Commerzbank Trials Blockchain Programmable Money for Managing Corporate Supply Chains
Using a “blockchain programmable money” (BCPM) system called Utility Settlement Coin, Commerzbank is working with a number of partners including Deutsche Bank and the London Stock Exchange to manage the supply chain of corporate transactions through the banking system. Utility Settlement Coin (USC) is an asset-backed digital cash, which can be exchanged at a 1:1 ratio with currencies used in the real economy. The USC system was developed with the aim of creating a blockchain-based digital cash system that can settle transactions with low costs and in real time.
In October, Commerzbank and SAP said they were developing a programmable blockchain solution to manage international corporate supply chains. The solution, which is built on SAP’s Blockchain platform and the open-source Hyperledger Fabric framework, should be up and running by March 2019, according to the German bank.
Blockchain is one of the most popular buzzwords of the last few years, and it’s starting to catch up with its hype. In order to understand how the technology works and what impact it will have on the financial industry, it’s important to understand how and why it works. What is blockchain? A blockchain is a decentralized, distributed, and public digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network. The blockchain is where crypto currencies such as bitcoins are stored, and it uses cryptography to secure the transactions and to control the creation of new units of a particular cryptocurrency.. Read more about blockchain magazine and let us know what you think.
Commerzbank has announced its participation in a blockchain project with two companies, BASF and Evonik.
For example, payments along the supply chain were automatically verified, paid and recorded using smart contracts.
Legally, the digital currency used is electronic money.
Commerzbank has partnered with two chemical companies to test a generic blockchain designed to manage two-way supply chain processes in a real-world environment. Throughout the process, payments between the two companies, Evonik and BASF, were monitored and made fully automatically and digitally through a programmed payment process. In this case, Evonik and BASF transferred business process data to Commerzbank’s blockchain platform via the data service provider Elemica. This platform mapped the relevant business processes comprehensively and fraud-proof, using data and blockchain to fully automate payments. It provided electronic money to partners for trading on a distributed ledger technology platform, and payments were processed after automatic confirmation of transactions using smart contracts and programmable money. Evonik Digital’s chief digital strategist, Heinz-Günther Lux, said the following: The payment process via blockchain and programmable currency through our existing technology chains is definitely more transparent, faster and more reliable. This is an important element in the development of fully autonomous supply chains. In summary, payments in the supply chain were verified, paid and recorded in a fully automated way using smart contracts, and programmable currency was used to complete the process. Following this experience, the companies agreed to extend the project to other supply chain partners in the coming months. Looking at the history of these companies, Commerzbank announced back in July 2017 that it was considering blockchain technology as a way to digitize its supply chain, and BASF also started working with the technology in 2017 when it was announced that the company was exploring its potential for tracking the delivery of goods. Imagine a future where you can have both an automated production line and an inventory process. Here the software or smart contracts can detect that the level of a certain input material is low and automatically order the required material from the supplier. When they arrive, the production system can register the new stock, and once they pass quality control, another smart contract can initiate payment with cash in the digital ledger. The bank, in turn, will retain a small portion of the money as a financing cost for the advances. As exciting as this programmable money sounds, it currently has a problem that may be solved in the future, which is the fact that all parties must simply use the electronic money book or Commerzbank. Commerzbank’s blockchain is the R3 Coda enterprise blockchain, which was used to test tokenized money for machine-to-machine payments via Daimer and repo transactions with Deutsche Börse in 2019. Suffice it to say, the bank has been focused on blockchain technology for a very, very long time and is now reaping the benefits of its progress. This certainly marks the future of blockchain technology in the supply chain sector, and will streamline business and make it much faster, which will inevitably lead to progress and global adoption of the technology.If you’ve ever worked in the heavily regulated financial industry, you probably already know that nothing is ever as straightforward as it seems. Even Bitcoin, when it was first developed, was originally called “Bitcoin: A Peer-to-Peer Electronic Cash System.” You wouldn’t believe how long it took some people to stop thinking of it as a currency, and start thinking of it as programmable money (the intended use case).. Read more about cointelegraph magazine and let us know what you think.