It is a real milestone in the financial system as blockchain technology has never been used for a commercial trade finance settlement before. The transaction that would take approximately a week utilizing usual paper-based processing mediums was carried out times faster and it took only 24 hours to finalize all the procedures.
Blockchain is here to eliminate time-consuming transactions supplemented by huge volumes of paper work. Blockchain supporters believe that this technology can be successfully implemented across a variety of different spheres like trade finance, health care and insurance, bringing significant benefits and positive changes.
According to professionals’ estimation, putting all trade-related paper work of Asia Pacific onto the blockchain could help to reduce the time need for goods export by up to 44% and to cut costs by up to 31%.
The transaction that has made news dealt with a shipment of soybeans transported from Argentina to Malaysia last week. Handling the deal for US food and agricultural group Cargill, HSBC issued a letter of credit to Dutch ING Bank NV.
HSBC as well as ING Bank used blockchain technology platform that was developed by the R3 consortium and called Corda. R3 actively collaborates with banks having an aim to find blockchain solutions that will be able to deal a variety of existing problems.
As it was informed Vivek Ramachandran, head of growth and innovation at HSBC, “the need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous”. “The quick turnaround could mean unlocking liquidity for businesses,” added he.
According to HSBC, the transaction can be replicated. It means that the technology is absolutely ready to be implemented across the industry. Thanks to blockchain, all operations and transactions can become faster, simpler, more secure and more transparent which is extremely needed.
Taking into account all the benefits that blockchain technology can bring to the world, there is little surprise that today more and more attention is paid to this technology by governments and organizations of different countries.
Last week, it was announced that after banning cryptocurrency trading, ICOs and other related activities in the country China’s government is currently working on development of national standards for blockchain. It is believed that national-level standards for this technology will boost growth of the industry in a structured and well-established way.
The world’s tech giants are also attracted by the new horizons opened by blockchain. While the world’s second largest software company Orange announced its plans to launch its new blockchain products such as a platform-as-a-service product and decentralized ledger-based applications in the nearest future, the social media mogul Facebook formed a new blockchain group that is to work on studying and implementing the technology.