Smart Contracts and Their Characteristics

Smart contracts (SC) are sets of digital code created to facilitate the transfer of assets (including non-digital assets). They originate as a way to reduce, or completely eliminate, the need for intermediaries in trustless third-party transactions.

In its simplest form, smart contracts are no different from regular contracts; namely, an agreement between two or more parties. Smart contracts utilize bits of computer code that rely on logic to be executed, and the transactions only happen when the conditions on the agreement are met. The most rudimentary way of understanding them is through if-else statement logic, most commonly known as conditional programming. Let us showcase this through an example.

Take Kim, a tenant who wants to enter into a rental agreement with a landlord, Park. One option would be for Kim and Park to enter into a traditional agreement. Usually, traditional rental agreements have many intermediaries that aim to ensure validity and enforceability of the contract; banks, brokers, lawyers and others may be included in the process. This agreement, however, doesn’t guarantee that either party will fulfil their obligations. Kim could send an advance payment for the reservation of the flat and Park could then deny Kim access to it, or Kim could stay in the property while refusing to pay. A smart contract would be a trustless alternative, which executes a command (like sending Kim the monthly flat code) only if a certain predetermined condition is met (Kim sending the predetermined rate to the SC, locking the funds in the SC as an insurance protocol). 

Smart contract process example

Source: GOB Platform [1]

Of course, this example is an oversimplification. Countless other inputs including insurance, contingencies, and others can be added to make the agreement more complex and take into account multiple scenarios. 

Characteristics of smart contracts

Most smart contract characteristics are derived from the underlying blockchain technology:

  • Secure: Cryptography is used to secure contracts and stop people from altering records. While the technology is highly secure in most instances, there have been several cases where SC have been hacked and the funds deposited withdrawn [2].  
  • Transparent: When running on public networks, anyone can see what the smart contract is and what it’s being used for.
  • Free of third-parties: As we presented initially, smart contracts don’t need a middleman to be involved in the verification process. 
  • Near real-time execution: Although dependent on the underlying networks’ throughput and congestion, smart contracts usually take place almost simultaneously for all parties, across participating computers, once the necessary criteria are satisfied.
  • Autonomous and decentralized: SC’s work automatically, so you’re not having to wait for someone to push a button. Additionally, once deployed, they can’t be changed or controlled by any centralized party (like banks, brokers, or even by the network).
  • Accurate: Because smart contracts are written in code, they don’t rely on the grey areas of a language and what words mean. This can pose an inconvenience, especially when grey areas that require flexible solutions exist.

Caveats and limitations of smart contracts 

Just as everything is not as it always seems, smart contracts are not always so smart. Their deterministic nature that can be regarded as a benefit, can also be a restriction to its inner workings. SC’s have several limitations that can slow down their adoption, and must be taken into account when developing them.

Built-in rules. Smart contracts are only as good as the rules, conditions, logic and scenarios built into them. This means that programming quality is crucial. A smart contract that includes only a handful of rules won’t be able to execute more comprehensive scenarios. The less it’s left to chance, the better the contract. Going back to our example, what if Park wanted to include a clause that allows him to check the flat before releasing the deposit back to Kim? 

Since a smart contract is a computer program, each term and condition of the contract needs to be coded. There is a possibility of misinterpretation and omission by the coder, which may lead to loopholes in the contract.

The next two most important characteristics of SC’s include the data input and security.

Data is fed into blockchains and used for smart contract execution from external sources, specifically data feeds and APIs. These real-time data feeds for blockchains are called “oracles” – they’re essentially the middleware between the data and the contract. Oracles can be software- or hardware-based. Imagine an insurance smart contract that releases payment if certain areas are hit by winds greater than 100 mph. The SC would fetch external data (in this case from an anemometer) and pay depending on the input (mph). Because at times there are few (or even one) data sources, this burdens the decentralization aspect, causing a central point of failure in the SC.

Bugs and errors in the code – Even though it’s recommended for a smart contract to be a hybrid between computer code and actual physical contract (worded), bugs and errors in code could lead to disputes and procedural difficulties related to identifying errors and the parties responsible for those. In June 2016, for example, a hacker exploited a vulnerability in the code of the Decentralized Autonomous Organization (DAO), which is a piece of smart contract built on Ethereum, and made away with 50 million Ether [3].

