{"id":4030,"date":"2023-06-26T12:34:23","date_gmt":"2023-06-26T12:34:23","guid":{"rendered":"https:\/\/innovationisrael.org.il\/en\/?post_type=report&p=2783"},"modified":"2023-08-15T10:39:55","modified_gmt":"2023-08-15T10:39:55","slug":"have-you-signed-a-smart-contract-yet","status":"publish","type":"article","link":"https:\/\/innovationisrael.org.il\/en\/article\/have-you-signed-a-smart-contract-yet\/","title":{"rendered":"Have you Signed a Smart Contract Yet?"},"content":{"rendered":"\n

“Already today, it’s clear that blockchain is the next generation of the financial system”, declares Eran Haggiag, CEO of Clear<\/a><\/strong><\/p>\n\n\n\n

Blockchain is a sophisticated computer technology that was invented by developers of the first virtual currency \u2013 Bitcoin. It is a method for encoding data (cryptography) in a way that enables visible and secure business activity via the internet and verification of transactions without the need for a central controlling entity. <\/p>\n\n\n\n

“At the most basic level, the blockchain network allows us to change the reality in which we need central entities that everyone trusts (such as government entities or banks) to create agreement and trust around information like identity as well as ownership of assets and real estate etc.”, Haggiag explains. The blockchain network enables the verification of all these details, not via a central entity, but rather, with a network that is operated by many different entities. By using advanced algorithms and cryptographic signatures, the network facilitates complete authenticity of information and prevents its deliberate disruption. As a result, in many ways, this system is more secure than centrally controlled systems. One day, all the world’s financial records will migrate to this infrastructure \u2013 it’s a real revolution”.<\/p>\n\n\n\n

Haggiag, who has been an entrepreneur in the worlds of programing for years, founded Clear in January 2018 together with Gal Hochberg. The goal was to understand how blockchain technology could be harnessed in order to significantly assist companies in conducting business in a better, more efficient way, as well as in reducing the scope of manual activity in areas that are currently difficult to automate. <\/p>\n\n\n\n

Haggiag mentions two of blockchain’s primary innovations: the first is Bitcoin \u2013 an invention he defines as brilliant \u2013 that is the realization of a currency on the blockchain network. The second generation is what he calls a “smart contract” that is produced on the Ethereum network. The smart contract enables users to agree among themselves on anything that can be encoded and signed digitally. For example, a large company and a distributor who share a complex agreement can write it in the form of a smart contract that they both run, and which serves as their agreed single source of truth. The result is that there is no more need for two separate systems (one for each company) that manage comparisons and perform a manually assisted reconciliation process between them at the end of each month and they can, instead, use a single common system. Continuous flow of information to the system allows for quick identification of disparities between the companies, and ongoing accounting and distribution of money. <\/p>\n\n\n\n

“We generally work on a private Ethereum network, but our technology can also use other blockchain networks”, says Haggiag. “It is difficult to predict which network will become the world’s most common blockchain infrastructure, so we developed the capability to work with whatever infrastructure our clients request”. <\/p>\n\n\n\n

Over 99.8% Precision <\/h3>\n\n\n\n

In practice, the company developed a platform that allows enterprises to automate complex commercial contracts, and to perform automatic settlement and reconciliation of accounts. In other words, any agreement can be uploaded to the system, with each of the parties signed to the agreement receiving both a copy on the blockchain and a legal copy, while the smart contract is, in effect, the realization of the legal contract in the form of a file of computer commands. If, in the future, smart contracts are recognized as legal contracts, they will become the primary means for writing agreements between companies. According to Haggiag, today’s legal systems do not know how to contend with smart contracts; however, in time, this will change. Regulation reacts slowly to technological innovations.<\/p>\n\n\n\n

Furthermore, Haggiag claims that as more companies make the transition towards using crypto-currencies and stable-coins, they will also be able to execute the payment process directly via the same contract i.e., to simply implement the terms of the contract using crypto payment. “Unlike crypto-oriented companies, we also know how to work with, and offer, added value to clients in the existing regulatory setup. As of now, our focus is to sign up as many companies as possible to our platform, and to create maximum value for them. For our customers, this presents a whole new world”, he stresses. <\/p>\n\n\n\n

The platform built by Clear enables large organizations to take the concept of a smart contract and transform it into something practical that they can run with, in compliance with all their security and privacy requirements in tandem with the many internal systems that exist in such organizations. “We can develop all the business models necessary to allow customers to ‘mix and match’ models, thereby creating custom smart contracts that cover all of the business terms of existing contracts, as well as to create more sophisticated agreements”, Haggiag explains. “Our goal is to make the infrastructure accessible to large companies around the world and to create a marketplace where the agreements between them are stored and money is distributed. This all occurs and is updated automatically so that each party involved knows the status of the agreement at any given moment, with calculations made according to a shared business logic encoded into the smart contract that is common to both parties. This prevents discrepancies and disagreements between the organizations and their different systems, and the resultant delays. <\/p>\n\n\n\n

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