A cargo of soybeans sailing from the US to China has set to become the premier fully-fledged agricultural trade to utilize the blockchain feature.
Blockchain Extends Its Newfound Authority
A report found in The Business Times shows that the parties involved in the trade comprised of Shandong Bohi Industry Co, Louis Dreyfus Co, Societe Generale, ING and ABN Amro. The companies decided to take advantage of blockchain to digitalize the letter of credit, sales contract and certificates using the Easy Trading Connect (ETC) platform.
As we all know that Blockchain is a distributed record of transactions that is controlled by a network of computers on the internet which first surfaced with the birth of Bitcoin.
As we all know that this is not the first time blockchain has been employed in the trading of goods, as the technology has been successfully used to trade in other markets such as oil.
Robert Serpollet, who is the global head of operations at Louis Dreyfus expressed excitement regarding the trade stating,
“We noticed very significant efficiency gains… far exceeding what we expected.” Efficiency gains, he added, were a result of less time consumed in processing the documents and data.
Louis Dreyfus Co served as the dealer in the transaction, while Bohi acted as the customer. The exchange also included teams from both parties participating on the blockchain, while banks issued and confirmed the letter of credit.
Blue Water Shipping and Russell Marine Group also contributed to the complex transaction by allotting all required certificates. The US Department of Agriculture (USDA) gave counsel and rendered insight on how to incorporate phytosanitary licenses in the process.
Officials Foresee More Widespread Blockchain Adoption
The results include streamlining cost and overall time the transaction takes, which is a benefit for any business.
Mr. van Vilet, a representative for ING, said, “This [cost saving feature] is key as we operate in a business that holds high volumes and shallow margins.”
“If not months, then in a year or two maximum, I think the world in this space will look considerably different,” he continued, alluding to the recent interest in blockchain and the potential the technology has for widespread adoption.
News headlines have been swarming with stories concerning financial institutions attempting their hand at investing in cryptocurrencies and other projects, and it appears that we are getting closer to embracing the technology into our everyday lives. If businesses and this new technology can sync and work in harmony, the world will experience a new age of efficiency and be able to designate resources more efficiently.