Blockchain 101
Blockchain is like TV in that you don’t have to understand everything about it to be able to use it. But a basic knowledge of what blockchain is and what it can do is vital to thinking about how it can be applied in our industry. And since few of us can rattle off a clear definition, let’s start with one built from several sources that speaks to its potential application in the equipment finance industry.
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Happening Now
Keith Letourneau, Partner at Blank Rome LLP in Houston, has a similar aim. Letourneau is a maritime attorney who became involved with blockchain through a client query. “It’s such an interesting topic that we developed a working group on blockchain and crypto-currencies at our firm,” he says. Letourneau participated in a panel discussion on technology innovations and disruptions at ELFA’s Annual Convention in October.
As software becomes more sophisticated and able to handle more aspects of blockchain, he expects major advances in many industries. “The maritime industry is already implementing it to track containers aboard ships,” he says. “A major player made a decision to invest in blockchain and then began talking to its vendors, suggesting that they participate. That’s how it gets going.”
Letourneau views blockchain as the overlay that will eventually connect equipment finance companies, service providers and regulatory agencies in a secure network. “I think the potential applications in equipment finance are profound,” he says. “Big data produced by the Internet of Things and placed on blockchain will alter how warranties are applied and when they expire. It will change when goods are ordered and how people contract for things, such as by hourly usage. It will bring so much transparency to the equipment life cycle that people will be able to know the exact condition of every piece of equipment on the blockchain.”
Lawyers will handle disputes arising over laws and agreements governing the use of blockchain, Letourneau thinks. “But I believe in equipment finance, the emphasis will eventually be on rewriting warranties and structuring payments,” he says. “It won’t solve problems where disputes arise between parties, but it will have great utility to tighten processes and eliminate certain intermediaries.”
"Blockchain 101," by Susan L. Hodges was published in the Nov/Dec 2018 edition of Equipment Leasing & Finance Magazine.