Trustless? Because physical assets are regulated by the laws in the jurisdiction they are in, this creates an intrinsic problem in the linkage between property of a digital asset that represents a physical (real) asset, and the real asset. This implies a dependency on a third-party, somewhat stripping SC’s from their characteristic of “total” decentralization and trustlessness [4]. 






[1] “House Rental DApp of GOB Platform.” Medium, GOB Platform, 28 Feb. 2019,

[2] “3 Famous Smart Contract Hacks You Should Know.” Medium, Firmo Network, 29 Apr. 2018,

[3] Siegel, David. “The DAO Attack: Understanding What Happened.” CoinDesk, 17 Dec. 2020,

[4] Song, Jimmy. The Truth about Smart Contracts. Medium, 15 June 2018,


Zhang, Jim. What Are Smart Contracts and How Do They Work? Kaleido, 1 Oct. 2019,

The Tokenization of Equity

Typical uses of tokenization

In October 2020 we introduced the concept of tokenization, the “process of issuing a blockchain digital tradable token that represents ownership rights in a real asset,” creating a bridge between real-world assets and their trading, storage and transfer in a digital world [1]. 

The asset classes that have the most to gain from tokenization are those characterized by highly complex inefficient processes, high market capitalization, low speed and high costs (such as real estate, art, etc.). Nevertheless, that does not mean that other asset classes can’t take advantage of the technology. With that being said, let’s talk about tokenizing equity.

Tokenized equity refers to the creation and issuance of digital tokens which represent equity shares in a corporation or organization. The biggest difference between conventional shares and this type of token is the way of recording the transactions in a decentralized, digitized infrastructure.

Why tokenize stocks?

Substantial benefits can be reaped from blockchain technology, and more specifically from tokenization [1]. Although equity can be categorized as having the most efficient processes within the traditional financial ecosystem, it can still take advantage of tokenization and what it has to offer. Take the traditional method for raising capital for example. A long list of regulatory requirements like book maintenance, adherence to exchanges rules, constant disclosure of financial, accounting, tax, and other business information must be met.

Tokenization benefits can be categorized into two main types. The “general” and the “particular” ones. General benefits are derived from the blockchain itself, such as immutability and transparency, accessibility, efficiency, decentralization, etc. In the case of equity, several particular benefits can be found:

  • Among almost every aspect of issuing equity, dividend repayment can be automated and distributed among holders in a much faster and cost-efficient way.
  • Because of its inherent decentralized characteristic, blockchain issued tokens don’t have time limitations on trading, so there would be no more “normal trading hours” defined by traditional exchanges, but 24/7 trading instead. The consequences of this are still unclear, given that liquidity can vary depending on time zones, but it may provide a smoother price movement and lower volatility.
  • Similarly, there is no geographical limitation. A higher democratization of access can be derived from assets traded seamlessly throughout the world, provided each actor conducts due KYC/AML processes. Additionally, a higher access will be derived from tokenized private companies (SME), previously restricted to qualified investors and private equity companies.
  • Tokenized different classes (Participation % dividends rights certificates, registered shares, etc.)
  • Improved efficiency 
    • Built in governance. Custom rules like free or restricted transferability, lock-up & vesting periods can be coded into the equity tokens.
    • Remote interaction with shareholders can be established to send them corporate updates, organize votings and manage dividend transactions. 
    • Fewer intermediaries (like brokers, underwriting companies and others) result in lower fees for both the companies raising funds as well as for token (share) buyers.
    • Similarly, lack of need on transfer, clearing & settlement (among others) processes. 
  • Liquidity. Born out of many of the previous points, deeper liquidity is a main benefit gained from tokenizing stocks. Having the capacity of tapping onto large secondary markets instead of finding private buyers, having unrestricted time and geographic access, and improved efficiency in the processes make an immense difference in the stock market.


