Trade finance is among the most advantageous sectors for blockchain technology. The majority of the biggest banks in the world are devoting time to its research and development.
Much has been learned about possible applications for blockchain technology thanks to the R3CEV consortium, which consists of 71 global financial leaders.
In order to supplement their research, R3 has conducted a number of pilot runs in the market since 2016. Up until they are prepared to fully enter the market, they will keep refining these strategies.
What are some of their findings that might be useful, then? Here is the way that blockchain technology companies will finance international trade.
Monitor Real-Time Status and Condition
Blockchain technology research is actively being conducted by CBA, one of R3’s members. They have three different projects running right now to study how blockchains are used.
They are testing it out with cotton exporters. Inside the canister is a humidity sensor with IoT and GPS connectivity.
Customers can track their shipments using this monitor’s real-time status. Additionally, they are able to assess the state of their product as it passes through.
Similar pilot programs to this study are being run by other national blockchain technology companies. Hellosent is conducting comparable tests in Singapore. However, they are researching the import of French wine.
Eliminate Unpaid Settlements
Financial losses resulting from trade insolvencies are becoming a bigger problem for grain farmers. This activity cost $50 million in losses in 2014, according to estimates.
Farmers typically wait 4–6 weeks to get paid for their shipments. Then, disputes over payment issues (such as failure to pay the correct amount, late payment, etc.) frequently occur between farmers and buyers.).
Taking matters into their own hands is an Australian start-up company called Full Profile.
With the help of their blockchain platform, farmers can now get paid automatically when their grains are delivered. By doing this, the possibility of a dispute between farmers and buyers will be greatly reduced.
The company will focus more on international trade after the application for Full Profile is fully operational in a domestic environment.
Digitize
Reducing risk and financial loss is another benefit of using blockchain technology. It will eventually be able to digitize contracts for sales and legal matters.
Trade finance is a complicated field that heavily depends on agreements and contracts. The majority of these agreements are currently handled using paper copies, the outdated method.
This paper-based system won’t be necessary thanks to blockchain technology. As documents are frequently misplaced, handled carelessly, or tarnished, this ultimately lowers the risk of financial loss.
Electronic documentation allows for much more effective tracking. Additionally, it eliminates the requirement for a system of independent verification.
Are You Interested in Finding Out More About Blockchain Technology Companies?
Transparency in financial transactions between buyers and sellers is made possible by blockchain technology. Blockchain has the potential to streamline the trade process from the time an order is placed until payment is received.
Are you interested in entering the world of global trade? The time is right for you. Your opinions and comments would be greatly appreciated.