The blockchain wave is gathering strength. More and more enterprises are embarking on concrete initiatives, either alone or in collaboration with their peers, their business partners, their clients, or their suppliers. Most of the use cases I’ve seen so far, apart from a couple of exceptions, are exploratory and mostly focus on using blockchain as a shared and trusted database of assets and transactions.

The really interesting use cases that realize the exponential and disruptive benefit of the blockchain are yet to come. The most visionary players have revolutionary use cases in their roadmaps, but right now, enterprises are taking foundational steps necessary to pave the way for innovative use cases that might disrupt entire industries.

Smart contracts and blockchain

Smart contract technology is the key that will enable these transformative transactions. You can think of smart contracts as good old stored procedures of relational databases. However, combined with other blockchain properties, like immutability, trust, and security, their potential is much greater. Yes, blockchain is a shared trusted database, but it’s an inefficient one. What makes blockchain unique is the fact that it can safely store value. Safely storing value makes blockchain a trading platform, which in turn makes smart contracts trading agents. With smart contracts, you can automate the exchange of value, in a trusted and safe way.

Code that enforces rules in value exchanges

Value exchange use cases bring innovative and sometimes disruptive services and business models, which will boost a new economy that is more social and more transparent, with fewer intermediaries. Smart contracts are essential in this yet-to-come generation of blockchain use cases. Use smart contracts to encode the rules of new businesses that are enabled by the new platform. When I say rules, I really mean rules: the terms and conditions that trading parties have agreed upon to formalize and secure their transactions. The code automatically enforces those rules, completely removing people from the equation, closing the door to most of fraud, corruption, and incorrect interpretation.

Business rules: a higher level of abstraction

Now, consider the best news for business rules practitioners. Even more than the rules that are encoded in many company systems today, the rules encoded in smart contracts need to be accessible to the parties who rely on the code for their business. For example, you probably want to read your insurance contract when you insure your new car. In some cases, business partners are also involved in the definition of the rules, probably negotiating the terms. Therefore, smart contracts can’t be code, in the sense that developers think about code. Smart contracts need to be expressed at a higher level of abstraction, using business terms of the domain. They should be formal enough and not ambiguous, but still understandable by people. That’s exactly what business rules are.

Finally, enterprises need to manage change at the ecosystem level. Because the rules are defined by the business partners of the network, managing changes must be a team activity. Numerous collaborative processes surround a smart contract lifecycle, according to the governance defined by the business network. What is the review process? Do we vote for activating a new version of the contracts? What is the emergency process to quickly turn off a flawed smart contract? Principles that the business rules community defined many years ago are even more acutely important as blockchain brings the need to manage business intent at the ecosystem level.

Next steps

Learn more about smart contracts, blockchain, and business rules, and how to use them together:

Learn more about digital process automation and blockchain

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3 comments on"Smart contracts and business rules: The keys to revolutionary blockchain use cases"

  1. patrick albert September 18, 2017

    Excellent Stephane ; being involved in the Bitcoin foudation since many years, I’ve no doubt that there is a very nice room for a startup that would propose some form of extended bsuiness rules langage to enable business/human define readable smart contracts further executed in an Ether-like blockchain. Post-ILOG fellows have the knowledge, skills and taste to execute this simple vision :).

    • Patrick, A structured natural language for expressing business rules, with solid underlying business vocabulary and definitions, was exactly the vision of the OMG standard SBVR (Semantics of Business Vocabulary and Business Rules). It provided the underlying concept system and vocabulary, but not a notation per se.

  2. Excellent insights. Readable, business-friendly, business-accessible business rule statements are the key.

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