Daily Management Review

Barclays held the world's first real blockchain deal


09/09/2016


A deal between Irish manufacturer of dairy products Ornua and Seychelles Trading Company with help of blockchain technology took less than four hours. Traditionally, this process takes seven to ten days.



SolvencyIIWire
SolvencyIIWire
Irish dairy producer Ornua became the first company in the world to hold a real deal with blockchain, according to Reuters. British bank Barclays and Israeli startup company Wave provided calculation of a letter of credit for $ 100 thousand to export a batch of cheese and butter from the Irish co-operative to Seychelles Trading Company

The transactions on the Wave platform took less than four hours. Traditionally, this process takes seven to ten days because of difficulties in processing related documentation, including exchange of original documents via courier services. However, cryptographic protection and blockchain verification mechanisms allowed to conduct all transactions through the Internet without any need for third-party verification.

Blockchain system allows to speed up trade transactions, reduce costs for companies and alleviates risk of forgery, according to Barclays. "We demonstrated that applicability of this technology is real, and our client, Ornua, already asked when they would could hold next such transaction. This proves how convenient is the whole process for the customer", - a representative of Barclays.

The banker is sure that blockchain can solve one of the major problems in world trade - giant paperwork required for transactions between multiple organizations. According to him, this is why the bank was interested in cooperation with the Wave to use the technology "which will save time and money of our clients, and transform trade finance in the interest of companies from around the world in the future." "I have worked in the industry for over twenty years, and I have not even dreamed of a solution by which a document will be carried out around the world in electronic form in minutes instead of days with the help of couriers, transport and other things".

Barclays said that it seeks to attract other banks to support implementation of Wave. The bank believes it can grow into a large-scale modernization of organization of trade documentation, reports Finextra. Nevertheless, Reuters says many experts believe that widespread use of the blockchain technology will take five to ten years.

Wave is not only developer of platforms for blockchain transactions. In August, Bank of America Merrill Lynch, HSBC and the Office of Information and Communications of Singapore successfully demonstrated use of blockchain to replace paper-based letters of credit in trade finance operations.

According to Juniper Research, a researcher of the telecommunications market, in the first half of 2016 investments in development, associated with introduction of Bitcoin and blockchain technology, amounted to nearly $ 300 million.

Blockchain is a distributed database, which contains information about all transactions carried out by members of the system. Data is stored in the form of "block chains", each of which encrypts a certain number of transactions. Key advantage of the system is distribution. There is no single place where you store all the records. Each participant of the system has access to the register, which automatically updates to the latest version whenever gets edited. Each account holder has access to information on any of 95 million transactions that have ever occurred in the blockchain system, starting with the first translation made in 2009. Members act as a collective notary, which confirms validity of information in the database. 

source: reuters.com






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