Czech republic registers historical first contract via blockchain

Current restrictions on travel and on the operation of many companies often complicate entering into contracts as well. Delays in signing and verifying contracts can be solved by the first Czech industrial blockchain, which is managed by the subsidiary of the Electrotechnical Association of the Czech Republic, ELA Blockchain Services.

"We decided to use this modern technology when signing a membership agreement with the Electrotechnical Association. Even though we closed the contract remotely, the whole process took about three minutes. We joined the ELA blockchain project as one of its first partners last October, when the Confederation of Industry launched one of the authorized servers on which the blockchain database is stored," says Dagmar Kuchtová, General Director of the Confederation of Industry and Transport of the Czech Republic.

The registration and verification of the contract was realized with the help of the Blockchain Notarius application.

"The Confederation of Industry registered a contract in the blockchain. This stored a 64-digit code, or "hash", in the database, which the application created from the contract. At ELA we received the contract by email, generated a hash from its electronic form, and compared it with the code stored in the blockchain. Because both hashes matched, we knew it was the right contract and they could sign it," explains Jan Prokš, director of the Electrical Engineering Association.

The first Czech industrial blockchain was launched by the Electrotechnical Association of the Czech Republic last May. It is known as a consortium blockchain. Only verified companies or institutions can run servers on which the blockchain database is stored and entries are verified, at the discretion of the ELA Blockchain Services system administrator.

There are currently 22 of these servers in operation. One of them has been in operation since October 8, 2019 by the Confederation of Industry and Transport of the Czech Republic. The same current version of the database is stored on all servers. If one of the servers stops working, users can access the database via the other servers. This ensures that the entire system is safe and always functional.

The blockchain does not store actual documents, but only their digital fingerprints, the so-called hashes. Therefore, companies do not have to be concerned that someone might obtain their sensitive internal information from the blockchain. The blockchain also does not contain a contract between the Confederation of Industry and the Electrotechnical Association.

Thanks to the unique digital fingerprint, however, it is possible to easily verify the authenticity of the submitted document. If a single letter in the contract changes, its hash will no longer match the code registered in the blockchain. Thanks to the blockchain, both parties can be sure that they are signing the same document.

Source:  Confederation of Industry of the Czech Republic