A note on custody: Because tokenized stocks can so far be bought, sold and traded only on exchanges, you will not be able to withdraw to other exchanges or more secure, non-custodial wallets. This can be a problem if a hacker gets a hold of the exchange’s hot wallet tokens.

A note on trading: Trading tokenized stocks does not imply one can circumvent all the KYC procedures that today’s investors have to pass in traditional markets. All users who trade tokenized stocks must also pass through KYC and compliance. Until a certain level is attained (“KYC 2” in FTX, for example), you won’t be allowed to trade these assets.  Similarly, you cannot trade tokenized stocks from any of the banned jurisdictions.

Regulation and current tokenized equity

Equity tokenization is not necessarily new, but it certainly is not mainstream yet. Only a few exchanges have a handful of tokenized stocks available for trading. Part of the reason could be that equity tokens should have the same treatment as its underlying stock (a security), and many countries still don’t have established regulation on digital asset securities [2][3]. 

We consider this small cog in the wheel as a step in the inevitable mass adoption of tokenization in the stock market. Even regarded as such by the US SEC Chairman, who believes it will be possible for all stocks to be tokenized in the future [4]. 

SCALABLE Tokenization

In SCALABLE you can find a partner that can tokenize basically anything in a short time frame, with industry leading technology, and a team to tailor to your needs and support you through every step of the way. If you’re particularly interested in tokenizing equity, get in touch with us today. 







[1] “DeFi Apps: Asset Tokenization.” Resources, Scalable Solutions, 28 Oct. 2020, 

[2] “SIX’s Digital Stock Exchange Planning Tokenized Versions of Nestle and Novartis.” Ledger Insights, 12 Aug. 2019,

[3] Stoner, Joshua. “Tokenized Stocks from Apple, Tesla, and Amazon Now Available through Bittrex Global.”, 8 Dec. 2020,

[4] Riseshine, Judith. “SEC Chairman Predicts Blockchain Is the Future for All Stocks.” Market Realist, 5 Oct. 2020, 


Roth, J., Schär, F., & Schöpfer, A. (2019). The Tokenization of assets: using blockchains for equity crowdfunding. Available at SSRN 3443382.

Gleec BTC powered by Scalable Solutions white-label exchange technology

February 2021. Nearly three years after launching Gleec Coin, a digital currency created for real-world use to purchase services or products through a dedicated ecosystem, the Gleec platform is taking it one step further by introducing Gleec BTC, a digital asset exchange.

Utilizing Scalable Solutionswhite label software, Gleec BTC will profit from deep liquidity, battle-tested security and a modular approach to technology that will enable them to easily scale as needed. 

Daniel Dimitrov, CEO and co-founder of Gleec, commented:


“After listing Gleec Coin on exchanges that run on Scalable Solutions’ infrastructure and starting to actively trade on them, we realized the potential of the underlying exchange technology. We then decided to replace our existing exchange infrastructure for Scalable’s in order to provide our wide user base with the best trading experience in the market.”


Scalable Solutions, founded by Mark Berger, has a team of pioneers with decades of experience in both traditional financial markets and blockchain technology. Scalables’ turnkey solution has helped exchanges launch and grow to new heights by providing an industry-leading trading engine, a high number of transactions per second, the highest standards of security and a dedicated customer service team. 

Licensed in Estonia by the Agency of Economic Activities, Gleec BTC customers will be able to trade their Gleec Coin on the platform, as well as the trading pairs GLEEC/BTC, GLEEC/EUR and BTC/EUR, with the outlook of adding more in the future. The digital assets can also be easily accessed through a user-friendly mobile application, regardless of location. The app is ready to be downloaded, and the platform should be available to trade on Google’s Play and on the iOS App Store. 

Mark Berger of Scalable Solutions shared:

“We are looking forward to the full launch of Gleec BTC and working together to provide their clients with a seamless trading experience. It’s exciting to see the digital asset exchange industry grow, especially with providers, like Gleec, who are offering a wide range of services, from payment processing in crypto to Bitcoin ATMs, as well as allowing clients to easily access euro-to-BTC trading through their euro wallet.”



