Today Commerzbank announced it was involved in a joint blockchain project with chemical firms BASF and Evonik, who frequently trade with each other. Supply chain payments were verified, paid and logged in a fully automated manner using smart contracts. In other words, it used programmable money or cash on ledger. At a legal level, the digital cash was e-money.
Looking into the future, one can envisage an automated production line and inventory process where a program or smart contract sees that levels of some input are low and automatically orders the materials from a supplier. When the materials arrive, the production system logs the new inventories, and as soon as the quality is checked, a smart contract can trigger a payment using cash on ledger. Given that supply chain payment terms aren’t usually instant, the supplier is likely to have opted for immediate payment. Hence, the bank will take a small cut of the money as a financing charge for the early payment.
“The payment process via blockchain and by means of programmable money along our existing process chains is definitely more transparent, quicker and more reliable,” said Heinz-Günter Lux, Senior Digital Strategist at Evonik Digital. “It is an important building block towards the development of fully autonomous supply chains.”
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