Exchange Network Architecture could take smart contracts to the next level

Emanuel Palm, doctoral student at Luleå University of Technology (LTU) has, together with colleagues, recently published a paper outlining how distributed ledger technologies, the technologies behind cryptocurrencies like Bitcoin and Ethereum, could facilitate a previously unparallelled automation of inter-organizational supply chain processes.

With a point of departure in attempting to investigate whether distributed ledger technology could be used to bridge the gap between IT solutions and some of the financial and legal aspects of decision making, Palm and his colleagues found that blockchain technology is not optimal. Problems include changes to the trust model since distributed ledger systems are essentially “trustless systems” that do not rely on one specific authority or trusted middlemen for validation. Something that has significant implications for legal liabilities. Distributed consensus models also require a transparency that could allow competitors to access sensitive information about one another.  So called “smart contracts” allow a certain degree of automation but are also a legal grey zone, issuing routines rather than contracts and issues of non-repudiation need to be resolved. To progress beyond integration with factory automation that simply involves extracting relevant information from digital contracts, Palm and colleagues propose an Exchange Network Architecture that includes digital facilitation, negotiation and ownership, providing greater compatibility with existing contractual practices than is currently offered by “code as contract” solutions . Further developments could include Contract Network Architecture that has the potential to go beyond providing greater efficiency at a surface level and fully automate trust and risk assessment. Further developments in the project will be presented at Arrowhead Tools workshops later this year.

More information and links to publications can be found here.