About Gleec BTC

Gleec BTC is a reliable exchange where you can safely buy, sell, trade and store your currencies. The exchange was designed to ensure great transparency, guaranteed security and easy traceability. The team is well-versed in this area and is always working to make sure that the sophisticated network runs smoothly. Gleec’s aim has always been to keep the user experience simple and to prioritize privacy, security and user control. Every step of the customer’s journey in the app ecosystem has been engineered with user experience as the first thing in mind. 

Along with the new exchange software, Gleec is also improving its range of products to result in a gain of utility for crypto. Gleec Coin, the exchange’s native currency, is expanding its market by listing also in other leading exchanges, such as Bittrex and Bithumb. Later this year, a prepaid Visa Card will be available for those who want to top-up their cards with Gleec Coin and Bitcoin (BTC). We are positive that the growth of Gleec’s platform will benefit the cryptocurrency community as a whole and increase the speed of mass adoption.

About Scalable Solutions AG

Scalable Solutions offers white-label technology to launch your own professional digital asset exchange and blockchain infrastructure to tokenize any asset and get everything running quickly — without complications.

With a built-in deep liquidity pool, battle-tested digital asset security through Scalable Vault technology, and 24/7 support from our Customer Success team, we ensure robust performance at all times.

Central Bank Digital Currencies (CBDC’s): Countries Leading the Cause

The power struggle – Central Bank Digital Currencies

With the advent of blockchain, governments now face what they consider to be a new threat: the ascent and possible hegemony of (government) unbacked private digital currencies. The loss of sovereignty, as well as the exertion of economic influence through fiscal and monetary policy, are the main pain points that worry the decision makers of the worlds’ economies. Additionally, some believe that if remained unchecked, digital assets can affect the traditional banking system, destabilize the economy, and disrupt policy transmission mechanisms [1]. This resulted in central banks investigating the introduction of their own digital currencies, also known as “Central Bank Digital Currencies”.

What are CBDC’s?

In its simplest form, a CBDC is a 


digital representation of a sovereign currency issued by and as a liability of a jurisdiction’s central bank or other monetary authority” [2]. 


According to the Bank of England [3], CBDC’s are electronic Central Bank (CB) money that:

(i) can be accessed more broadly than reserves;

(ii) potentially have greater functionality for transactions than cash (such as improved efficiency on payment systems and cross border payments);

(iii) have a separate operational structure to other forms of Central Bank money, allowing it to potentially serve a different core purpose, and;

(iv) can be interest bearing, under realistic assumptions paying a rate that would be different to the rate on reserves. 

Other characteristics that can sweeten the deal for CB are that CBDC’s can compete with private e-money and help transition to a cashless society, while diminishing cyberattacks and counterfeiting. 

A 66 participant Bank for International Settlements (BIS) survey demonstrated increasing engagement of central banks in CBDC work. By 2019, about 4 out of 5 respondents had CBDC’s in their project folders, compared to 65% two years earlier. Nonetheless, it would seem that a small percentage of those interested are actually in a development/pilot phase, with the majority still doing experiments and proof-of-concept [4]. 

Retail and wholesale are the two main types of currencies that capture the spotlight. While retail CBDC’s aim to give access to every consumer out there (much alike cash, but with the subtle restriction of needing a mobile device and internet access), wholesale CBDC’s are restricted-access digital tokens for wholesale settlements (eg. interbank payments, or securities settlement). So far, retail and hybrid models are taking the lead over wholesale models [ibid]. 

Countries leading the cause of CBDC’s

Depending on their state, we can categorize CBDC projects in the following categories:

  1. Cancelled (10)
  2. Research (35)
  3. Pilot (10)
  4. Development (17)
  5. Launched (4)

While over 55 countries currently have plans to launch their own digital currency and many have been conducting extensive research on the subject, only a handful are actually in an advanced state to launch it in the short-medium term (we consider those currently on a pilot program or further). Among them we can find China, Sweden, the European Caribbean Currency Union, and the Bahamas [5]. 

Fearing a wide acceptance of Facebook’s Libra, we can find China as team leader. With a prototype that is only now being tested by private and public hands, but that has been cooking since 2014, this world power wants to position itself as owning the first definitive strong CBDC before its 2022 Winter Olympics. Unlike its european counterpart, China has been seeing steady decreases in cash payments, which amounted to a bare 20% in 2018. 

