Request to use Jur For 2.5 M Euro Pharmaceutical Deal Shatters Our Assumptions About Early Adopters
JUR has received an email from an Italian pharma company asking to use Jur to secure a payment of 2,500,000 Euro. The company making the request has permitted us to discuss the request while maintaining the anonymity of the party requesting use of our contract, escrow, and dispute resolution platform.
Jur believes strongly that our new approach to contracts and dispute resolution will be vastly superior to current options for many cases, disrupting the current market. Jur uses the blockchain to provide a system to record and guarantee fair execution of agreements.
Naturally, our go to market strategy begins with services in the blockchain industry. We believe this market will be the most receptive and migrate to our system quickly, with Jur becoming the preferred approach for most deals within 24 months. We did not expect companies outside the blockchain world to begin using our system ( especially for deals over 1,000,000 Euro! ) until we were well-established as viable by early adopters from blockchain-based ventures.
You know the famous concept about the innovation adoption process: we expected predictable early adopters leading to a tipping point followed by the majority of people.
Well, we are happy and surprised to say that it seems that we were wrong. Jur appears to be disrupting the conventional technology adoption paradigm
On September 21st we received a request from a big pharmaceutical company asking to use Jur for a 2.5 Euro transaction. At first, we suspected someone was playing a joke. But having thoroughly vetted the request, we see it is quite sincere. Note: we had not reached out to them in any way — they came ‘out of the blue’.
The reason that we didn’t think of this use case as a potential early adopter scenario, and why we were skeptical of the sincerity of the request, was that we assumed companies with 100M Euro or more of annual revenues are not motivated to find very affordable innovative legal solutions. But now we have discovered that just as small companies are frustrated by the high cost and ineffectiveness of current legal agreement options; big companies have the same problems, just magnified to a grand scale.
The problem is not just cost — speed, ease of use and reliability are also significant problems. ( We have more articles about the need for a new approach to contract and dispute resolution, the limits of the currently available options, and the basics of how the Jur system works and why it is so much better than what is available now. )
Today business relationships are often global in scope. Global regulation is extremely complicated. Larger businesses don’t face less challenges, they face more. Many companies need to sell or buy in many different jurisdictions. Those jurisdictions are sometimes extremely inefficient. In some jurisdictions, the cost of dispute resolution typically exceeds the cost of the sum in dispute! The letter of credit system sometimes doesn’t work. In many cases, the banks don’t do a good job of handling cross-jurisdiction letters of credit reliably.
Since ICOs face this same problem, we are aware how much the subjectivity of a bank could create friction and unpredictability for a cross-jurisdiction deal. We will bring this era of risk and uncertainty to an end, perhaps faster than we had hoped, if this early interest is an indicator of big businesses frustration with the current options and receptivity to a new approach.
Let’s consider this example of the potential Jur user who has just approached us. This company has a pretty famous client in a country where the legal system is perhaps even more famous, or infamous, for being inefficient and fraught with risk and unpredictability. The letter of credit is expired and the time it takes to create a new one is very high. The client needs to buy 2.5 M Euro worth of goods from the company based in Italy that approached us.
The company is looking for a solution to complete the deal on the blockchain. Making an escrow in cryptocurrency appears to be the only solution.
Here is our second discovery. Why use Jur when you can go to a normal escrow? The answer: cost and ease of use, but only for smaller deals (100k Euro or lower) we thought initially. Well, we were wrong again
We assumed that larger deals would pay to use a cryptocurrency escrow agent. On further examination, it is not so easy to find a clearly reliable agent. When you do find someone you choose to trust, you still have to discuss it quite a bit, negotiate, and pay a substantial fee. Furthermore, there are no clear regulations to ensure things go according to plan. We found some seemingly trustworthy options here in Switzerland, but to ensure a deal between parties in two different countries outside Switzerland are well regulated, we see no option.
So we realized that a company like our prospective early adopter could easily create a robust agreement on Jur, perhaps with the help of an expert lawyer who has been studying Jur. The escrow and the agreement are both decentralized thus conveying the extreme reliability of the blockchain. Until such time as a dispute arises, the agreement is completely confidential and cannot possibly be discovered, nor can the identity of the parties to the agreement who are identified only by an anonymous key.
The agreement should specify a suitable third party that the parties both trust who will verify that the goods are well shipped. The third party will upload a simple statement to indicate compliance or non-compliance. All the complexity regarding how to make the assessment are up to the parties to agree on. Jur remains agnostic. They could also provide multiple assessment entities and rely on the consensus of the majority.
If there is a disagreement about the result, either party can open a dispute. (See this article for details on how the system works.) There is no need to show the Jur voters the details of the assessment, just the yes/no votes of the assessors. The contract need not reveal the assessment details. In this way, anonymity is maintained. At the same time, you have a safe, reliable and affordable guarantee system for delivery of goods worldwide regardless of jurisdiction.
Corruption of the dispute resolution is impossible as shown by our rigorous game theory that shows no one has a motivation to attempt corruption of the dispute resolution process because there is no strategy for corruption with an expected value greater than zero.
Other use cases might provide different challenges that must be analyzed. The experts using Jur must assess potential issues for each different use case. This example just shows how Jur can provide a superior solution for a letter of credit scenario, thus solving the issue of cross-jurisdiction complications for a huge market segment representing hundreds of billions of dollar a year. Thus we see Jur can be a real solution for big problems with current approaches to making deals on a very large scale.
Comparing the Jur solution to traditional alternatives, we see it is clearly superior. Many countries have problematic banking and legal systems. Letters of credit are often hard to obtain. The system may be unreliable, plagued by inscrutable personal relationships, bias, and complexity. Jur, on the other hand, provides a uniform unbiased approach that works worldwide..
Of course, legal and tax recordkeeping requirements in the home jurisdiction of each party will require that they issue and receive invoices, but this easy requirement would apply whether they use Jur or not.
This company approaching Jur shows there is interest in a new use case that Jur can handle very well. It also shows that it is not just blockchain businesses and small businesses that will be early adopters of Jur.
Medium and large-sized companies that are not on the blockchain will also adopt Jur, because all companies face these problems and all companies have some agreements that are simple enough to work immediately on the open base layer of Jur. We were wrong to guess that large enterprises would not be among our early adopters. Large well-funded companies that can absorb large legal costs will still want to use Jur, not just because it is more affordable, but because it provides a much more reliable solution.
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