“Blockchain may complement AI and solve the problem of the veracity of the underlying information.”

Blockchain is more than just a tool to enable digital currencies. At its most fundamental level, it is a new, decentralized and global computational infrastructure that could transform many existing processes in business, public administration and society in general. Blockchain has received considerable hype, ranging from "cryptomania" in the trading markets to wide- spread discussions about the breadth and depth of its potential impact across public and private sectors. We have asked Frank Roessig, Head Digital Solutions for Finance at Telindus, to help us gain a clearer understanding of the strengths of blockchain, as well as areas requiring improvement.

What is your personal definition of Blockchain?

For me, in simple terms, blockchain would be a trusted and collaborative network for transactions and information. From a technical standpoint, it's a combination of three components. One of them is a chain of immutable blocks. The second component is a consensus mechanism, to get from n to n + 1, and the third aspect is a set of distributed ledgers. Combination means, for instance, that you may not have all three components but only two out of three.


What are the possible applications of Blockchain?

One application is, for example, notarization. Telindus has built the first European notarization log chain for the Luxembourg government. It is operational since 2018 and has been announced to the public and other European governments in February 2019. If you have a trusted source, instead of having to send back full force paper, you make a hash of a notarized document. You still have the notary that authenticates the document, but once he has evidenced it, he uploads a few hashes on the document and anybody who wants to compare a copy of the document just has to compare the hashes to check that it is verified. The advantage of that chain is that it significantly reduces the notarization log costs. It's a clear ROI.

Another application is traceability. We have built a traceability chain for any item in general but we have also built one version for IoT in particular. We are currently implementing such a chain with a company that produces very high-quality mechanical pieces. They want us to trace each piece from manufacturing via distribution to the utilization, the maintenance, and either the retirement or the breakage. That piece is used to trans- port expensive items and if it were to break, you need to know the history, for insurance purposes for example. These producers are being copied by cheap manufacturers and by using such a traceability chain, they can guarantee their clients that what they bought is actually an original, not a copy of any sort.

Other use cases are what I would call KYX applications. There is a lot of KYX requirements and procedures - Know Your Customer, Know Your Supplier, Know Your Transactions, etc. Today all these KYs are done mostly bilaterally and repeatedly and for a lot of persons, the current KYX processes are highly redundant and inefficient, resulting in little added value. The idea is to put it on a chain once and then share it among all the parties who are entitled to see it. Once uploaded, it's verified, it's identified, because it's a trusted source. And then you decide if you want to share it with one or several of the counterparts, for example banks, you work with.

Telindus is working in a consortium with the Luxembourg Association of Corporate Treasurers, ATEL. Large corporates have joined us, including RTL, Koch, Aperam, Cargolux, Ferrero and Goodyear. They all have many banks they're working with and for every bank, they need to do their KYC. They wanted to work on a POC, where we upload the KYC once and then we share it with all the banks. We have talked to the ATEF and the ATEB, the French and the Belgian associations of treasurers, and together, we are exploring a cross-border framework for this."

Reconciliation is another application. Nowadays, reconciliation is done mostly bilaterally, especially in the fund industry, between the various members of the fund administration value chain. As a result, mismatches tend to be modified only between two entities. Blockchain-based reconciliation works among multiple parties, live, in parallel, and transparently on chain.

Blockchain may also complement AI and solve the problem of trust many people face with this technology. One of the challenges with AI is the veracity of the underlying informa- tion. If you start blockchainizing the information you feed into AI, you can enhance the source and the whole history of what the AI is using. That potentially explosive use case might permit far better and more concrete applications of AI.


There is also a key application that I call interchainability. The reason is that we're all not going to use the same chain. It is like with operating systems: I mean we have Linux, Apple, Microsoft, etc. It's going to be the same on blockchain. Actually, there's going to be a whole conundrum of blockchains and it is therefore essential that chains communicate with each other in order to scale and enable more use-cases. We are also talking to a few big corporates with over 300 intra-group entities. That's another use case. They do interco financing and interco-payments, and they have no view of what is really happening. They want to put it on a chain and see how it can improve their monitoring as well as their cash management. Another use-case is the optimization of transactions: payments, trade finance, capital market securities. All these are the biggest use cases: notarization, traceability, KYX, reconciliation, interchainability, and transactions in general.


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Publié le 22 juin 2020