As one of the countries with the lowest cash-usage in the world, Sweden has recently transitioned from the 2020 e-krona pilot to a complete digital currency review that aims to finish by the end of November 2022. Even though it is taking cautious steps and aiming to get every aspect right, those steps are bigger than many other countries have taken [6][7]. 

The Eastern Caribbean Currency Union is the third in the list of most advanced CBDC projects. Its central bank, ECCB, has been testing the retail Caribbean Dollar (DXCB) pilot program since March 2020. With current cash payments amounting to over 80% and traditional digital payments being costly, the issuance of a CBDC can prove a game-changer.

A place with geographic barriers of payments and money distribution, the Bahamas have around 380,000 people living scattered on the 700 islands, and initiated their own CBDC project called the “Sand Dollar.” Although counting on a stable –pegged-  currency and high levels of bancarization, there are still many groups in the area that are excluded from banking services. With its launch in October 2020, the Sand Dollar made the Bahamas the first country in the world to officially roll out a CBDC.

CBDC project status map

Graph 1: CBDC project status around the world. December 2020. [8]

Some curious cases

Typically, the U.S. leads the vanguard of research and development of most technological advances, but the case of CBDC’s appears to be the exception to the rule. While effectively dedicating plenty of resources on the research of blockchain technology and its application for a U.S. CBDC, most high-ranked officials have told that they do not intend to lead in this race. Case in point, the current strategy involves carefully analyzing the effects that CBDC have on foreign economies, and adjust plans, if needed, for the development of the domestic one [9]. 

Similarly, the U.K. and Russia should be “further along than they are, but are not” [10]. In the case of the U.K., it can be because they assign too much focus on researching rather than “going forward.” Russia, on the other hand, sympathizes with the U.S. and doesn’t have the objective of being first in the race. Despite having banned cryptocurrencies in the country, the Russian central bank has recently set up to create a digital ruble to replace unreliable payment mechanisms, as well as to create new layers for money transferring, (tax) payments, conversion to foreign currencies and store of value [11][12]. 


Despite still being in its infancy, the development of CBDC’s is likely to see exponential growth in 2021. As the countries leading the cause of CBDC’s will test the technology and use of the digital currency in their own markets, adoption is likely to increase and gain the attention of other countries. To keep up to date with developments happening in the blockchain industry, subscribe to receive news and engaging articles on the topic. 

Need to build your own digital currency? Scalable Labs can help. 





[1] Kriwoluzky, Alexander, and Chi Hyun KIM. “Public or Private? The Future of Money.” European Parliament, Dec. 2019. 

[2] Kiff, J., Alwazir, J., Davidovic, S., Farias, A., Khan, A., Khiaonarong, T., … & Zhou, P. (2020). A survey of research on retail central bank digital currency. Available at SSRN 3639760.

[3] Ward, O., & Rochemont, S. (2019). Understanding Central Bank Digital Currencies (CBDC). Institute and Faculty of Actuaries (March 2019).

[4] Wong, P., & Maniff, J. (2020). Comparing Means of Payment: What Role for a Central Bank Digital Currency?. FEDS Notes, 08-13.

[5] Gross, Jonas. “CBDC Pioneers: Which Countries Are Currently Testing a Retail Central Bank Digital Currency?” Medium, 20 June 2020,

[6] Partz, Helen. “Sweden’s Central Bank to Partner with Accenture to Launch E-Krona.” Cointelegraph, 13 Dec. 2019,

[7] Partz, Helen. “Sweden Is Studying a Potential Transition to the e-Krona CBDC.” Cointelegraph, 11 Dec. 2020,

[8] For a continuously updated platform on CBDC advancements, please visit:

Gross, Jonas, et al. “Central Bank Digital Currency (CBDC) Tracker.” CBDC Tracker, BCG, Digital Euro Association, R3, Firmshift, 22 Jan. 2021,

[9] Fed’s Powell: More Important for U.S. to Get Digital Currency Right than Be First. Thomson Reuters, 19 Oct. 2020,

