OFS Prototypes and Accelerators in Blockchain
To show you blockchain in action, I would like to share several of the prototypes and accelerators OFS just built in blockchain.
Please note that the use cases discussed below do not address all the regulatory concerns required in their respective fields. Practical applications of blockchain are still evolving and, in fact, it is possible that blockchain will do away with some of these regulatory concerns. We think this is what makes blockchain applications even more interesting. Having said that, the objective of the proofs of concepts given below is to demonstrate the disruptive potential of blockchain and the skills OFS has developed in-house to develop and deploy them.
#1 Tokenization of Automobiles Enabling Title and Lien Processing in Blockchain
“Tokenization” is the process of representing the right to a real-world asset as a digital token in a blockchain. A tangible asset like an automobile, which over its lifetime could have many owners, titles, liens, and leases, is a perfect candidate for tokenization.
Automobiles as a Smart Contract
A real-world automobile will be represented as a smart contract on blockchain. When such a smart contract is deployed it gets a unique ID (address) and the functions (contractual terms) of the contract become immutable. The smart contract will initially have all unique and identifiable attributes required, such as a VIN number set during deployment, to uniquely identify the vehicle.
Smart Titles – Record of Ownership
A title is an instrument of ownership. There are a lot of administrative efforts involved in issuing, transferring, and maintaining titles. From the consumer point of view, it is something that should be kept safe. There are a lot of contractual terms regarding when a title should be transferred from a lien holder to an owner, and from a previous owner to a new owner, etc.
At the end of the day, a title is just a piece of paper and all the contractual processes around this paper are manual and time consuming. With blockchain, these paper titles can be represented as digital smart contracts.
Representation of titles as smart contracts makes them ‘smart’ titles with self-executing functions defining the contractual terms. For example, the transfer of ownership can be programmed in the contract according to specific conditions, such as having the outstanding loan amount paid in full. Even the payments can be processed through these smart contracts. Note that these contracts are immutable (tamper-proof), self-executing and always available.
The functions above can be implemented through traditional applications without blockchain or smart contracts, but also without disintermediation, immutability and transparency.
In the future, as the blockchain technology matures, there is so much potential for these smart contracts to be used to control the operational aspects of an automobile. For example, the contracts can be used to stop a loan defaulter from starting a vehicle until they become current in their payments.
Please note the same use case can be repurposed to fit any kind of asset that can be tokenized. Land registration is another good example.
#2 Mortgage Processing – Blockchain in Business Process Improvement
Mortgage processing has some inherent inefficiencies with its many handoffs, exchanges of value, third-party certifications and built-in delays.
A PwC report from 2016 has this to say:
“Having a third-party intermediary involved in a mortgage transaction can cost as much as 1% to 2% of a property’s value. Blockchain could reduce or eliminate the need for a third-party intermediary in the mortgage process and instead allow two parties to interact directly instead.”
Mortgage processing has many stages like origination, fulfillment, settlement, servicing, and secondary markets with many document handoffs and transfers happening between different parties, organizations, and departments, making mortgage processing a very good candidate for the smart contracts and distributed ledger aspects of blockchain. The applications are not just limited to processing and closing, but also in secondary markets for mortgage securitization.
We are developing a consumer centric mortgage origination proof of concept. Instead of working with a traditional mortgage broker or bank, the philosophy here is to allow a borrower to register the intent to borrow and submit necessary documents in a blockchain marketplace for mortgages. The lenders who have access to the blockchain review the application and respond with competing offers. Technically, blockchain is inefficient to store documents, so we propose using IPFS (https://ipfs.io/) for document storage. We will talk in more detail about IPFS in forthcoming blogs.
The proof of concept shall be expanded to include inter- and intra-organization workflows.
Blockchain-Based Mortgage Marketplace
#3 ALT Coin Payment Processing Gateway Accelerator
As cryptocurrency gains more acceptance in the market today, there is an increasing number of customers who wish to accept cryptocurrency as a form of payment. In the meantime, there is an explosion of altcoins in the market. To start accepting cryptocurrencies, existing payment processing systems should be linked to cryptocurrency exchanges to ensure users can pay with these alternate currencies. There are multiple cryptocurrency exchanges, each with its own pros and cons regarding time taken for payment processing, transaction fees, etc.
We are developing a pluggable accelerator – an API wrapper for leading exchanges – that can be plugged into your current payment processing gateway. This API wrapper will extend your gateway to start accepting cryptocurrencies.
Blockchain, with its smart contracts and the decentralized nature, has greater potential to disrupt any domain and its conventional applications. Even though it will take time for this technology to mature for enterprise applications, an increasing number of organizations and governments around the world are investing time and resources in developing prototypes and proof-of-concept applications with blockchain. There is great interest in how they can make better use of this technology.
Think of the saying, “Today’s fiction is tomorrow’s reality.” Blockchain is already a reality, and that tomorrow is today.
Are you currently exploring the possibility of implementing blockchain technology in your organization? The OFS tech team would love to show you a demo of our accelerators and prototypes and exchange ideas on how you can start working with blockchain technologies. Contact us here.
About the Author
Ganeshram Ramamurthy is ObjectFrontier’s technical director and heads technology for presales. For many years, Ganesh has been designing and developing enterprise applications across various domains. He has a keen interest in emerging technologies and is now spearheading blockchain initiatives at OFS.