Blockchain Trade Finance

Blockchain | TFG Ultimate Guide to DLT

Trade Finance Global / Blockchain Trade Finance

Blockchain, DLT and Trade Finance – Your TFG Guide

Welcome to our blockchain hub, a comprehensive guide by Trade Finance Global and TradeIX on the use of distributed ledger technologies (DLT) and blockchain within international trade, trade finance, and shipping. Consortia, networks and technologies have emerged in attempts to digitize trade, yet to date, their applications have been relatively unsuccessful and disjointed. We investigate some of the key opportunities and challenges the in the current ecosystem, as well as an in depth look at what needs to happen for the industry to evolve. Just as TCP/IP, HTML, and HTTP provide shared and open standards and protocols that enabled the Internet to become what it is, so too can blockchain and related technologies create a flatter, smarter, more connected, and overall better world for global trade and commerce.

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Infographics, Charts & Diagrams

Evolution of Technology in Trade Finance

Evolution-in-Trade-Finance20190506
3 models for the how platforms should evolve and adapt, from single instance, on-premise software to distributed platforms & networks ‘a network of platforms’

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Gartner Hype Cycle for Blockchain / DLT and trade finance adoption


Our indication of the current position of DLT for trade and shipping on the hype cycle curve, supported by past events, and, our prediction of key future events that will facilitate movement along the hype cycle curve.
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Consortia & Networks 2019 – Where we are at now

Depiction of the current state of the market. Each segment represents a network in the ecosystem. The underlying technology is shown at the core, followed by the network leads, and finally the participants. There are several more consortia and networks represented within the trade finance ecosystem; this paper highlights the major players with 8+ companies as key members or shareholders.
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Key Consortia and Network Articles

25Oct

VIDEO: Commodity finance enters a new digital era of platforms, networks and consortia – Cécile André Leruste, Accenture

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Trade and supply chain finance is at the forefront of innovation as there are currently many pain points for corporate... Read More →
23Oct

PODCAST: World Trade Symposium: Iain MacLennan, on Policy in an Era of Digital Trade (S1 E28)

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TFG caught up with Iain MacLennan, Head of Trade & Supply Chain Finance at Finastra, on the key trends in... Read More →
18Oct

VIDEO: Wells Fargo, on the changing needs of the Corporate Customer

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TFG heard Judd Holroyde, Head of Global Product Management, Wells Fargo. We talked about the changing payments landscape, about SWIFT... Read More →
15Oct

PODCAST: Anglo Gulf Trade Bank – Pioneers in Digital Trade ( S1 E27 )

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AGTB: New kid on the block. TFG heard from Daniel Gould, Deputy CEO of Anglo Gulf Trade Bank, and its... Read More →
10Oct

VIDEO: Marco Polo Deep Dive: An Insider View from the Banks

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Existing systems are woefully inefficient, siloed or still paper-based and many of them have not improved for decades. The Marco... Read More →
16Sep

Accenture: Commodity Finance Enters the Digital Era

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TFG heard from Accenture's Cecile Andre Leruste, on the major digitisation initiatives within the commodiy finance space. Commodity finance is... Read More →
05Sep

Eversheds Sutherland appointed as legal counsel for eTradeConnect

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Global law practice Eversheds Sutherland appointed as legal counsel for blockchain trade platform eTradeConnect to help the consortia tackle legal... Read More →
20May

Consortia & Networks 2019 – Where are we at now?

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The use of distributed ledger technology in the trade finance space is moving fast. Today’s DLT-trade ecosystem can be sectioned into... Read More →
20May

We’re Doomed: The Blockchain Gartner Hype Cycle for Trade & Shipping

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The Gartner hype cycle serves as a tool to help decision makers and investors gauge the actual current state of... Read More →
20May

The Evolution of Technology in Trade

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Why distributed platforms and networks can achieve global scale and adoption previously impossible with legacy technologies, architecture, and business models.... Read More →

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Contributions

Popular Cryptocurrencies

Bitcoin – The inaugral cryptocurrency, bitcoin has a $100bn market cap, and by far the most commonly used crypto.

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Ethereum – A public blockchain with smart contract functionality, the EVM is a simple and viable mechanism for trade finance.

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Monero – The anonymous crypto. With privacy being it’s USP, Monero is one of the most confidential cryptos in the market.

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Dash – The younger sibling of Bitcoin, Dash is an improved crypto with Masternodes, privateSend and InstandSend.

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Ripple – Comprised of XRP and RipppleNet, we see the future of payments being Ripple. It doesn’t use blockchain for concensus and cannot be mined.

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Litecoin – A near replica of Bitcoin, Litecoin has a faster processing speed and coin limit. The 6th largest by market cap, it’s one to watch.

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Blockchain for Trade Finance Podcasts

Similarities DLT Challenges

Latest Blockchain News

28Oct

VIDEO: WOA Insights – John Brehcist and Erik Timmermans on the WOA Convention 2019

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Open Account financing is going through a period of rapid change, thanks to digital innovation and competition. Recognised as a... Read More →
21Oct

VIDEO: Transaction Banking Updates from BAFT: Digitisation, Rules and Regulatory Changes

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We caught up with the President of the Bankers Association for Finance and Trade (BAFT). We talked about the balance... Read More →
17Oct

VIDEO: Steven Beck (Asian Development Bank) on Trade Gaps, Growth and Jobs in Asia

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We caught up with the Head of Trade Finance at Asian Development Bank, Steve Beck. We talked about the newly... Read More →
14Oct

Blockchain Software Provider Komgo Surpasses USD700m Of Financing On New Platform

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Geneva based blockchain software provider komgo SA has announced that it has taken a number of steps towards achieving its... Read More →
01Oct

Going back in time to SIBOS (UK) 1985

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"I joined SWIFT as part of the 5 man global sales team in 1985, so SIBOS in Brighton was my... Read More →
01Oct

Universal Trade Network becomes Digital Standards Initiative as ICC adopts it

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The Universal Trade Network (UTN), a project initially aimed to allow for interoperability between many of the blockchain and non-blockchain... Read More →
29Sep

VIDEO: Blockchain and DLT for Trade and Trade Finance – The Role of Multilaterals in the Digitisation of Trade

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TFG spoke to Emmanuelle Ganne, Senior Analyst and Blockchain Lead at the World Trade Organization on the state of digitisation... Read More →
29Sep

Bitcoin Arbitrage: How does it work?

