While Cryptocurrencies constantly get bashed by the naysayers as the downward spiral in prices continues, the underlying blockchain technology has been employed by many as it makes its mark across all sectors of the global economy. Although still in its infancy, practical solutions of real-life problems are beginning to be addressed by DLT based solutions in a variety of use cases & we are going to skim through a few of the recent ones. But before that here’s a look at how the investment in Crypto-economy has grown for the past five years (figure below). Despite the bubble popping year for Cryptocurrencies in 2018, immense amounts of capital have flown to the digital assets & the underlying DLT – almost 2.5 times more than 2017 when the prices of Cryptos were peaking. The following (after the chart) are some of the notable projects which I came across recently. Not to say, these are the only ones out there, just to get hindsight into use cases going mainstream in 2019.
China Inter-bank Blockchain 🏦
Trade Finance transactions accounted for more than $9 trillion in 2017, but historically have been reliant on traditional & cumbersome paper-based systems – last fall however, we saw the development of eTrade Connect — a collaboration between ANZ, BNP Paribas, HSBC & Shanghai Commercial bank among a host of others. The project was facilitated by the Hong Kong Monetary Authority (HKMA). The multinational banking giant Standard Chartered recently completed its first agricultural-business supply chain deal on a blockchain developed by Distributed Ledger Technologies. More significant news came on Dec. 29, 2019, when China Banking Association (CBA) launched the much awaited “China Trade and Finance Interbank Trading Blockchain Platform.” The establishment of the platform is to create an ecosystem intended to standardize, digitize & efficiently and securely handle the inter-bank financial transaction & services. Chinese startup PeerSafe, a Hyperledger consortium partner, is one of the technology partners while the United Nations Development Bank (UNDP) is one of the major sponsors of the Project.
10 banks have signed up for the Pilot project – Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Bank of Communications, China Merchants Bank, China Everbright Bank, Shanghai Pudong Development Bank, China Postal Savings Bank, Ping An Bank, and HSBC Bank (China). A fully functional version of the platform is expected to be launched sometime later in 2019 at which time other medium-sized & smaller Chinese banks will be integrated into the system. Successful completion of this transition would create a model for others to follow. Canada & Saudi Arabia are already exploring the implementation of similar platforms in areas of Customs & Trade finance. HSBC China Vice President said on the occasion:
“The establishment of this inter-bank platform can be described as extraordinary, opening up barriers between different banks and realizing the interflow of information. The use of blockchain technology to promote trade finance reform has become a global trend. The HSBC Group’s overseas blockchain trade pilots show that the blockchain is used to improve the efficiency, safety and scale of trade.”
WWF (Australia) – OpenSC 🥩
World Wildlife Fund-Australia in collaboration with BCG Digital Ventures (BCGDV) has launched a blockchain supply chain tool to track food items from source to delivery. The OpenSC platform allows to track their shipments efficiently & securely while the customers can be at peace, knowing the origins of the food items – empowering the customers to make an ethical choice of what they are buying. This will also bring much-needed transparency which is so often hidden in the complexities of the supply chain process. As consumers & retailers become more self-aware & conscious of what they procure, buy and eat – they want sustainable products which weren’t produced by damaging the environment or by using unethical practices like slave or child labor. OpenSC achieves this by distributing QR codes to client companies using the platform – these codes are then linked back to the blockchain platform to let the consumers track the origin & life cycle of the product (figure above).
According to Reuters, OpenSC plans to expand its services to commodities like palm oil and timber in the next two years. Food tracked by the platform is being served at the World Economic Forum in Davos. WWF-Australia CEO Dermot O’Gorman commenting on the launch said:
“Through OpenSC, we will have a whole new level of transparency about whether the food we eat is contributing to environmental degradation of habitats and species, as well as social injustice and human rights issues such as slavery.”
