Connectivity and interoperability with external blockchain services is the hallmark of Digital Cash success.
The lack of cross-chain interoperability is a major challenge for blockchain technology to overcome. Blockchains, which offer accurate, safe and immutable ledger services, have up until now been more or less unable to integrate with each other. 2019 has been the year where protocols for cross-chain interoperability have effectively developed, and this presents an opportunity for stable, digital assets to unify decentralized finance and applications.
At ARYZE, the distributed ledger which maintains a record of transactions and facilitates interaction with external parties is called RYZEnet. When a user deposits money into the ARYZE ecosystem through the associated fintech products, a digital cash “I-Owe-You” is issued to the user on RYZEnet, for the equivalent value and in the same currency desired by the user. Under normal circumstances, the digital cash IOU is strictly present on our blockchain; however, through interledger/interoperability protocols, we can “publish” a corresponding virtual amount on other blockchains that we offer connectivity with.
It is the strategic consideration of ARYZE to offer an entry into the universe of blockchain assets, by unifying the innovations of the future through a set of “blockchain agnostic” stable, digital currencies, backed by the faith in central banks around the world. An expected trend for the future shows that trillions of dollars’ worth of existing assets are going to be digitized, stored, and transferred via distributed ledger technologies, providing an incentive for ARYZE to meet this trend head-on.
Let’s say that Alex wishes to use $100 USD to set up a blockchain-enabled “smart contract” between his friend, Bob, and himself. This smart contract is to ensure that Bob delivers a collector’s edition painting by post to Alex, who has offered to pay $100 USD. The smart contract is set to execute once the package is delivered to Alex’s nearest post office, but the contract only accepts ETH for the coded agreement. Through RYZEnet, Alex can indicate that he wishes to use $100 Digital USD on the Ethereum blockchain and receive a corresponding USD_ETH in his own Ethereum wallet. The USD_ETH can now be coded into the smart contract as the amount payable.
Upon executing and transferring this ownership of both physical and digital assets, Bob can redeem his USD_ETH for fiat currency either directly through his MAMA account or through an exchange which is a known partner to ARYZE. This is an example of a Digital Cash to Ethereum pairing. The interledger protocol offers this type of pairing for myriad blockchains that are actively developed around the world, to name one of many interoperability protocols available today.
“Interledger is an open protocol suite for sending payments across different ledgers. Like the Internet, connectors route packets of money across independent networks. The open architecture and minimal protocol enable interoperability for any value transfer system.”– Source: Interledger Protocol
While this is substantial for cryptocurrency enthusiasts like Alex and Bob, what about corporations seeking to use this technology? Adoption of blockchain technology in the corporate world is edging ahead optimistically, though with caution. World-renowned brands like JP Morgan, Maersk, IBM, IKEA, Amazon, and Microsoft have all invested rather heavily into blockchain technology in the past few years.
Recently, IKEA efficiently executed smart contracts with Tradeshift through the Ethereum blockchain and an Icelandic stablecoin, proving that supply chain and trade financing were excellent use-cases for the aforementioned technology. Deloitte’s 2019 Global Blockchain Survey indicates that China and the United States are highly interested in excelling in blockchain technology, as a strategic and performance vehicle for handling data or assets, where 61% of survey respondents from industry professionals indicated that blockchain technology is broadly scalable and will eventually achieve mainstream adoption.
Coming back to stablecoins, the use-case for low credit risk stablecoins is apparent among selected corporations who are in dialog with ARYZE. Alternatives currently on the market do not adequately consider market risks and the credit risk that is inherent with modern banking. In order to remain blockchain agnostic and therefore appeal to a broad corporate user-base whom have invested in different technologies, ARYZE offers low credit-risk Digital Cash stablecoin integrations for desired blockchains.
It is becoming increasingly apparent that there are feasible and high impact uses for blockchain in a wide variety of industries. Taking a look at a corporate example for a firm seeking to utilize smart contracts to execute trade financing deals, we can examine the IKEA-Tradeshift pilot project. While the first attempt for Tradeshift and IKEA was conducted utilizing a programmable e-money, we believe there will be many more trials to perfect this transmission of data and asset ownership. Moreover, different stablecoins call for different intricacies, in terms of adapting to market conditions, FX volatility and credit-risk, indicating a rise of many different stablecoin models in the future.
The so-called “smart invoices” in the aforementioned case are smart contracts that execute an invoice according to a trigger and due date. Using a stablecoin, rather than a cryptocurrency, ensures that corporations do not need to dabble in speculative and volatile assets, as digital currencies that are stable and pegged to fiat currency are familiar and transferable in other traditional business arenas. This case is a remarkable validation of a real need for stablecoins to conduct modern and automated supply-chain and trade finance operations.
“A programmable financial supply chain, where trading partners can connect information flows to money flows through smart contracts, will transform how suppliers and customers interact.”– Stefan Arnason, CFO of IKEA Iceland
Digital Cash stablecoins, issued on RYZEnet, are not only transferable throughout the ARYZE ecosystem and products, but able to interact with third-party blockchains and blockchain-enabled financial services. Partners and clients who are known to ARYZE, through thorough Know-Your-Business processes, are able to deposit funds for financial supply chain operations within ARYZE and subsequently publish corresponding digital assets to their desired blockchain. Not only do they then have an efficient, stable, and programmable e-money, but also a digital asset that carries the lowest possible credit-risk for currency derivatives. Transactions are free to conduct throughout ARYZE services, as well as being safely backed by currency deposits in the corresponding central bank.
Ultimately, there is an enormous opportunity to improve the systems that today are in place for moving funds around the world, and as major corporations look towards the innovations in distributed ledgers for various optimizations, the time has never been better to do so.