blockchain

  • Tracey Cheek posted an article
    Using Digital Signatures in Aircraft Title & Registration see more

    NAFA member, Debbie Mercer-Erwin, President of Wright Brothers Aircraft Title, discusses the use of digital signatures in the aircraft title and registration process. 

    It is an exciting topic and a fundamental priority for Wright Brothers Aircraft Title (WBAT) to stay current with technology, especially when it has the potential to increase efficiency and security in our services, as well as help reduce time and cost in transactions for our clients. We are always looking forward to how our company could put certain applications to use, even Blockchain in Aviation Escrow Transactions. For this month’s topic, we don’t have to guess though. 

    One huge hindrance to efficiency in aircraft title registration is the paperwork involved – handling and distributing numerous paper documents between multiple parties, whether in the United States or internationally. Printing, signing, mailing – more than once if corrections are needed, let alone if the documents are lost in the mail altogether – is enormously time-consuming. 

    WBAT wanted to find a way to streamline certain processes and reduce our amount of paperwork, while maintaining a high level of security – to save time and money within our business and for our clients. We were immediately interested in the use of Digital Signatures, which is a specific implementation of an electronic signature (eSignature).

    The US Federal ESIGN Act defines an eSignature as “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record”. A Digital Signature takes this a bit further with the addition of encryption/decryption technology – securing the data associated with an electronically signed document and creating a robust audit trail.

    Digital Signatures have been used for electronically signing an array of documents – sales contracts, offer letters, lease agreements, liability waivers, financial documents, etc. – and are legally enforceable in most business transactions throughout most of the world.

    We needed to make sure this solution would work with multiple signers on complex documents though and be compliant with the Federal Aviation Authority guidelines, including their Notice of Policy Clarification for Acceptance of Documents With Digital Signatures (81 FR 23384), which requires Digital Signatures – traceable and digitally encrypted – not just eSignatures.

    DocuSign was the clear answer for our business – meeting some of the most stringent US, EU, and global security standards, and using the strongest data encryption technologies available. It also happens to be the leading eSignature brand, with the ability to:

    • Easily upload and send documents for signing
    • Sign at any time, on a wide variety of devices, from nearly anywhere
    • Check signing status and send reminders to keep things moving forward

    This software has enabled us to get agreements done faster with fewer errors, which directly translates to lower cost, for our business and our clients. We’ve accomplished this with using Digital Signatures mainly for Bill of Sale and Application for Registration documents, which directly benefits our buyers and sellers.

    There are more benefits on the horizon though with more widespread use of this technology. With more lenders in the industry using Digital Signatures, it might not even be necessary to presign a release of the lien. Instead, the involved parties would digitally sign at closing when money is distributed, reducing the risk for all. 

    We’re excited to see where this technology takes us and the aviation finance industry. In the meantime, we’re thrilled with the results we’ve already seen and the time and cost savings we’re able to pass down to our clients. 

    This article was originally published by Wright Brothers Aircraft Title on September 16, 2019.

     

  • Tracey Cheek posted an article
    Blockchain in Aviation Owner Trustee Transactions: What Is the Potential? see more

    Blockchain – the highly advanced, decentralized database technology behind every virtual currency you can think of, and that most of us don’t understand – has many companies in many industries making huge strides to be at the front of this digital revolution, including aviation. However, it isn’t in regard to the use of virtual currencies (or cryptocurrencies), like Bitcoin, Ethereum, and Ripple, among others, but the multitude of other applications for which blockchain technology can be used.

    We discussed virtual currencies and their possible use in the aviation industry, and specifically in aviation owner trustee transactions, in the previous blog: “Cryptocurrency in Aviation Owner Trustee Transactions: Is it a Viable Option?” This time the focus is purely on the technology behind it all, and what its potential use is in aviation owner trusts.

    To review a bit, blockchain has four main pillars, which include: a distributed ledger, a decentralized database, immutable records, and smart contracts (digital contracts of data agreed upon). This decentralized, encrypted database in the Cloud is shared by all its participants, open to all (anonymously if desired), with access to view each permanent and timestamped transaction or alteration but not retrospectively change. 

    For aviation owner trustee companies, and the large amount of data produced with every transaction, there is a big opportunity for blockchain technology to be applied and radically streamline the process, possibly opening the door for the use of cryptocurrency in the future. A relatively brief synopsis of key blockchain capabilities will hopefully help in understanding the potential benefits of digitizing and automating the aircraft owner trustee registration process and associated transactions. Increased accuracy and integrity are at the top of that list. 

    There are two main types of blockchain ledgers – open, in which participants are anonymous, or closed, in which participants are identified. Participants have confidence and trust in the accuracy of records because they have access to the same information, and consensus is required to add new inputs, or “blocks”, which are connected to those preceding them. Closed blockchains are also referred to as “permissioned” because certain parameters can be applied, allowing specific participants, and limiting functions like the ability to view, add to, or validate the ledger.

    There is a high level of confidence in closed blockchain databases because the records cannot be changed, and the database can limit access and functions, providing a more private transactional space. Either type can provide a way to carry out transparent, verifiable and secure transactions in real-time, but a closed blockchain database is more applicable to aircraft owner trusts, and even more so the use of “smart contracts” within it.

    Smart contracts, as previously referenced, are digital contracts agreed to by the parties involved. They are already used outside of blockchain technology, helping to efficiently authenticate and conclude agreements, but the increased ability for automation along with a distributed and neutral ledger can offer specific benefits in owner trustee transactions. Not only can certain permissions be applied to the database, but certain conditions can be applied to the contract as well. For instance, if a registration document is simply lacking a signature and that requirement is met, the document could then automatically be processed and filed. 

    Blockchain databases can make the transactions of an aircraft registration filing accessible to the parties involved. Examples of visible transactions can include digital offers, acceptance of terms, filing of documents, and more. Through applying conditions to the smart contract, blockchain databases can automate much of the process, reducing the risk of human error. Accordingly, the amount of time spent and cost incurred retrieving and circulating documents, along with the fees associated with processing transactions, would be greatly reduced. 

    However, blockchain technology is still largely unregulated. Without consensus among lawmakers as to use and enforceability, there could be many pan-jurisdictional issues. There is currently a lack of integration in the aviation industry as well, which could make it difficult to fully realize the benefits of the technology. 

    Aviation owner trustee companies must consider all aspects of the industry, especially security and compliance, so widespread regulation and integration of new technologies is important. However, unlike the use of cryptocurrency and its volatile nature, the use of blockchain technology could mean more security, and a competitive edge. The ability to quickly make informed decisions increases significantly with automated systems, potentially increasing efficiency and reducing costs.

    This article was originally published on Aircraft Guaranty Owner Trustee's blog.