5 Months Ago

Tradeshift, based in Iceland, uses blockchain technology to help several multinational organisations and has just announced that IKEA has used its platform to effect a ‘digitalised payment’ using Tradeshift’s platform.

It used Smart Contracts with an Ethereum-based version of the Icelandic króna and created by a company called Monerium.

As the first company authorised to issue e-money on blockchains, we are delighted to demonstrate the benefits of blockchains for mainstream B2B transactions using a legal form of digital money,” said Monerium’s CEO, Sveinn Valfells.

Monerium has an eMoney licence, enabling it to move money around Europe without the need to use banks. By using ‘programmable’ eMoney in conjunction with Smart Contracts, Monerium is looking to reduce the cost of moving money while making payments faster.

Gert Sylvest, co-founder of Tradeshift said, “Smart contracts can create smart invoices which are not just as useful for lowering administrative hurdles in business-to-business (B2B) cross-border transactions, but for building new financing models that make it easier for enterprises to improve access to credit and improve cash flow. That is why we have built the world’s first smart invoice and now settled it with licensed digital cash”. 

In effect, a smart invoice can create a token which represents the cash that is due to an invoice. Since whoever holds the token is entitled to receive the money from the invoice, it opens tokens to the world of factoring and credit lending which, by using Smart Contracts, payments could all be automated. A key advantage is because the tokens are held on a Blockchain i.e. there is one immutable database and history of transactions, thus avoiding fraudulent activity by the same invoice being used twice as collateral since the token can only be used once.

So IKEA, by accepting payment using a token on the Ethereum Blockchain, demonstrates how it is possible to bypass the banking system and make the process transferring money more efficient. It is not difficult to see why banks are having to rethink their business models and become more digitally engaged themselves.

 

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#Payments

6 Months Ago

The Australian Government is proposing to enact legislation so that it would be a criminal act if one of its citizens used cash for transactions worth more than $ 10,000.

It is estimated that cash is used illegally for about 3% of the country’s Gross Domestic Product GDP - Aus$50 billion.

In Europe, the European Central Bank (ECB) announced it would end the production and issuance of its €500 note by the end of 2018. While in France cash transactions above €1,000 are banned, the same is true in Spain for €2,500+ and in Italy, over €3,000.

A report issued in May 2019 claims “that in Europe, GDP of European countries are underreported by 19% because of unrecorded shadow economy activities” The use of cash no doubt lubricates much of these “shadow activities”.

It is of little surprise that governments are encouraging transactions to ‘go-digital’ and reduce the amount of cash its citizens use for buying and selling of goods and services.

Another area that concerns governments is the debt and bond markets, given their huge size and potential impact on economies.



Source: Institute of International Finance


The Institute of International Finance claims the world’s debt is approximately $244 trillion, i.e. three times the size of the global economy. There is increasing evidence that the bond markets are becoming digital, as we have seen yet another bank, this time Europe’s fifth-largest Santander, issue a $20 million bond on a blockchain. As Finextra described, “Santander Securities Services is acting as tokenization agent and custodian of the cryptographic keys”.

 

Given the economic uncertainties globally and ultra-low interest rates, after a quiet summer bond markets in September have been very active with over $140 billion of corporate bonds being issued in just the first week, as reported by the FT. Therefore, if more institutions follow the lead of Santander, BVVA, Commonwealth Bank of Australian, The World Bank, Société Generale - the list goes on - we are likely to see more bonds being issued on blockchains and further digitising of this asset class.

 

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#Digitalization