 [10] Hinchliffe, Ruby. “UK CBDC Researcher: We Should Be Further along than We Are.” FinTech Futures, 15 Dec. 2020,

[11] Wood, Miranda. “Russia to Confiscate Crypto, Central Bank against Private Digital Currency.” Ledger Insights , 8 Nov. 2019,

[12] Kozlov, Vladimir. “Russia’s Regulator to Create a New Digital Currency.” Bne IntelliNews, 21 Oct. 2020,


Boar, C., Holden, H., & Wadsworth, A. (2020). Impending arrival–a sequel to the survey on central bank digital currency. BIS Paper, (107).

Auer, R., Cornelli, G., & Frost, J. (2020). Rise of the central bank digital currencies: drivers, approaches and technologies. Bank for International Settlements, (880), 36.

Integrated KYC/AML Compliance with Sumsub & Scalable

White label exchange software provider Scalable Solutions has integrated Sumsub, an all-inclusive KYC/AML compliance platform. 

As regulation around digital asset management and services is becoming clearer and more demanding, compliance is top of mind for exchanges, institutions and other financial services providers. Having access to a one-stop-shop for all compliance needs can significantly lower the costs usually associated with KYC/AML compliance procedures, such as technology integration and operations, human resources and maintenance costs. 

Sumsub tackles all onboarding and compliance challenges that come with identity verification. It optimizes KYC and AML procedures by converting existing policies into automated digital processes that allow faster and safer customer onboarding. 

Scalable Solutions and Sumsub have partnered to further offer clarity and ease of compliance integration to their clients, which range from exchanges, brokerages, wallet providers, institutional players, fintech companies and more. Hence, the integration is able to:

  • Drive conversion of customers – identity verification becomes a smooth process and no longer a bottleneck in the onboarding procedure. This eliminates user frustration and saves time for financial services providers, creating an overall better customer experience. 
  • Optimize costs – having to coordinate verification with multiple providers is not only time consuming and costly, but also oftentimes inefficient. Sumsub’s user-friendly interface allows transparent checks, improved workflows and customizability, all from one monitor and source. 
  • Champion compliance and prevent fraud – compliance with local and international legal frameworks and regulations (think FATF, FINMA, FCA, CySEC, MAS) is integrated. Fraud recognition services and extensive legal expertise prevent the risk of unlawful activity taking place. 

Before the partnership, Scalable Solutions and Sumsub already had quite a few mutual clients, such as and Changelly, which further convinced the two companies to collaborate.

Mark Berger, founder of Scalable Solutions, added: 

“As a company that values security and knows its importance for our clients, we’re glad to have integrated with Sumsub to provide KYC and AML compliance services that are transparent, easy to navigate and a pleasure to work with.” 

Jacob Sever, Co-founder of Sumsub, said:

“If trading businesses want to avoid fines and keep their platforms out of trouble, compliance with regulatory demands is vital. We’re happy to supply Scalable Solutions with a secure and user-friendly tool. Now their clients can stop worrying about complicated regulations and onboard more efficiently.”




About Sumsub 

Sumsub is an identity verification platform that provides an all-in-one technical and legal toolkit to cover KYC/KYB/AML needs. The company focuses on accelerated ID verification, digital fraud detection, and compliance in over 200 international markets. Sumsub combines top technologies with legal expertise and assistance with financial requirements (FCA, CySEC, MAS, FINMA, BAFIN, etc). Clients include BlaBlaCar, Gett, ESL Gaming, JobToday, Wheely,, Changelly, Decta, Exness, HRS Group.

Awards: Benzinga Global Fintech Awards 2018, The UK Startups 100 2020, PwC nomination for ‘The best use of tech award’.

Sumsub Contacts

Olya Laktyushina

About Scalable Solutions

Scalable Solutions is a global technology and service company that focuses on developing state-of-art white-label blockchain solutions for our clients. The institutional-grade trading software which serves as a B2B solution for exchanges and brokers has never been compromised. Besides innovative technology, the security of exchange systems is a significant area of value and pain-point the company is solving for its clients. 

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