The digital age is fast-paced and constantly evolving. From a time when every business, trading, transaction and results were all about paper works, we are now at a stage where everything is up and available ‘online’. While an older generation of business owners, traders and financial consultants still hold out to physical documents and receipts to record monetary and product transactions, the other half of the world is warmly embracing the many possibilities of cutting edge innovations and technologies available in the market.
One of the recent entrants into this mix is the blockchain technology. What initially came into existence as an open distributed ledger used to record bitcoin (cryptocurrency) transactions. With its invention, blockchain became the first digital ledger to solve the issue of double-spending without the requirement of a central authority. Although the system has been a breakthrough in digital ledger system, its decentralized nature scared a lot of people in the initial days.
Understanding Blockchain Technology
As discussed, the blockchain technology can be visualized as a public ledger that is distributed across many computer networks. This decentralized nature of the system ensures that any record made on the system is recorded as a time-stamped ‘transaction block’ and is permanently saved in the chain.
These blocks of data are immutable, meaning they cannot be altered under any circumstance and are accessible to anyone in the network and are authorized through mass collaboration. As each transaction is recorded only once, it solves the issue of double-spending as mentioned before.
Impact on Trade Finance business
But today, more and more companies are keen on utilizing its many benefits to ease their operations. For instance, commodity trade financial consultants are welcoming the new use of this disruptive technology to record and monitor all financial and product transaction. The blockchain technology has proved to be a highly efficient and secure to record product moments through the supply chain as well as trade finance distribution.
The most recent blockchain-based e-marketplace ‘TradeAssets’ from the UAE based fintech firm Fintech Innovations International, for instance, has brought up drastic changes to the country’s trade finance ecosystem. Expert financial consultants have been quite impressed by this B2B auction trade platform right from its introduction in the market, primarily because of its ability to simplicity and security. The current system is finely tuned to suit the needs of banks, allowing different banks to connect to a common digital ledger system where everything from everyday banking transactions to trade distribution, origination and processes can be conducted without the need for additional secure channels. As the TradeAssets is powered by blockchain, all transaction information that enters the ledger is permanent.
While this is a successful case of the use of blockchain technology, there are undoubtedly many more inventions still in the pipeline and yet to enter the market. Our financial consultants believe that with new and better technology, the global commodity trade business ecosystem will surely develop and reach greater heights in the near future.