Ikea experiences the smart contract, the first such transaction worldwide

IKEA Iceland carried out a commercial transaction on Ethereum, using smart contract and authorized e-money. This is the first transaction of its kind in the world and proves, according to the operators involved, that smart contract and e-money are ready for the traditional markets

22 Oct 2019

An electronic invoice based on blockchain (the smart invoice) and paid automatically, thanks to a smart contract, in electronic money, i.e. digitized crowns. This is what happened between the local Icelandic retailer Nordic Store who bought goods from IKEA and welded the smart invoice using the Icelandic digital Monerium crown. The transaction was carried out on a platform provided by the supply chain management company Tradeshift (a startup in which Goldman Sachs also invested) and used the “programmable digital cash” Monerium, from ConsenSys. 

Monerium, based in Reykjavik, is a startup that has been authorised by the Icelandic Financial Supervisory Authority (FME) as the first electronic money institution, making it the first to have regulatory approval to provide fiat payment services on blockchain systems across Europe. This currency is not a crypto currency, but ‘real’ currency in electronic format, a digital alternative to cash, programmable in smart contracts. 

Tradeshift – which created the “smart bill” for the transaction – is a startup that was invested by Goldman Sachs in a $250 million round of E-series financing last May. The company is already valued at $1.1 billion and is considered to be one of the most robust applications in block chain technology. 

How did the transaction work 

Smart contract has the advantage of being ‘automated’. that is, when certain predetermined conditions occur, predetermined ‘consequences’ are automatically triggered. How did it work in this case? Explain Tradshift: 

 “The transaction was carried out with Nordic Store as buyer and IKEA Iceland as seller. Nordic Store ordered furniture, while IKEA Iceland issued an electronic invoice through the Tradeshift network. Nordic Store immediately approved the invoice on Tradeshift and then on Ethereum. On the due date, which we set to be the day after the invoice was sent, which was paid automatically thanks to the smart contract”. 

The operation highlights how the advancement of certain technologies, their translation into practical applications, is a choral and complex effort: in this case the technologies that have made possible the execution of the smart contract are, on the one hand, the ‘smart invoice’ of Tradeshift which is based on a blockchain infrastructure for the supply chain; on the other hand, the electronic money of Monerium, also on blockchain, which has the particularity of being programmable. 

 “Programmable money regulated by governments will become the basis for e-commerce payments because it allows so-called “smart contracts”. Smart contracts have many use cases. For example, they can be used to generate ‘Smart Invoices’, which are invoices that basically pay for themselves,” said Gert Sylvest, co-founder of Tradeshift. “We see smart bills not only to reduce administrative barriers in cross-border business-to-business (B2B) transactions, but also to build new financing models that make it easier for businesses to improve access to credit and cash flow. That is why we built the world’s first smart invoice and now we have paid it with authorized digital cash together with Monerium. This is an important step forward”. 

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