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There are a lot of ways to gain profits from bitcoin and other cryptocurrencies today. One of the most popular... Read More →

An A to Z of Blockchain, Cryptocurrencies and Trade Finance

Frequently Asked Questions

What is Blockchain?

A blockchain is essentially a decentralised, distributed ledger that permanently records transactions. ‘Decentralised’ means that no single individual or group has excess control over the exchanges. ‘Distributed’ means that the ledger is sent out to many computers. In other words, it’s made public and thus is completely transparent. Whilst everyone can view the blockchain, nobody can amend it.

The term ‘blockchain’ is derived from the way the technology works. Each ‘block’ contains encoded data of groups of valid transactions. These transactions are linked to previous blocks to form a ‘chain’, hence we get the name ‘blockchain’.

It’s not necessary to understand the complexities of how the technology works to understand what it does. Blockchain technology provides a way to transact directly via a peer-to-peer network securely. This means that you can use the blockchain to transact without any middlemen.

How Does Blockchain Work?

Transactions are recorded to a blockchain through 5 important steps:

Step 1: Two parties initiate a transaction by agreeing to exchange something of value. In most cases, this will be a cryptocurrency token or other asset.

Step 2: This pending transaction joins others and creates a ‘block’ which is then sent out to ‘miners’. Miners are computers on the blockchain network that evaluate transactions to earn a reward. This reward is usually new cryptocurrency tokens or a part of the transaction fee. They validate the transaction by solving complex mathematical problems using computer power.

Step 3: If miners reach consensus to validate the transaction, it’s verified and added to the blockchain.

Step 4: A timestamp is added to this transaction block using a cryptographic receipt. As each block has a reference to the hash of the previous block, there is an unalterable chain of records.

Step 5: The transaction is complete and the unit of value is transferred to the receiving party.

Infographic: How does Blockchain work?

Source: By Shivratan rajvi [CC BY-SA 4.0  (https://creativecommons.org/licenses/by-sa/4.0)], from Wikimedia Commons

What is Blockchain Used For?

Blockchain technology was originally designed as the foundation upon which cryptocurrencies could be built. Since then, and it’s use cases have expanded hugely as the technology has evolved. The invention of Ethereum’s Smart Contracts made it easier for developers to build applications for many different industries, including:

  • Cybersecurity
  • Travel
  • Banking
  • Trade finance
  • Cloud storage
  • Legal
  • Insurance
  • Healthcare

The reason that blockchain has so many use cases is that it provides a reliable, secure and transparent network. This makes it useful for any business that could benefit from a way to transfer data securely, quickly and transparently.

Are Cryptocurrencies and Blockchain the Same Thing?

Contrary to popular belief, blockchain and cryptocurrencies aren’t one in the same. Many people think that this is the case as the two terms come up in the same sentence quite often – they’re closely linked.

Cryptocurrencies are digital currencies – they’re units of value that take the form of tokens. The blockchain is the digital ledger that stores a record of all cryptocurrency transactions. Blockchain is also used in other applications outside of cryptocurrencies.

What are Cryptocurrencies Used For?

There are several use cases for cryptocurrencies, including:

Cross-border payments:

Sending fiat currencies internationally often comes with excessive fees for international transfers. It’s also a lengthy and time-consuming process to complete through regular banks. Cryptocurrencies allow you to send money across international borders directly. The exchange is completed almost instantly and with minimal fees.

Anonymous transactions:

Cryptocurrencies offer higher levels of anonymity than fiat currencies. This makes them ideal as a medium of exchange for transactions where a high level of anonymity is preferred.

As an investment vehicle:

The cryptocurrency market is hugely volatile, but it has seen massive growth over the last decade. It’s an accessible market for beginner investors who are willing to invest in high-risk, high-reward assets.

What are the Most Common Cryptocurrencies?

Bitcoin is the most popular cryptocurrency. As it was the inaugural cryptocurrency, it benefited from a first-mover advantage which has allowed it to remain the leading cryptocurrency by market capitalisation.

According to CoinMarketCap, the top 5 cryptocurrencies by market capitalisation as of July 2018 are:

  1. Bitcoin
  2. Ethereum
  3. XRP
  4. Bitcoin Cash
  5. EOS

Is it Still Worth Investing in Cryptocurrencies?

Many investors believe that the cryptocurrency market is in the midst of a speculative bubble that is destined to pop. This may be at least partially correct as there can be little doubt that cryptocurrency prices have been extremely volatile.

The last spike in price came in 2017 when prices rose exponentially. Since then, the market has been in decline. However, there may be a further price spike in the future as the technology moves forward. Many banks are beginning to adopt blockchain technology and more and more retailers are beginning to accept cryptocurrency payments. These facts bode well for the future of cryptocurrencies.

Ultimately, this is a hotly debated topic and whether it’s still worth investing is a matter of opinion. The future of the cryptocurrency market remains uncertain.

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