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Blockchain Partners To Fight Fraud & Drive Digitization
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Blockchain Partners To Fight Fraud & Drive Digitization

The Blockchain Connect Association, a newly established Czech Alliance formed in the spring of 2018 with partners including IBM, PwC and a Prague-based fintech incubator for start-ups, has revealed plans to contribute to the development of blockchain technologies in the “economic and public spheres” within the Czech Republic.

This is a country that this year along with Slovakia celebrates the 100th anniversary the founding of the First Republic of Czechoslovakia.

The grand aim of the Alliance is to “significantly change” the Czech economy within the next three to five years by using blockchain technology – also known as Distributed Ledger Technology (DLT) – as the initiative plans to accelerate the evolution of blockchain in the country.

The protagonists behind the venture claim that it will be “integral to implementing crypto solutions” throughout the public and private sectors across the nation, which has a population of around 10.5 million.

The Czech Republic is a country – along with neighbouring Slovakia – that can lay claim to many inventions and innovations over the years. The list is long, but it includes the ship’s propeller (by a Slovak) in a landlocked country, the ‘Radio Priest’, Jozef Murgaš, and another Slovak, whose patents would go on to form the foundations for the invention of the radio before Marconi.

Then there was Štefan Banič, who emigrated to America and built a prototype of a parachute in around 1912 that was registered with the U.S. Patent Office.

On the Czech side, the sugar cube (or first ever cube-shaped sweetener) was invented in the small Bohemian town of Dačice, near the Austrian border, by Jakub Kryštof Rad. And, let’s not forget the world’s first golden pilsner larger, Pilsner Urquell, originates from 1842. Reflective of this ingenuity, there is an old adage, ‘Zlaté české ručičky a chytré české hlavičky‘, which translated means “golden Czech hands and clever Czech heads.”

Mitigating Corruption, Fraud & Theft

Blockchain technology is touted by industry pundits as having the potential to significantly mitigate corruption, fraud and theft in various markets. IBM, for its part has been on a trail in recent years to bear down and stem fraud in sectors spanning gold and jewelry, logistics, shipping and digital identitiesapplying technology from the HyperLedger project.

Founding members of the alliance include Adel, a blockchain project accelerator and innovation firm, consultancy firm PwC, technology company IBM, and Squire Patton Boggs, a full-service global law firm with a multi-disciplinary team of over 1,500 lawyers across 20 countries.

Last December, Adel revealed plans to initiate a month-long crowdfunding exercise from March 1 2017 through an Initial Coin Offering (ICO). The incubator is headed up by a couple of Prague-based fintech advisers, with its ecosystem comprising stakeholders, registered community members, staff from around the globe, a Project Review Committee and Adel’s Board formed by its three co-founders.

At the time, the incubator was to launch a website to support its initiative and aimed to develop, support and fund start-ups using blockchain technology based on the Nxt community platform. (Nxt was to provide a Blockchain-as-a-Service (BaaS) platform).

The popularity of blockchain arrived with the rapid expansion of cryptocurrencies and the open ledger. This represents a decentralized database that keeps a record of every single transaction or interaction between two parties. In simplistic terms one could think of it as a huge Excel spreadsheet.

Traditional databases have a much wider scope. For this reason, Blockchain Connect has indicated that it will “focus on the differentiation of crypto solutions.”

Jan Lamser of Adel describing the alliance’s ambitions, remarked: “First and foremost, our goal is to educate the public and private sectors on blockchain and crypto solutions. We want to take part in the digitization of the entire Czech society and show the practical use cases.”

Jiří Batěk, the director of IBM’s Infrastructure Division based in Prague and Business Unit Leader, Global Technology Services (Central Europe) at ‘Big Blue’, added: “Our ambition is not only to localize our global solutions in the Czech environment, but also to find and support innovative local partners and enable their access to international markets.”

One of blockchain’s benefits is touted as the reduction of administration between companies and customers. As such this technology offers a high level of security and supply-chain transparency.

“In traditional business models, there are many entities that play different roles. They are not easily trusted, and therefore require bilateral paper-based agreements. Blockchain can easily secure trust in a streamlined and digital sphere,” stated Petr Ložek, managing partner of consulting firm PwC ČR and lead partner of technology consulting at the firm.

A possible obstacle though to the global introduction of blockchain technology is seen as deriving from “insufficient motivation” of all the stakeholders, it was pointed out by the Association. And, the question was how to address this.

As noted by Danica Šebestová, a partner at Squire Patton Boggs law firm: “For a successful introduction of blockchain [projects] it is necessary to work with all stakeholders who want to benefit from these solutions. This is our ambition – to find optimal crypto solutions that will save time and money for our clients.”

Simplified Logistics: Helping Global Trade

Blockchain Connect has identified a number of areas – real estate, financial services, automotive, healthcare and the food industry – as the top sectors that will be able to “maximize the benefits” of blockchain and DLT.

For example, the alliance pointed to the logistics industry being “heavily burdened” by multiple parties needing to exchange paper documents. With blockchain they can be in a position to simply share the same open ledger in order to settle transactions.

According to the World Economic Forum’s study “Enabling Trade Valuing Growth Opportunities 2013”, international trade can potentially save up to 15% by reducing legacy barriers.

Similar benefits can also be found in food safety controls, in verifying the quality of raw materials. And, in real estate, negotiations between banks and land registration can take up to 70 days.

By using blockchain these settlements can be resolved within a few days or a saving in time of “up to 95%”, it was ventured.

In the automotive industry, for example, it was pointed out that an open ledger can prevent tachometer tampering. Similarly, counterfeit spare parts can easily be identified and traced in cars, thereby protecting the supply chain of the entire automotive industry.

Of course, like so many partnerships and alliances in the blockchain and cryptocurrency spaces, it is one thing to promise so much. And, the industry has had a habit of over promising and under delivering. The proof of the pudding will surely come when concrete advances are actually forged and carved out.

And, that is something the industry needs to build confidence more so than ever. For now, this is a work in progress, even if Blockchain Connect’s aim of “digitization” of Czech society to bring accelerated changes to legislation is a laudable one. And, working with partners across the CEE region might potentially pep up proceedings going forward.

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