For as long as there have been computers in enterprises, there have been people working on how to make machine-to-machine commerce a reality. While the world of blockchain is only now embracing smart contracts for enterprise usage, programmable, machine-to-machine commerce has been around since the 1970s.
I started thinking about the power and value of this very old ecosystem when I was asked a question by a member of the EY developer team: What data should go in a blockchain purchase order token? The answer is already out there. It’s been out there for 50 years. There is no need to reinvent the wheel (or the purchase order).
In 1950, all the countries in the world exported a combined total of $61 billion in goods. In 1970, that number had risen 500% to nearly $320 billion. The world’s paper-based systems for trade and logistics were already close to the breaking point.
The need for some kind of digital automation was urgent. Different global industry groups started to put together standards for digitizing commerce, of which the most important came to be known as the Electronic Data Interchange (EDI).
The EDI compressed the typical interactions that companies have with each other into standardized digital messages. The result was, over time, a standardized way for companies to interact online.
Ask a supply chain executive how they think about operations, and many of them can respond in a sequence of EDI message standards: 850 for purchase orders, 856 for shipment notices, 846 to confirm receipt and 810 for invoice message.
When matched with the emerging digital financial standards promoted by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), it was possible to build a fully digital, global supply chain in the 1970s. The SWIFT standards emerged in the world of banking at nearly the same time as EDI, and the result was something that looked very close to smart contracts, including digital payment execution to close the loop.