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Blockchain, the key word in the boardroom, is fast becoming one of the most significant considerations for higher expenses of companies in all sectors.
An intelligent contract stores the terms of the agreement and can therefore verify and execute such agreed terms
Deloitte 2018 Global Blockchain Poll 1,000 executives covering seven countries and nine different industries have confirmed blockchain as a priority when it comes to budgeting, with 40% confirming their organization will invest more than $ 5 million in technology for the next 12 months.
The survey also showed that over 75% believe that without blockchain their activity could lose competitive advantage, but nevertheless 33% said they remain uncertain about the return of investment in technology.
According to the report: "The only real mistake we believe organizations can do about the blockchain is now doing nothing, even without a solid business case to implement, we believe organizations should at least keep watch the blockchain so that they can take advantage of opportunities when they arise. "
Blockchain is already demonstrating its value with smart contracts
While the future looks promising for the adoption and implementation of the blockchain, with so-called intelligent contracts between companies in various sectors around the world, to date it has been slow.
Eric France, partner of the Mills & Reeve law firm, says: "This technology is at the beginning and the applications for it are still being defined, but the unique properties of distributed registers are already proving extremely useful.
"The key innovation of the blockchain technology is that the distributed logs keep all copies of the ledger identical, in real time, for each member of the network.This provides a new way to allow people to enter into contracts. one with the other, where the chronology of their chords is recorded in a way that can be verified but not altered.
"While contract registration is recorded, the information that parties want to keep private can be securely encrypted – the system is securely deployed on many computers without a single point of failure, protecting against the threat of a computer violation."
How do smart contracts work?
The use of smart contracts – a direct and digital relationship between stakeholders – has grown in line with the blockchain, although the term was first discussed in 1995 by computer scientist and cryptographer Nick Szabo.
By allowing companies to communicate directly, eliminating any dependence on an intermediary or third party, an intelligent contract stores the terms of the agreement and can then verify and execute such agreed terms.
Saswata Basu, founder of 0chain, explains: "Smart contracts allow you to execute a transaction programmatically based on an event, which removes the human element of communication, interactions and errors associated with it."
Mr France says that by offering customers superior experience, smart contracts have the "potential to give companies a competitive advantage".
He adds: "Smart contracts drastically increase supply chains, increasing automation and speed, reducing the need for agents and other intermediaries, limiting human errors, avoiding the manual retention of registrations and strengthening certainty and trust Between the parts".
How AXA's intelligent contract simplifies compensation for damages
Deloitte's research on the blockchain shows that a successful implementation was largely based on multiple digital companies, with traditional organizations lagging behind in technology adoption.
For consolidated companies, a significant concern is how the blockchain would fit into an existing paradigm and, ultimately, what the overall benefit would be. This differs significantly from digital organizations that have been built with existing blockchains.
Despite this, there have been some interesting success stories concerning smart contracts which, according to Mr France, were predominantly in the insurance sector.
He emphasizes one of AXA's products as a great example of how this particular industry is well positioned to benefit from technological advances in this area.
"The product of" sparkling AXA ", for example, uses distributed register technology to offer immediate direct and automatic compensation to policyholders whose flights are delayed by more than two hours," says France. "The gaseous product works by registering for the purchase of flight delay insurance on the Ethererum blocker platform, the smart contract is then linked to the global air traffic databases, so as soon as a delay of more than two hours, the compensation is activated automatically. "
Basu also cites IBM, Microsoft, Oracle, AWS and CitiGroup as excellent examples of companies that have started implementing blockchain solutions, adding: "The most important implementation is Walmart with its supply chain and logistics."
He explains: "Blockchain and smart contracts reduce transaction and escrow times and associated costs by eliminating the need for human interaction, and it allows for greater transparency and trust that is better than an entity or a traditional trusted individual."
Smart contracts allow you to make a transaction programmatically based on an event. This removes the human element of communication, interactions and errors
How smart contracts are used to clean up the supply chain
For Walmart, the use of blockchain technology was supported by a bad batch of lettuce resulting in the illness of a large number of customers. Having conducted a two-year-old pilot, the supermarket chain announced in September the launch of technology that allows them to monitor every lettuce.
By 2019, the organization will require most of its farmers to provide detailed information about their products to a database. For any future outbreaks of illness, the company would be able to identify and dispose of only the affected lots, instead of emptying entire shelves of fresh produce.
According to reports by The New York Times, the same system, developed by IBM, is also used by Dole, Wegmans and Unilever to track products as they cross the supply chain.
Mr. Basu says: "Supply chains have working capital and SLAs [service level agreement] inefficiencies that can be simplified. If the goods shipped and received today are registered on the blockchain, then the application and payment of SLAs can be made faster and cheaper. "
Blockchains and smart contracts, although successful for some organizations in a wide range of sectors, still need to be widely adopted. Deloitte's research shows that while the first users believe in the potential of the blockchain to destroy and revolutionize their industries, the problem lies in the limited number of active case studies that demonstrate the broader benefits.
But in an increasingly digital world, with advances in emerging technologies such as automation and cloud, companies will find it hard to ignore the blockchain. As Deloitte's research concludes: "We see the potential of blockchain to help organizations create and realize new value for companies beyond anything we can imagine with existing technologies."
As companies look for faster, safer ways to conduct business across international borders and increase sales with relevant and informed business connections, new platforms are emerging.
TraDove is one of these organizations. The company was born as a social network for companies. Since then, it has gained recognition among investors for its potential to accelerate cross-border payments and drive advertising.
"We started as a corporate social network, to bring buyers, sellers and decision makers under the same umbrella," explains TraDove founder Kent Yan. "Traditionally, you should use the phone to make cold calls, it could take weeks, we have shortened the cycle."
The company has recently raised $ 10 million from investors. The TraDove platform allows companies to establish a verified profile, authenticating users to ensure that they are those they claim to be. Overlaps with this with the approvals of other companies.
Once business transactions become more frequent, the platform can even classify a company with a credit rating, based on the number of transactions and the number of partners with whom the company has interacted.
TraDove uses blockchain technology for cross-border payments, so the traditional letter-credit approach from banks could soon face a new challenger. "With blockchain, you are replacing the letter of credit in a low-cost way.Once you reach an agreement, you use the infrastructure to make the payment," Yan says.
