Who will benefit the most from a widespread blockchain adoption?
We had a great conversation with co-founders Matthias Weissl (MW) and Jonathan Llamas (JLL) to learn more about what Verum Capital does, understand current challenges, and gain insight on the future of the blockchain space.
Verum Capital is a boutique blockchain advisory based in Zurich, Switzerland. Operating since 2017, the Verum Capital team has worked to build strategies and implement pioneering blockchain projects for major financial institutions, global corporates, international institutions, and national governments.
To warm up the conversation we asked a question that many of us would like to know.
EBC: Who will benefit the most from a widespread blockchain adoption?
JLL: The end user!
MW: It’s true, consumers will benefit from direct, trusted transactions through decentralization. But, the enterprise is poised to offer these solutions to the consumer.
JLL: Of course, and while there is a lot of discussion about blockchain as it relates to fintech or supply chain, we do not think that the discussion of blockchain opportunities should be limited to one sector.
MW: When we speak to global corporates, we discuss blockchain at three levels: financial, operational, and strategic. The more familiar use cases related to payments and logistics can be positioned nicely within the first two categories. But, the really exciting opportunities are the strategic use cases.
JLL: The opportunities for enterprises, of all shapes are sizes, to benefit are limitless. As are the benefits they can pass onto their customers. Organizations just need to ask themselves: how far are we willing to go to build a mutually beneficial ecosystem with our suppliers and customers? What are we willing to do to ensure the sustainable nature of our products and services? Are we willing to empower our customers to access our solutions in new ways?
MW: It sounds obvious, but eventually your customers will want to benefit from blockchain-enabled solutions. So, if you are willing to take the first steps you will reap the rewards, regardless of your sector.
EBC: Who do you help and what is the most common challenge to implementing blockchain?
JLL: Our clients range from start-ups to international organizations and we help them with everything from stakeholder education to venture building, product development, and project management.
MW: The biggest challenge organizations face, whether large or small, is that they are often unable to see that blockchain is offering them a completely new way of working.
For blockchain to make a meaningful impact within an organization it needs to be considered at a systems level, not just a product application level. It often requires that the organization rethink how they work together so that they can move toward a new operational paradigm. An enterprise that has its HR, finance, and logistics teams experimenting independently with blockchain will not fully harness the potential of the technology; they need a concerted effort.
JLL: And ideally a pilot project would also include suppliers and partners. We should not lose sight of the fact that blockchain works best when we use it together.
EBC: Is there a project that you talk about, which could help a reader to understand what blockchain is and what it makes possible?
JLL: Something we have started working on with a few enterprise clients is moving elements of their Enterprise Resource Planning (ERP) system onto the blockchain.
Imagining a blockchain-based ERP solution requires us to understand three things: First, that the blockchain is a registry of transactions, just like an accounting ledger. But, this ledger is distributed and held by all the parties who need to know about these transactions. Together, these parties can write new transactions and ensure that no one is changing previous transactions. Second, they can also commit to transactions, by saying “when I do x, you will always do y”. Finally, they can transfer and share ownership by representing assets digitally within this ledger.
MW: These three opportunities — decentralized data storage, smart contract automation, and tokenized ownership — can accelerate ERP automation potential, while ensuring data security, transactional trust, and cost reduction. For example, an ERP solution today might be used to automate payments between international subsidiaries at a global corporate. It feels efficient for the accounting team because human processing has been eliminated, but the transactions are not optimized to maximize working capital efficiencies.
By introducing smart contracts on the blockchain that use a token to represent payments, an organization could move around a representation of capital internationally, incurring no costs or fees. This is an early and simple example of how we could improve payments. Micro transactions related to payments and data transfers is the next big step.
EBC: Have you worked on a business model that is not possible without blockchain technology?
JLL: We are currently working with an enterprise client to automate outcome-based contracts with blockchain. An outcome-based contract (OBC) is a service contract that is linked to an assets output. It allows equipment manufacturers to justify an OEM premium on service agreements while also holding the equipment owner accountable over the asset’s performance.
In order to make accountability indisputable and ensure fair service agreements, smart contract automation is very valuable. It’s a very specific and niche opportunity to make more money using the blockchain, we think manufacturers could see a 30–50% increase in service agreements by adopting blockchain-based OBCs’.
EBC: What should Europe do to become a blockchain powerhouse?
MW: Europe is already the region best positioned to be a global leader in blockchain, and we think this is true for three key reasons.
First, this is where the technology is being developed. We have Crypto Valley in Zug, Switzerland, which is a locus for blockchain development; major protocols like Ethereum, BSV, Tezos, and Polkadot are based here. Berlin and London, for example, also have a lot of critical mass.
Second, the ecosystems within which start-ups are exploring opportunities to use blockchain are getting essential support. This support is coming from institutions and universities, government innovation funding, as well as industry. More and more companies are allowing start-ups to tackle specific and targeted problems through pilot projects because they want to be catalytic for transformation even if they are not driving it internally.
Finally, and most importantly, Europe has the decentralized mindset. We have come together in a union and economic area to improve trade, relations, diplomacy, and life for citizens across the continent. This mentality is a valuable precursor to blockchain exploration, because ideally you want decentralization to spur new forms of collaboration and empower individuals.
JLL: We already talked about the progressive regulations in Switzerland that are moving in this direction. But, there is also a draft in European parliament to support a European-wide blockchain. The European Blockchain Services Infrastructure (EBSI) is a joint initiative to deliver EU-wide cross border public services. If European countries could agree to a set of standards and contribute collectively to a single infrastructure, we have no doubt it would become the global standard. But, we have to increase our risk appetite and be willing to invest in and offer resources to early projects.