Using Blockchain Technology Companies for Trade Finance

One of the most propitious industries for blockchain technology is trade finance. Many of the world’s largest banks are putting time into its research and development.

Thanks to a consortium of 71 global financial leaders, R3CEV, much has been uncovered about potential uses of blockchain technology.

Since 2016, R3 has executed several pilot runs in the marketplace to complement their research. They will continue to improve these strategies until ready to fully enter the market.

So, what are some of their findings of potential use? Here’s the future of trade finance with blockchain technology companies.

Monitor Real-Time Status and Condition

One of R3′s members, CBA, is a leading contributor to the research of blockchain technology. Currently, they are undergoing 3 different projects to analyze blockchain use.

They are conducting a trial run with exporters who ship cotton. A humidity monitor is placed inside the canister, which is linked to IoT and GPS.

This monitor allows consumers to track their shipments with real-time status. Also, they are able to evaluate the condition of their product as it travels through.

Other national blockchain technology companies are running pilots, similar to this study. In Singapore, Hellosent is conducting similar tests. However, they’re studying the import of French wine.

Eliminate Unpaid Settlements

A growing issue for grain farmers is a financial loss due to trade insolvencies. An estimated $50 million was lost in 2014 because of this activity.

It takes roughly 4-6 weeks for a farmer to receive payment for their shipments. At that, often times conflict arises between farmers and buyers over payment complications (failing to pay the appropriate amount, late payment, etc.).

Australian start-up, Full Profile, has taken matters into their own hands.

Their blockchain platform allows farmers to now receive automatic payment upon delivery of grains. This will significantly reduce the risk of dispute between farmers and buyers.

Once Full Profile’s application is fully functional in a domestic setting, they will expand on external trade.

Digitize

The use of blockchain technology can also be beneficial to reducing financial loss and risk. Upon further development, it will be able to digitize sales and legal arrangements.

Trade finance is an unwieldy industry, that relies heavily on settlements and contracts. Currently, most of these agreements are handled the old-fashioned way: paper copies.

Blockchain technology will remove the need for this paper-based system. This ultimately reduces the risk of financial loss as documents are often lost, mishandled, or tarnished.

Electronic documentation can be tracked much more efficiently. Also, it cuts out the need for a third-party verification system.

Interested in Learning More About Blockchain Technology Companies?

Blockchain technology creates transparency in financial trade between buyers and sellers. From the moment an order is made up until payment, blockchain is capable of simplifying the trade process.

Are you looking to jump into the world of international trade? You’re at the right place. It would be great to know your thoughts and comments.

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What Is Bitcoin and the Blockchain and Why It Is Important to Invest Now

There is increasingly growing interest and buzz around bitcoin these days. You may have heard of it before or not. Either way, it is a multi-trillion-dollar financial industry that is practically flying under the radar of most people (only about 2% of the population is even aware of its existence), which makes it a prime time to get positioned before it hits the mainstream. And the time is now because cryptocurrency awareness is going viral. Even some universities are teaching classes on bitcoin, cryptocurrencies and blockchain technology!

What is Bitcoin Exactly?

Bitcoin is a digital currency (or digital money), that is electronically held, which means it is not tangible like fiat currency (dollars, euros, yen, etc.). It was created cryptographically, and thus it is a cryptocurrency. It runs on open-source software and it is not controlled by entities. It is decentralized and not governed by banks or government.

What is the Blockchain?

Blockchain technology is where bitcoin and other cryptocurrencies exist. The blockchain is also used for other applications other than cryptocurrencies, such as running smart contracts, for example. In a nutshell, the blockchain is a digital ledger that is decentralized. It stores records of all transactions that occur within it and is run by a peer-to-peer network. This means that individuals and businesses use it to transfer digital assets to each other via the Internet with no third party (i.e., banks, governments) needed.

The Importance Blockchain Technology and Investing in It

From a business perspective, blockchain technology can improve business processes and significantly lower costs. It will also allow businesses to offer more benefits of service to customers. For instance, financial institutions could use blockchain technology to improve processes for things such as settlements and insurance.

From an individual perspective, blockchain technology offers opportunities for significantly high returns on cryptocurrency investment as compared to traditional investments.

Blochchain technology and cryptocurrencies are quickly proving to be an inevitable part of the future of money and finances in the global economy. It is something that will soon become mainstream in the world financial market, and those who invest early as early adopters of this amazing innovative technology will be among the newest millionaires in the coming years and beyond.

We are in the third big wave of the Internet. The first being websites and domain names (dotcom boom), the second being social media (dating sites, Twitter, Facebook, YouTube, etc.), and the third blockchain technology, bitcoin and other cryptocurrencies. It’s a great time to get positioned.

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Swift Facing Criticism From Bitcoin Remittance Companies

One of the widely known mediums for financial transaction messaging called Swift has been facing criticism for not being able to fulfill the needs of financial markets around the world. There are some who believe that it has turned out to be inefficient for settling cross-border payments for not being able to manage real-time settlement of any transaction amount and not being transparent in payment status and settlement risk.

Global Payments Innovation – A New Initiative

In response to such criticism, Swift has launched Global Payments Innovation (‘GPI’), which has the ability to make funds available on the same day for B2B transfers that fall in the same time zone. It also offers secure remittance information, end to end payment tracking, and better transparency. The first phase of the project was made live in January this year and is currently in use by twelve banks, including ING, ‘Danske’ Bank, ‘Citi’, and Bank of China. It is currently focusing on B2B payments. Swift has made another commitment to expanding its cross border payment system.

