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HP, the computer technology giant, believes the blockchain may save billions of dollars for companies if integrated into B2B relationships.

The real promise of the blockchain technology lays in a smart contract management, states an article in HP MATTER, a digital magazine issued by HP, in partnership with Quartz, Fast Company, and The Atlantic.

Smart contracts, which are described as “legally binding agreements that execute themselves through software”, can eliminate a need for an intermediate party, namely human lawyers, accountants, consultants, and bankers. These specialists are slow and not immune to human faults. Moreover, some of them “bill small fortunes by the hour”. By contrast, a smart contract is just a piece of rather simple software, the article notes.

“In Bitcoin, the contract is the transaction itself: one party sending another funds. But in commercial banking or investments, smart contracts could execute unknowably complex contingencies based on the terms of the contract, all in real-time, with total transparency to the agreeing parties.”

The blockchain technology makes smart contracts impervious to fraud as every transaction is fixed forever in a public ledger. 

Nowadays, the blockchain technology is not just a mean for two nerds to facilitate a transaction over the Internet, the article continues. Developers are seeking ways to integrate the disruptive technology in B2B payments exceeding usual transaction volume limits. Their success may be disrupting for credit card companies, payments processors, and legions of accounting and law firms and cost their employees jobs but at the same time it will save billions for companies as well as individuals. A smart contracts integration will increase the velocity of transactions to “warp speed” at all levels of the economy, HP remarks.

“With that kind of uptick in volume, the IRS might end up being the most disrupted entity of them all.”

As we wrote earlier, Santander Innoventures recently published a document called “The Fintech 2.0 Paper: rebooting financial services”. An innovative investment vehicle for the Spanish bank group Santander stated that the distributed ledger technology can be used to bypass slow and expensive international payment networks or be adopted in securities, syndicated lending, trade finance, swaps and derivatives via “smart contracts” and save banks $15-20 billion a year by 2022.

 

Nadya Krasnushkina