Continuing from our earlier post on smart contracts, this post aims to discuss the state of Smart contracts, highlight some current projects and companies currently undertaking developments in the area. Smart contracts as discussed in the previous article of the series are programs that exist and execute themselves on a blockchain network. We explored how smart contracts work and why they are superior to traditional digital platforms. Companies described here operate in a wide variety of industries however most of them deal with identity management systems, financial services, crowd funding systems etc., as these are the areas thought to be most suitable for switching to blockchain based data base systems.
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Platforms such as Counterparty and Solidity(Ethereum) are fully public building blocks for developers to create their own smart contracts. Wide spread developer participation in such projects have allowed these to become de facto standards for developing smart contracts, designing your own cryptocurrency token systems, and creating protocols for the blockchains to function. Many commendable projects have derived from them. Quorum, by JP Morgan, derived from Ethereum, is an example. Ripple is another example for the same.
Managing financial transactions
Transferring cryptocurrencies over the internet is touted to be the norm in the coming years. The shortfalls with the same are:
- Identities and wallet addresses are anonymous. The payer doesn’t have any first recourse if the receiver does not honor the transaction.
- Erroneous transactions if any will cannot be traced.
- Cryptographically generated hash keys are difficult to work with for humans and human errors are a prime concern.
Having someone else take in the transaction momentarily and settle it with the receiver after due diligence is preferred in this case.
EscrowMyEther and PAYFAIR are two such escrow platforms. Basically, the escrow company takes the agreed upon amount and sends a token to the receiver. Once the receiver delivers what the payer wants via the same escrow platform, both confirm and the final payment is released. These are used extensively by freelancers and hobbyist collectors online.
Developments in micro-financing and micro-insurance projects will improve the banking infrastructure for much of the world’s poor and unbanked. Involving the poorer “unbanked” sections of the society is estimated to increase revenues for banks and institutions involved by $380 billion. This amount supersedes the savings in operational expenses that can be expected by switching to blockchain DLT for banks.
BankQu Inc. based in Midwest United States goes by the slogan “Dignity through identity”. Their platform allows for individuals to setup their own digital identity record where all their transactions will be vetted and processed real time on the blockchain. Overtime the underlying code records and builds a unique online identity for its users allowing for ultra-quick transactions and settlements. The BankQu case studies exploring more about how they’re helping individuals and companies this way is available here.
Stratumn is helping insurance companies offer better insurance services by automating tasks which were earlier micromanaged by humans. By automation, end to end traceability, and efficient data privacy methods they’ve radically changed how insurance claims are settled. Improved customer experience along with significant cost reductions present a win-win situation for clients as well as firms involved.
A similar endeavor is being run on a trial basis currently by the French Insurance firm, AXA. The product “fizzy” allows users to subscribe to its service for a small fee and enter their flight details. In case, the flight gets delayed or comes across some other issue, the program automatically scours online databases, checks with the insurance terms and credits the insurance amount to the user’s account. This eliminates the need for the user or the customer to file a claim after checking with the terms manually and in the long-run once such systems become mainstream, increase accountability from airlines.
Keeping track of ownership rights
It is theoretically possible to track media from creation to end user consumption utilizing timestamped blocks of data in a DLT. Companies Peertracks and Mycelia are currently helping musicians publish content without worrying about their content being stolen or misused. They help artists sell directly to fans and clients while getting paid for their work without having to go through rights and record labels.
Identity management platforms
Blockchain based identity management platforms store your identity on a distributed ledger. Once an account is setup, it is securely encrypted and sent to all the participating nodes after. However, as the owner of the data block only the user has access to the data. Once your identity is established on the network and you begin transactions, an automated program within the network will verify all previous transactions associated with your account, send it for regulatory filings after checking requirements and execute the settlement automatically provided the program deems the transaction legitimate. The upside here being that since the data on the blockchain is tamper-proof and the smart contract checks the input with zero bias (or subjectivity), the transaction doesn’t, as previously mentioned, require oversight or approval from anyone and is taken care of instantaneously.
Start-ups like ShoCard, Credits, and OneName are currently rolling out similar services and are currently in talks with government and social institutions for integrating them into mainstream use.
Other independent projects by developers like Chris Ellis and David Duccini have respectively developed or proposed alternative identity management systems such as “World Citizenship”, and IDCoin, respectively. Mr Ellis even demonstrated the capabilities of his work by creating passports on the a blockchain network .
Share & Charge (Slock.It) is a European blockchain start-up. Their mobile app allows homeowners and other individuals who’ve invested their money in setting up a charging station share their resource with other individuals who’re looking for a quick. This not only allows owners to get back some of their investment, but also allows EV drivers to access significantly more charging points in their near-by geographical area allowing for suppliers to meet demands in a convenient manner. Once a “customer” is done charging their vehicle, the hardware associated creates a secure time stamped block consisting of the data and a smart contract working on the platform automatically credits the corresponding amount of money into the owners account. A track of all such transactions is recorded and proper security verifications kept in place. Interested readers can take a look here, to know the technical angle behind their product. The company’s platforms will gradually enable users to share other products and services with individuals in need and earn a passive income from the same.
The companies we’ve looked at here, comprise a very short list of ongoing projects that make use of smart contracts and blockchain database systems. Platform such as these help in building a secure “box” full of information to be accessed only by the users themselves and the overlying code or the smart contract. The information is vetted in real time based on a trigger, examined, and the algorithm is executed by the system. Such platforms with minimal human oversight, a much-needed step in the right direction with respect to secure digital automation, something which has never been thought of at this scale previously.
The next post will shed some light on the different types of blockchains. Click the following link to know more about this topic.
-  About | Counterparty
-  Quorum | J.P. Morgan
-  Escrow My Ether
-  PayFair
-  B. Pani, “Blockchain Powered Financial Inclusion,” 2016.
-  STRATUMN | Insurance Claim Automation Across Europe
-  fizzy
-  AXA goes blockchain with fizzy | AXA
-  M. Gates, “Blockchain. Ultimate guide to understanding blockchain bitcoin cryptocurrencies smart-contracts and the future of money.pdf.” 2017.
-  ShoCard Is A Digital Identity Card On The Blockchain | TechCrunch
-  J. Biggs, “Your Next Passport Could Be On The Blockchain | TechCrunch
-  OneName - Namecoin Wiki
-  Share&Charge launches its app, on-boards over 1,000 charging stations on the blockchain
-  slock.it - Landing