The effort of improving global messaging service might be too small or too late in terms of resolving worldwide payment clearance, payment and settlement blockage, especially for customers from the non-banking sector.

‘Bitcoin’ Remittance Companies

Both new and old ‘bitcoin’ remitters are already working on resolving these issues. They use different ‘blockchains’ to transfer money around the world. Align Commerce is one of the ‘bitcoin’ remittance companies that became famous for $20.25 million in funding. ‘Marwan Forzley’, CEO of Align Commerce, considers distributed ledgers and ‘blockchain’ to be next generation opportunity.

Cross Border Payments in the Global Finance Chain

These payments were around $26 trillion in 2014, which is around 33 percent of the world’s GDP. Due to inconsistent and non-standardized infrastructure, the money will stay trapped in today’s system. For sending payment across the border, a customer has to find a transmitter for managing money transfer. The transmitter will be able to transfer payment due to its contacts with financial institutions in both home and recipient countries. Furthermore, each institution has its own intermediary, which adds more to the complexity of the process. Every bank, involved in managing the transfer, charges its own service fee and it can take 7 days for a process to complete.

The corporate sector around the world was estimated to be $15.7 trillion in 2014. They can negotiate fees between 1 to 2 percent of the payment amount. Whereas, small and medium size companies; and person to person transactions can be charged up to 15%. The hidden cost of these transactions makes it harder for customers who cannot afford it.

If a customer belongs to a ‘underbanked’ or undeserved part of the world, he may not be able to find those paths that may enable simplified cross border payments, for example, taking the services of a transnational bank for payment transfer by using their infrastructure.

Efforts made by ‘Bitcoin’ Remittance Companies

Although, Swift is committed to bringing transparency in cross border payments through ‘GPI’, yet, it failed to provide relief when it comes to customers who cannot negotiate fees. On the other hand, ‘bitcoin’ remittance companies have made efforts to resolve this issue at a small-scale. These companies enable customers to execute borderless transactions at a low and well-controlled cost.

One of the largest ‘bitcoin’ remittance firms called ‘Bitspark’ is based in Hong Kong. The company believes that it has the best long-term prospects despite the lack of traction. The CEO of the company, ‘George Harrap’, said,

“The vast majority of the world’s remittances are not done via banks, but by cash money transfer shops. This will not affect how they manage their business or transactions. Cost will remain the same as remittance companies batch payments anyway, so potentially, reductions in wire fees do not affect companies who transfer $10m per transfer and draw down on this balance for small remits.”

The Problem Persists

Despite Swift’s intention of improving payment transaction recording for its member institutions around the globe, it is possible that innovations inspired by ‘GPI’ may show up in other ‘blockchain’ enabled applications. For instance, ‘HyperLedger’ Project (a project in which Swift is a member) might develop the basis for cross border frameworks in future.

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Bitcoin – A Secure Investment for the Future

Bitcoin is an online digital currency, just like a dollar or a pound but with a few exceptions. Introduced by Satoshi Nakamoto in 2009, Bitcoin engages in a peer-to-peer payment system where no intermediaries exist and goods can be securely transferred between any two people on the planet. It is associated with a heavy network of computers and the unit of currency for the Bitcoin system (appropriately called Bitcoin) can be simply acquired by joining the vast network. Bitcoin provides a fast cheap and secure transaction alternative but few are willing to take the jump for it. So the one million dollar question still lingers, is Bitcoin a secure investment?

Bitcoin is only a few years old, an interesting creation that has awed many and for the record, has attained a name in the top financial charts. Its popularity has spanned and it has led some of the top businesses like Virgin Galactic to consider it as an acceptable source of payment. Bitcoin prices increase at rates of up to 10% and continue to dominate as the alpha of the market and this has made many interested in investing in it.

Another special feature of Bitcoin is that it does not have a central bank and neither does a central government control it. It’s a global currency and its creation and existence lies behind a complex and geeky mathematical algorithm that enables it to shadow government related mishaps. Cases of political instability and government absurdities that plunge the economy down to shame and lead years of investments in a currency down the drain do not occur in the crypto-currency system. This creates a secure and friendly investment opportunity with low inflation risks.

The Downside

With an ever-amazing upside, crypto-currency also has its downs. As mentioned, this thing is still taking baby steps; and with that comes great uncertainties. Bitcoin prices are volatile; currently increasing sharply and can fluctuate at 30% to 40% in a month. The world is still surprised at its emergence and there exists very few Bitcoin holders and Bitcoin. This leads to unanswered questions and cold fear among people as investing in a new unpredictable ‘gold mine’ can yield devastating effects. Its newness brings forth lack of regulations and scares off potential investors.

The enigma surrounding the Bitcoin system is a major factor to be considered. Anything can happen and everyone participating in the Bitcoin market is on a high alert. China in December 2013 eliminated the use of Bitcoin and this led to a drastic drop to its value from $1240 to $576 in just three weeks. Programmers also determine the functionality of this global currency and many question the thought of risking their finances for some group of geeks. This prevents many from venturing into the system and increases the risk of Bitcoin investment ever so highly.

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