HSBC has just conducted what it claims is the world's first blockchain trade-finance transaction, which is a major step forward for mainstream adoption of the technology. A shipment of soybeans was transported from Argentina to Malaysia, via Cargill's Geneva and Singapore subsidiaries.
"What this means for businesses is that trade-finance transactions have been made simpler, faster, more transparent and more secure", Vivek Ramachandran, HSBC's head of growth and innovation, said in the statement.
This was the first time that a blockchain was used for a trade finance settlement.
The Letter of Credit transaction was an end-to-end trade between a buyer and a seller and their respective banking partners, completed on a single shared application rather than multiple systems.
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This particular use case, as reported in the Financial Times, has been developed on Corda's R3 platform, a piece of tech developed by a global group of financial institutions banks. Speaking further, he said that "With blockchain, the need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous".
This follows tests announced in March 2016 by a global banking consortium - which included ING, and HSBC - that completed cloud-based tests of five different blockchain technologies. R3 is now working with a consortium of banks to determine blockchain solutions for a range of issues.
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%. This consortium now holds more than 100 different banks, trade associations, and regulators.
More banks all around the world seem to be showing interest in decentralized ledger technology which is the same technology that supports cryptocurrencies such as Bitcoin (BTC).
Ramachandran said HSBC already had another client lined up for the next similar transaction.