Blockchain to secure a real letter of credit within minutes

When Texas-based Tricon Energy wanted to buy polymers from India’s Reliance Energy, the two companies avoided the usual rigmarole of phone calls, couriered documents and emails by logging on to a new blockchain system called Voltron. Within minutes they had completed negotiations on the terms of the sale and then secured a letter of credit and advice from ING and HSBC to complete the deal, which was finalised last Friday. This was one of the first examples of a real-life trade deal being handled by one of many platforms being developed by banks to use blockchain technology — which underpins cryptocurrencies such as bitcoin— to save money and time in the centuries-old trade finance market. HSBC, Standard Chartered, Bank of China, Deutsche Bank, Société Générale and UBS, among many others, are looking to a handful of platforms to help speed up, simplify and reduce risk in the $16 trillion in global trade done annually… Trade finance is still mostly based on paper, such as bills of lading or letters of credit, being sent by fax or post around the world, and seems to many bankers to need modernisation.

Don Weinland

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