Philadelphia Federal Reserve Bank President Patrick Harker said on Wednesday it is “inevitable” that central banks will issue digital currency. He also said the United States should not be the nation to lead such a move. He had been asked about the Fed’s creation of “FedNow,” its own real-time payments system. The comments were first reported by Reuters.

“Frankly I don’t think we should be the first mover as a nation to do this,” Harker said at a St. Louis community banking conference. He noted the dollar’s status as world reserve currency and underscored the need for experimentation and tests when it comes to such technology. Read More

When two senior blockchain leaders left JP Morgan’s Juno project last month to start the firm Kadena.io, as reported by Quartz, it was on amicable terms.

Related: JPMorgan Publishes Code for Permissioned Blockchain

JPMorgan & Kadena Partnership In The Works?

In fact, former executive director Stuart Popejoy and JP Morgan head engineer Will Martino – who use South Park caricatures on the website in their biographies – are currently exploring a partnership with their former employer, the largest bank in the United States with total assets of $2.35 trillion.

Kadena’s conversations with JP Morgan revolve around both the initial pilot of the Kadena self-titled blockchain and other use-cases, and  a relationship with the bank could be formalized in the next few months with Kadena either as a vendor or partner. Spinning off from JP Morgan was “definitely” a professional decision for Popejoy and Martino.

“Our decision was based on the belief that the true potential of the Juno pilot would be best-served by an independent effort,” Martino told Motherboard, referring to JP Morgan’s blockchain project.

DAO Hack Foreseen By JPMorgan

Martino’s and Popejoy believe  their work serves as an improvement over Ethereum. Martino and Popejoy say Kadena’s technology would avoid blockchain crises such as the June $56 million DAO hack of Ethereum’s token, ether.

Like Ethereum, Kadena’s blockchain technology can handle payment clearing use-cases, but that’s just an “added bonus of private utility-like blockchain technology,” as Martino says. He believes blockchain technology can standardize business logic for inter-organizational relationships. This, he suggests, “could provide for terrific business acceleration.”  At the time of the DAO hack, Kadena was preparing Pact, a safe, declarative smart-contract language.

“While bugs aren’t impossible in Pact, it represents the same sober, disciplined approach found in database engineering and Bitcoin: safety is absolutely paramount in transactional computing,” Martino said.  The Ethereum hack, ultimately, confirmed a longstanding hypothesis of the Kadena founders – one they had since their JP Morgan days.

“That Ethereum’s Solidity, and indeed the EVM bytecode environment itself, is fundamentally unable to provide a safe environment for blockchain transaction execution,” Popejoy expressed.

Martino and Popejoy noticed Ethereum’s shortcomings as blockchain technology researchers in the Emerging Technologies Group at JP Morgan, which is tasked with fostering innovation within the bank. Ethereum’s design presented “a significant barrier to industry adoption of private blockchain in a multi-organizational setting.”

Is the Kadena blockchain a Bitcoin and Ethereum killer app? Popejoy and Martino believe so. Kadena can, after all,  process upwards of 7,000 transactions per second. Bitcoin is currently stuck at seven transactions per second a la the “Bitcoin block size debate.” Kadena also claims their blockchain sacrifices none of the cryptographic robustness expected from a blockchain, proving full durable security. Overall, the Kadena founders foresee a paradigm shift away from public blockchains like Ethereum.

“Private blockchain solves a raft of issues for transaction processing that normally require extensive operational and engineering expertise, including database replication, reliable and performant messaging, service discovery, high-availability, and disaster-recovery,” Popejoy said. “Remarkably, blockchain solves all of these problems in a single stroke, letting IT focus efforts on solving business problems by coding transactional logic into smart-contracts.”

Digital currency exchange ShapeShift, based in Switzerland, raised $10.4 million in capital from U.S. and international venture capital investors to fund its future expansion. The firm, owned by libertarian and former bitcoin gambling site SatoshiDice administrator Erik Voorhees, allows cryptocurrency users to instantly exchange digital currencies like bitcoin for other altcoins without needing to open an account nor the need for fiat currencies like US dollar, euro or Chinese yuan.

Related: Shapeshift Among Bitcoin’s Best Affiliate Programs

According to the digital currency exchange, the company has grown on average of 48 percent monthly since it launched just three years ago.

The Series A funding, led by Berlin’s Earlybird, also included investors like Lakestar, Access Venture Partners, Pantera Capital, and Blockchain Capital.

ShapeShift already had backing by FundersClub and Digital Currency Group. Erik Voorhees, who has been very successful in Bitcoin, also devoted funds.

The funds will mostly go towards further expansion, the company said. Considerable money might go towards security, as the company did once suffer a hack perpetrated by an inside source, according to an internal investigation.

“When we started ShapeShift, a future world of natively digital assets was very theoretical,” Voorhees said in a statement of the Series A funding. “Yet this world is quickly arriving; one in which millions of forms of digital value, from access keys to tokenized derivative contracts to video game items, will trade between people and machines all over the world, every second of every day.”

More than 40 digital currencies and assets – like bitcoin, ethereum, dash, litecoin, Augur and Monero – are traded on the ShapeShift platform. These assets may be traded for another.

“ShapeShift’s team built a compelling crypto exchange engine which can be easily integrated into third-party products,” said Christian Nagel, partner at Earlybird.

The investment into ShapeShift could signal a second wave of venture capital investment into the digital asset space. (big bank and multinational tech companies investing in blockchain, aside) While the first wave saw VC’s focus on Bitcoin, this second wave, it might be argued, will see a movement into the digital asset space – that is, ‘altcoins’, as cryptocurrency enthusiasts call them for shorthand.

Photo: Erik Voorhees