One of the most lucrative industries for blockchain technology is trade finance. Many of the world’s largest banks take the time to research and develop them.
Thanks to a consortium of 71 global financial leaders, R3CEV, much has been discovered about the potential use of blockchain technology.
Since 2016, R3 has implemented several pilot runs in the market to complete their research. They will continue to develop these strategies until they are ready to fully enter the market.
So, what are some of their potential uses? Here is the future of trade finance for blockchain technology companies.
Real-Time Status and Condition Monitoring
One of the members of R3, the CBA, is a leading contributor to blockchain technology research. Currently, they are going through 3 different blockchain usage analysis projects.
They are conducting a trial run on exporters who ship cotton. A humidity monitor is placed inside the canister, which is connected to IoT and GPS.
This monitor allows consumers to track their shipments with real-time status. Also, they will be able to evaluate the condition of their product as it passes.
Other national blockchain technology companies are running pilots, similar to this study. In Singapore, Hellosent conducted similar tests. However, they studied the import of French wine.
Remove the Unpaid Settlement
A growing issue for grain farmers is a financial loss due to trade insolvencies. An estimated $ 50 million was lost in 2014 due to this activity.
It takes about 4-6 weeks for a farmer to receive payment for their freight. That said, there is often a conflict between farmers and buyers due to payment complications (failure to pay the correct amount, late payment, etc.).
The Australian startup, Full Profile, is managing things in their own hands.
Their blockchain platform allows farmers to now receive automatic payment for the delivery of grains. This will greatly reduce the risk of disputes between farmers and buyers.
If the Full Profile application is fully applicable in a local setting, they will expand into external trade.
The use of blockchain technology can also be beneficial in reducing financial loss and risk. With further development, it will be able to digitize sales and legal arrangements.
Trade finance is an unusable industry, relying heavily on settlements and contracts. Currently, most of these agreements are handled in the traditional way: paper copies.
Blockchain technology will eliminate the need for this paper -based system. This ultimately reduces the risk of financial loss because documents are often lost, mismanaged, or damaged.
Electronic documentation can be tracked more efficiently. Also, it cuts down on the need for a third-party verification system.
Interested in Learning More About Blockchain Technology Company?
Blockchain technology creates transparency in financial transactions between buyers and sellers. From the moment an order is placed until payment is made, the blockchain is able to simplify the trading process.
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