IKEA Begins Using Smart Contracts on the Ethereum Blockchain
IKEA has begun utilizing smart contracts on the Ethereum blockchain to facilitate payments from one of its Icelandic retailers.
Tradeshift, the leader in supply chain payments and marketplaces, and Monerium, the world’s first and only authorized provider of licensed e-money for blockchains, announce the successful completion of a transaction that marks a major step forward in business payments and finance.
Using Tradeshift’s platform and smart contracts on the Ethereum blockchain, Icelandic retailer Nordic Store purchased goods from IKEA Iceland and settled an e-invoice with Monerium’s programmable digital cash.
With the transaction, Monerium and Tradeshift prove government-regulated, programmable e-money is ready for mainstream markets. A new category of blockchain-powered payments is now a reality.
“Programmable money regulated by governments will become the foundation for e-commerce payments because they enable so called ‘smart contracts.’ Smart contracts have many use cases. For example they can be used to generate ‘Smart Invoices’, which are invoices that basically settle themselves,” said Gert Sylvest, co-founder of Tradeshift and GM of Tradeshift Frontiers, a digital incubation unit.
“We see smart invoices not just as useful for lowering administrative hurdles in business-to-business (B2B) cross-border transactions, but for building new financing models that makes it easier for enterprises to improve access to credit and improve cash flow. That is why we have built the world’s first smart invoice and now settled it with licensed digital cash together with Monerium. This is an important step forward.”
The transaction is in line with predictions made recently by Gartner, the International Monetary Fund (IMF) and World Economic Forum (WEF).
Gartner predicts that blockchain and smart contracts will have transformative impact on a 2–5 year horizon (“Hype Cycle for Multienterprise Solutions”).
IMF foresees blockchain-based forms of e-money enabling “seamless payment of automated transactions” and substantial efficiency gains from back-office tasks (“The Rise of Digital Money”).
Last but not least, WEF projects that 10% of global gross domestic product will be stored on blockchain technology by 2027 (“Deep Shift Technology Tipping Points and Societal Impact”).
Earlier this year, Monerium received a license to issue currencies as e-money on blockchain. The transaction was settled with Icelandic Krona, the first of several currencies Monerium will support.
“As the first company authorized to issue e-money on blockchains, we are delighted to demonstrate the benefits of blockchains for mainstream B2B transactions using a legal form of digital money,” said Sveinn Valfells, co-founder and CEO of Monerium.
“Unlike cryptocurrency which is volatile, e-money is a proven digital alternative to cash, regulated and redeemable on demand. Using programmable e-money in smart contracts heralds a new category of payments.”
Connecting the information flow on Tradeshift with licensed e-money on blockchain creates an ideal foundation for programmable financial services.
“With a ‘smart invoice’ we can issue tokens that represent the future cash flow down to each dollar on the invoice. Whoever holds tokens will get paid upon due date, which makes smart invoices ideal to use for financial-services apps,” said Sylvest.
With Smart Invoices, short-term credit to small and large companies can be delivered automatically.
Sylvest continued, “if you sell the tokens back to the buyer, you basically have dynamic discounting. If you sell them off to a financier, you have Supply Chain Finance. If you use them as collateral in order to provide finance to sub-suppliers, you have what some call ‘Deep Tier Finance’ and what we call ‘Ecosystem Finance.’ You then avoid double-dipping finance fraud, which is when the supplier sells the same invoice two or more times, because now you can only sell a token once.”
Stefán Árnason, CFO of IKEA Iceland, said “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.”
Nordic Store illustrates the potential in this way, “the science fiction is when Tradeshift integrates with Monerium. It connects the invoicing, the money, and the inventory,” said Hafsteinn Gudbjartsson, co-owner of Nordic Store.
The partnership marks the first phase of Monerium’s global expansion plans. “We are passporting our e-money solution to Europe to accelerate seamless cross-border payments; other jurisdictions will follow,” said Valfells.
“With Tradeshift, we intend to make international B2B supply chain transactions happen instantly, automatically, and at a fraction of today’s costs.”
Monerium’s plans align with the Tradeshift roadmap for blockchain. “For us, it’s about digitizing the financial supply chain and making it programmable. This can help break down country barriers for small companies and open access to finance in all of our 190 countries where the Tradeshift platform is operational,” said Sylvest.
“Combining e-invoices with programmable money has significant global impact and outreach.”