Global bank HSBC performs first blockchain trade finance transfer

Global bank HSBC performs first blockchain trade finance transfer

HSBC and ING Bank have successfully executed the first scalable live trade finance transaction using blockchain for Cargill, an global food and agriculture conglomerate. It involved a shipment of soybeans from Argentina to Malaysia. Although this was not the first blockchain technology had been used for trade finance, it was the first time that such a transaction had been completed using only a single shared blockchain platform rather than also relying on other systems.

HSBC Holdings announced the world's first commercial financing transaction using blockchain.

"At the moment, buyers and suppliers use a letter of credit, typically concluded by physically transferring paper documents, to underpin transactions", added Ramachandran. The Cargill blockchain transaction was completed in 24 hours.

The NYSE- and LSE-listed banking and financial services organization has issued a letter of credit to the Dutch lender ING Groep NV (ADR) (ING) for the USA food and agriculture firm Cargill.

As it was informed Vivek Ramachandran, head of growth and innovation at HSBC, "the need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous".

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This Cargill transaction breakthrough provides a ray of hope for trade finance and if more efforts are put into consolidating on the achievement made so far, there is the possibility that trade finance could shift from the traditional method to a blockchain technology-driven one in no distant time.

HSBC said that while other trade finance deals have been carried out using blockchain together with other technologies, the Cargill trade was the first to use a single blockchain application, the report indicates. R3 actively collaborates with banks having an aim to find blockchain solutions that will be able to deal a variety of existing problems. "The quick turnaround could mean unlocking liquidity for businesses".

The announcement is excellent news not only for the bank but also for the companies involved in worldwide trade finance.

Trade experts believe blockchain may be shipping's answer to how it can reduce the time it spends on paper-based processes.

More banks all around the world seem to be showing interest in decentralized ledger technology which is the same technology that supports cryptocurrencies such as Bitcoin (BTC).

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