we were looking to find a wallet for jCash that we can build functionality into, we found none, so we built our own. It’s plug-and-play, you just go to the website. Your private keys always stay private. It’s run off our own Ethereum nodes—you never have to bring your own Ethereum connection. It’s how we envision the future landscape to work."