World’s First Trade Finance Transaction Conducted by HSBC using Blockchain

Renita

Renita

May 15, 2018 1:57 pm

World's First Trade Finance Transaction Conducted by HSBC using... | Coindelite News
3288 Total Views

Blockchain Technology used by HSBC to Perform World’s First Trade Finance Transaction

On Monday HSBC claimed that it had conducted the world’s first commercially feasible trade finance transaction using blockchain technology.

The bank circulated a letter of credit for U.S. food and agriculture firm Cargill. The trade finance transaction included a bulk shipment of soybeans from Argentina to Malaysia. The letter of credit was issued from HSBC to Dutch lender ING.

Letters of credit are originated from one bank to another to ensure that a seller will receive a payment under a set of provisions. Traditionally this process would take a considerable amount of time, various paper records, and a lot of back and forth between the several parties involved. Blockchain technology guarantees to change that.

Blockchain, the technology that justifies bitcoin, allows transactions to be maintained across a vast network of computers. However, in bitcoin’s case, it records all of the transactions that happen on the network, creating a public ledger. Banks have taken the principles behind bitcoin’s blockchain – such as the idea of the decentralized ledger – and attempted to apply it to processes that they are carrying out.

HSBC used a platform developed by blockchain start-up R3 called Corda for this transaction. R3 works with an association of banks to come up with blockchain solutions to several problems.

The head of growth and innovation at HSBC, Vivek Ramachandran, said in a statement:

“The need for paper reconciliation is removed because all parties are linked to the platform and updates are instantaneous. The fast turnaround could mean opening liquidity for businesses.”

According to HSBC and ING, the exchange was performed in 24 hours, compared to the five-to-10 days it usually takes to complete such exchanges over a paper-based system.

Supporters of the blockchain technology claim that it can upend various industries. Sectors like trade finance, health care, and insurance are thought of as good objectives for the use the technology as they depend on long paper trails.

While there have been proof-of-concept activities performed using blockchain technology, HSBC’s was the first that could have practical applications, a spokesman for the company told CNBC.

Banks have been spending money on blockchain projects as it is regarded that the technology will notably upset the financial assistance.

While bankers do not like the original use case of blockchain — to underpin cryptocurrency transactions — many see the functional use for the technology because of its ability to handle large amounts of data within a simple, stable network.

In the previous month, Santander coupled up with blockchain firm Ripple to create a foreign exchange service that enables same-day international money transfers.

No Comments
IBM is Looking for Blockchain Researchers

IBM is Hiring Blockchain Researchers for French Extension IBM’s chief executive told that the technology giant is looking forward to hiring nearly 2,000 people in France and most of them will be employed to focus on blockchain technology. Meanwhile, in the interview with Le Monde, Rometty told IBM is hiring …

Bank of Ayudhya Pilots Cross-Border Transaction using Blockchain

Thailand’s Bank conducted Pilot transaction using Blockchain Technology Announced on Tuesday, Thailand’s Bank of Ayudhya PCL successfully performed a cross-border transaction with a Bank in Singapore using Blockchain technology. As per the Press Release, the Bank is also known as Krungsri, stated it performed a real-time international remittance in concert …

Bank of America Wins Patent for Blockchain Security Tool

Bank of America Won Blockchain Security Tool Patent Bank of America wins a patent for a way to control access to specific features of a permissioned blockchain network, recently published document shows. The patent for a somewhat titled “system for managing security and access to resource sub-components” describes how security …

Proxy Voting Blockchain Pilot Organised by Santander at AGM

Santander Performs Proxy Voting Blockchain Pilot at AGM Banco Santander has finished a blockchain pilot that it states to enhance the process of proxy voting amid Annual General Meeting (AGMs). For the project, declared  Thursday, Santander collaborated with global fintech firm Broadridge and custodian banks Northern Trust and JPMorgan, explaining …

Alibaba CEO Jack Ma Says Bitcoin is a Bubble, Blockchain is Not

The Blockchain is Not a Bubble, but Bitcoin is, says Jack Ma Jack Ma, Alibaba founder, and chairman is now one of the latest supporters of Blockchain Technology. The billionaire CEO told Bitcoin is the bubble, but Blockchain is not. He commented recently at the World Intelligence Congress in Tianjin. …

EU Parliament Thinks Blockchain could ‘Empower’ Business and Citizens

EU Parliament believes Blockchain Technology could ‘Empower’ Small Business Members of the European Parliament thinks small business could benefit from incorporating Blockchain Technology. According to a Press Release, the Industry, Research, and Energy committee voted on Wednesday to suggest that small businesses look into blockchain payment systems in a move …

Press Release

shares