LBBW and Daimler agree to cooperate on blockchain

German car manufacturer Daimler and Landesbank Baden-Württemberg (LBBW) have carried out a promissory note transaction of 100 million Euro and a running time of one year via blockchain. In doing this, the two companies have used the new technology for the first time to execute a financial transaction. This can be counted as a successful test to use blockchain for capital market processes in the future.

“Blockchain radically changes the rules for intermediaries. We want be a active part of that new economic relationship”

In this case, Daimler placed a promissory note with a volume of 100 Million Euro and a runtime of one year at the Kreissparkassen Esslingen-Nürtingen, Ludwigsburg and Ostalb and the LBBW. The entire process from the initiation to the allocation and the conclusion of contract to the confirmation of payment of interest and refunds was displayed on a blockchain. Further possible areas of application of the technology could be payment transactions, securities trading or the international movement of goods.

One of the main advantages of blockchain is the possibility of direct and secure financial transactions worldwide in mere seconds. The produced data is stored decentralized in blocks on several servers and are signed cryptographically. That way, manipulation is almost impossible, explains Joachim Erdle, Head of Corporate Finance at LBBW. Also, blockchain allows for more automation in financial transactions since more labor intensive steps that are necessary for the creation of promissory notes are being replaced by digital processes.