Global Mining and Metals Supply Chain 💎
According to a Press release, MineHub Technologies and IBM recently announced a collaboration to use blockchain technology to help improve operational efficiencies, logistics and financing & reduce costs in the high-value mineral supply chain — from the mine to end buyer. The newly announced mining supply chain platform will be built on the cloud-based IBM Blockchain Platform powered by the Linux Foundation’s Hyperledger Fabric. Gold Corp., ING Bank, Kutcho Copper Corp., Ocean Partners USA Inc. & Wheaton Precious Metals Corp. are some of the major players contributing to the building of the mining supply chain platform representing sectors like mining, streaming, trade and finance.
The $1.8 trillion global mining and metals market has traditionally suffered from inefficiencies due to manual, paper-based processes and a lack of transparency between supply chain participants. Blockchain technology helps address this by providing a shared ledger to create a single, real-time view of transactions and data across the supply chain that can be seen by all permissioned participants (federated ledger). Vince Sorace, CEO of MineHub put the endeavor in following words:
“By digitizing the supply chain, we can increase the level of automation, reduce reliance on intermediaries and increase the speed at which goods are transferred from miners to end buyers. This is a significant advancement for an industry looking to integrate and use data in ways not previously possible.”
On a separate but another important development IBM has also joined hands with Ford Motor Company, Huayou Cobalt, LG Chem and RCS Global to launch a blockchain pilot intended to ethically source Cobalt from the Democratic Republic of Congo. Cobalt is the precious metal used in the production of Electric Vehicles whose price has spiked in the wake of the renewable initiative surge. Congo with a production capacity of 64000 million tonnes is the single largest producer of the metal in the World – the platform plans to address issues pertaining to child labor & exploitation in an unstable country like Congo. According to a report from Morgan Stanley, by 2026, the demand for Cobalt is expected to multiply eight-fold.
Energy Commodity Trading Platform 📊
Although tokenized securities are the new trend in the financial markets, other instruments like the commodities will not be left out anymore with the launch of UK-based Vakt – a commodity trading platform. Just like DX.Exchange & Currency.com have digitized stocks, Vakt is transforming the Oil business globally by digitizing the commodities. The platform which is backed by JP Morgan’s Quorum blockchain technology was launched back in November 2018. With major players like BP, Shell, and Equinor in the Oil industry – ABN Amro, ING, and Societe Generale from the banking sector and trading houses Gunvor, Koch Supply & Trading, and Mercuria on board it grabbed immediate attention. Lyon Hardgrave, Product development Vice President of Vakt said at the time:
“In 2019 we will look at ARA barges, waterborne markets and US crude pipelines. And by January we expect the first licensees will come on board, in addition to our shareholders.”
The platform received further credibility as Chevron (one of largest American multinational energy corporations), Total (leading French multinational integrated oil and gas company), and major Indian refiner Reliance recently joined the platform. The platform intends to achieve transparency & operational efficiency in the movement & trading of the commodities – also expecting a cut of 40% in costs related to post-trade resolution. The platform is looking to add petrochemicals and U.S gas to the list of tradeable commodities as the platform becomes fully operational.
To sum it all up, an honorable mention of an upcoming blockchain Project that the US Space authority NASA is considering to develop – a blockchain-based system to control the Air traffic management (figure above). The proposed permissioned blockchain would be developed using the Hyperledger platform. The new system – Automatic Dependent Surveillance-Broadcast (ADS-B) will be implemented by 2020 at the latest. The blockchain system would enable secure & anonymous communication between all Air traffic services. Implementation of Cryptography has been suggested to avoid spoofing (false positions reporting of Aircraft) on the system. As per the Project paper:
“This framework features certificate authority, smart contract support, and higher-bandwidth communication channels for private information that may be used for secure communication between any specific aircraft and any particular authorized member.”
Blockchain has the capacity to create a border-less global economy if it can streamline the systems around its three main properties of decentralization, security & scalability. With the continued improvement in these three facets of DLT emerging, a transition to a truly digitized global ecosystem is a real possibility in the not too distant future.
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