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Smart Contracts Show Potential; Progress Limited So Far

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Experts on the deployment of blockchain technology to handle smart contracts, which facilitate trust between parties in a transaction, are disagreeing about how much blockchain is being applied to smart contracts so far.

The battle was joined in a panel discussion at the Blockchain for Wall Street conference hosted by the Wall Street Blockchain Alliance on November 29. According to Preston Byrne, chief operating officer and general counsel at Monax Industries, the maker of the Eris blockchain platform, “nothing” is in production currently for smart contracts, although he sees prototypes in the works that could be in production by the end of 2017.

IBM, the Swiss non-profit Ethereum Foundation, and New York and London based technology company R3 have emerged as the leading blockchain platforms for the financial services industry. Byrne gave an edge to Ethereum’s Solidity language for smart contracts processing. “Our bets are on [Solidity], because we see the most enthusiasm about it,” he said. “It’s organically built from scratch.”

The Hyperledger open source project for blockchain technology is being applied to smart contracts, however, according to Bart Cant, blockchain community leader at Capgemini Financial Services. “We see new initiatives like Hyperledger, Corda [R3’s platform] and other platforms jumping into the smart contract space,” he said. “It’s an evolution we’re going to see and continue to see. I’m not sure who the winner is going to be, but we’re looking at all pieces of it. Each brings specific aspects strengths to the environment. We will see that evolve over time.”

Use of blockchain for smart contracts by investment banking firms, particularly for trading and settlement of syndicated loans, could bring several benefits, according to a Capgemini study. Settlement of syndicated loan transactions could be reduced from 20 days down to 6 to 10 days; demand could be increased by 5 to 6%, and income from such transactions could increase by anywhere from $2 billion to $7 billion annually, according to the study.

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