THREE QUESTIONS TO ALAIN BROUSTAIL, DIRECTOR OF SWORD BLOCKCHAIN
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1-We interviewed you a few months ago, could you share with us the latest news?
With the current COVID-19 pandemic, 2020 will be remembered as one of the strangest years we ever lived. Thanks to our specialization strategy into very niche and hi-tech markets, less sensitive to economic downturns, Sword France however managed to limit its exposure to the crisis.
The positive aspect of this terrible sanitary situation is that it indeed forced lots of organizations to understand the need of moving fast from “old and traditional” paper-based or “face to face” processes to “digital” ones. The multiple lockdowns we have been facing here in Europe have drastically changed the way we work and interact with each other. Sword France being historically a leader in the electronic content and process management space, we received an important number of requests for new projects on these topics.
Most of our business units found ways of bouncing back on the economical crisis focusing on these digitalization needs. This also applies to our blockchain services department. Public and private distributed ledgers are frequently the best solution to some of the news digital problems we now live with. Typically, they are a very good way of notarizing documents & data and generating tamper-free digital proofs in a transparent, decentralized and low-cost manner.
We met earlier this year exactly on that topic when Sword was just starting a digital signature project relying on the Tezos public blockchain. The first version of the solution, called Tezos DigiSign, was published in September. We are very proud of having finalized our project in due time despite the massive impact of the lockdown on our internal organization. On a side note, I am pleased to inform you that this first version is available in an open-source format open to the community. It has been thoroughly tested and is now already used in production, we can only invite every interested organization to look at the gitlab repository (1)!
2-Why did you decide to become via Sword France, Corporate Baker on the Tezos blockchain?
Sword France’s business model focuses a lot on innovation. While most of the revenues come from implementing mature technologies, we also continuously invest in what looks like tomorrow’s markets. Blockchain technology is one of these very promising niches. It is still very small, but it undergoes a very fast & promising development.
In particular, the business of crypto assets is doing particularly well, with a growth estimated by some institution between +40 a +60% in 2020, just in the middle of what seems to be the biggest global economic crisis ever! We are not talking here about the market capitalization of the crypto assets themselves (which also enjoys an impressive 100% growth so far), but about the cumulative revenues of the start-ups and fintech’s present in this ecosystem.
We expect more and more corporate organizations, especially but not exclusively from the financial sectors, to get an interest in getting top of the art consulting and IT services around crypto assets. Therefore, we decided that if we really wanted to propose these services, we needed to have firsthand experiences ourselves. Our current and main objective currently for becoming a baker is not to make money, even though we do appreciate the two digits expected profitability. We are making this investment first of all as a way to learn and educate ourselves.
On one side there are the technical aspects of implementing, hosting and maintaining a baking node with the level of IT security expected by a company like ours, ISO 27001 labeled. On the other side, we also have impacts on our accounting and payment processes. You do not manage a bank account as a crypto wallet. And you do not manage a corporate wallet as you do with your personal one: we need to respect our principles of delegation of power and of security. Now that we have been through all these different steps ourselves, we feel much more comfortable in advising other large size organizations on the topic.
We do not work exclusively on Tezos, but the choice of having our first mining node on this blockchain came as an evidence to us when our top management confirmed our strategic will to position ourselves on the crypto assets market. We already had a need for baking our own DigiSign signatures. We decided to exclude Proof of Work consensus. We wanted a large public blockchain which had core strategic orientations oriented toward crypto assets. And obviously a blockchain with a bright future, not one of these many smart but already dying blockchain initiatives, so we could ride on its success for many years.
3-What is your long-term vision of this approach?
Most people still consider blockchain is about “crypto currencies”, as in “payment methods”, which it is not (yet) the case. Some understand that Bitcoin is already something else, an entire asset class in itself, some kind of “digital gold”. But few people outside the crypto community currently understand how impacting crypto assets will be in the future.
We are convinced that in the long term — say 10 years, a lot of industries will be deeply modified by the development of a new Peer to Peer economics relying on blockchain technologies. Innovative B2B, B2C and C2C models will rise where players of a market will exchange values and data in a decentralized way, with no — or at least fewer — intermediaries.
One specific market is particularly interesting: the securities token. If you look at the French market, you may be surprised to learn that it is now legally permitted since 2018 to manage a security register online only if using…distributed ledgers. This sounds trivial, but so far, for non-listed companies, all movements in the shareholding are inscribed in a paper-based register. And obviously, because you want it done properly, you have to pay chartered accountants of lawyers to keep it updated. By tokenizing securities on a blockchain, you can help to save a lot of time and money.
Now that we can go fully digital on shareholding registers, we will of course go digital. That is what the past has taught us: digitalization is a one-way road. What can be numeric will be. It is going to take a lot of time before the industry learns how to use these tools, but it is very likely that in a few years most newly created companies will run their shareholder register on a blockchain.
And securities tokens are much more than just stocks, as the European Commission just recently confirmed it with its proposal for a pilot regime on security tokens (2). There are today a lot of non-listed financial instruments that would drastically benefit from being tokenized.
There is a whole new financial infrastructure that is being created, with Tezos being the top contender in Europe for being its backbone. That is at least what we believe, and why we go into that direction.