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.