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Browsing the "smart contracts" Tag

Smart Contract Sweet Spots: Basic Implications (Blockchain Report Excerpt)

November 10th, 2018 | by Michael Barnard

One clear area where smart contracts have potential is in cross-border purchases of finished goods or raw materials where no business relationship exists. Herstatt risk already applies due to the exchange rates with the foreign seller, although at a lower level of risk. Projecting accounts receivable into a distant country is problematic at best


Smart Contract Business Drivers: Multiplying Parties, Default Costs, & Penalty Clauses (Blockchain Report Excerpt)

October 28th, 2018 | by Michael Barnard

One of the purported advantages of smart contracts, including a third party such as a delivery organization in a contract, is actually an added complexity. Anything which involves multiplying parties to a contract increases its complexity, as is true with any solution to a problem. One of the original English formulations of Occam’s Razor was do not multiply entities without necessity.


Smart Contract Business Drivers: Herstatt Risk (Blockchain Report Excerpt)

October 20th, 2018 | by Michael Barnard

Herstatt risk or settlement risk is the risk that a foreign exchange rate will change after a contract is locked in at a specified amount of a specified currency. Obviously this is a two-way risk, as if the exchange rate goes up, the buyer will pay more; and if the exchange rate goes down, the seller will receive less. The more volatile the currency and the longer the time until settlement, the greater the risk


Smart Contract Business Underpinning (Blockchain Report Excerpt)

October 13th, 2018 | by Michael Barnard

A smart contract that involves contracting a payment for services to be rendered or a product to be delivered involves three separate accounts: a purchaser, a seller, and an escrow account. Escrow is a means of creating trust in a contract where there is none. In an escrow situation, a third party holds something of value from the purchaser until a certain condition is met by the seller, at which time they deliver the thing of value to the purchaser



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