Blockchain, a trust and opportunities generator
Traditionally, countless transactions taking place in several contexts were sealed thanks to a simple oral exchange. It was possible in the condition that all the present parties trusted each other and relied on an intention signal, from confirmation or agreement, explicit or implicit.
The trust issue
In a world more and more complex, trust is not always guaranteed. The present parties know nothing or little about each other. What could be an agreement in the past does not work anymore. « In many fields, contractual formalism as well as intermediaries certifying the exchanges have appeared to guarantee security and authenticity of the transaction and/or data registration, explains Frederik De Breuck, head of blockchain department at Fujitsu. These intermediaries hold, in return for a financial compensation, the responsibility and risks related to such a role. These third parties become trust conveyors between actors, ensuring and maintaining the security of the exchanges. There are for instance lawyers, banks, financial institutions, database administrators or even public entities. »
Seeking assistance in third parties to secure transactions and guarantee trust between multiples parties is essential but presents some disadvantages. « The main constraint lies certainly in the costs and supplementary fees generated by the activity of these actors, precises Frederik De Breuck. In addition, the use conditions are sometimes restrictive or diverse risks are involved such as those related to informatic security of these institutions. Centralising information around a limited number of actors can in some cases lower trust in final users, which is opposed to initial objectives. »
Considering the disadvantages, revealed especially at the occasion of the financial crisis of 2008, which has disturbed the trust of citizens towards banks and financial institutions, Bitcoin appeared. We attribute its origin to Satoshi Nakamoto. « The idea is that a distributed ledger, transparent, which management would not depend on intermediaries, would be more likely to ensure trust between stakeholders, as a response to the traditional financial system considered too opaque and subject to risks », mentions Frederik De Breuck.
Fourteen years after, in 2022, Bitcoin is now known from all as the first cryptocurrency, and the most important one in terms of capitalization. Nevertheless, the enthusiasm around Bitcoin has outshined the underlying technology, the Blockchain can offer. « The real revolution brought by the Bitcoin does not lie in its speculative feature, but rather in the technology on which it is based, explains Frederik De Breuck. Indeed, for the first time was born a new IT architecture enabling the treatment and registration of transactions of value without any necessary intermediary between the parties to guarantee the exchanges’ security. »
In almost fifteen years, the technology has highly evolved and gained in maturity. Numerous functionalities appeared in addition to the simple securisation and transparency of the exchanges, multiplying the possibilities Blockchain technology has to offer.
For example, the use of the blockchain technology can also:
- Create shared and inviolable databases between different stakeholders, enabling a better transparency in the business relationships.
- Register and automate the execution of contracts through « Smart contracts ».
- Create new tools through decentralized finance (DeFi), offering new possibilities in the financial industry.
- Tokenize assets in the physical world to facilitate their exchange in the digital world.
- Create ‘digital unit’ thanks to NFTs.
Negotiating the bend
« Of course, companies which negotiate the bend in the best way will benefit from the technology, comments Frederik De Breuck. Improving the speed, the security and the flexibility with which companies transfer, stock and manage virtual assets, companies from a broad range of sector, from industry as well as from services, can not only improve the efficiency of the existing processes but also create new business models. »
From today and in a concrete way, blockchain enables companies to improve their processes. For instance, registering the exact moment of a transfer of property, validating in several different IT systems the expedition confirmation of one good or even guaranteeing the inviolability of an audit process or quality control.
« Made of multiple stakeholders, changing variables, several processes and systems, current business ecosystems are rarely harmonized, continues Frederik De Breuck. The blockchain resolves this, which represents a significative interest for companies. »
Luxembourg takes advantage of blockchain
In Luxembourg, the financial sector, from the public or private actors, naturally seized this technology, from the onset. As an example, the Commission de Surveillance du Secteur Financier (CSSF), the Luxembourgish financial regulator, was the first financial authority in Europe that has positioned itself in favor of digital currency exchange platform regulation since 2014.
« Beyond cryptocurrencies, blockchain offers numerous possibilities to the bank sector, adds Frederik De Breuck. The smart contracts, for instance, can support several administrative processes. They enable automation and more efficient treatment of accountancy formalities and audit processes, accelerate preliminary checking before loan granting, improvement of data reconciliation processes or even simplification of accountancy closure processes. »
Simplification and automation of data
In parallel with simplification and automation of formalities, blockchain, in combination with Analytics tools, turns out to be particularly relevant to measure in real time and thoroughly performances in financial institutions without any additional human resources.
Since 2014, Luxembourg has positioned itself as a forerunner in the field, adopting early the technology. That is why there is today a blockchain start-up ecosystem particularly mature, traditional finance actors in favor of this transformation, lawyers and proactive regulators, professional organizations supporting the adoption of blockchain (c.f. Infrachain or the LHoFT) as well as technological partners expert in the field. For these reasons, Luxembourg could position itself as one of the most innovative countries in the area.
Supporting the creation of new solutions
« Fujitsu is part of this movement and could at an early stage, as Luxembourg does, invest in this technology and build a solid expertise in the field, explains Frederik De Breuck. More than turnkey solutions, Fujitsu focuses on cocreation. Our desire is to combine blockchain expertise from Fujitsu with the business skills of different Luxembourgish actors to bring the most adequate technological solutions to answer to specific business issues. »
Find the original French article on IT-Nation: La Blockchain, vecteur de confiance et d’opportunités – ITnation | L'actualité des professionnels de l'IT au Luxembourg