Bitcoin Leads to ‘Revolution’ in Commodity Trading
$BTCUSD, $IBM, $UBS
The rise of Bitcoin is amazing the world’s financial gurus, and now blockchain, the digital-ledger system is set to do the same in Y 2018 for trading in raw materials commodities, as it is being adapted to streamline physical transactions.
Two months ago 4 banks joined a venture started by UBS Group AG and International Business Machines Corp. to use the technology in a platform for the global goods trade.
In March, Trafigura Group Ltd. announced they will employ the system to finance buying and selling of Crude Oil.
Note: Blockchain is an online ledger that records transactions using encryption to ensure security while allowing a network of users to verify them. The most-prominent use was in Bitcoin, which became a global phemon in Y 2017.
Over the past year investors and speculators became more comfortable with how Bitcoins and ledger systems work, the price of the cryptocurrency has surged more than 2,000% and is approaching $20,000 each.
Bitcoin is currently trading at: 19,598.9941, -135.201, or -0.69%, at close: 10:46p GMT
Bitcoin’s market relies on blockchain to transmit and store the value of each token, the transparent tracking technology has “much greater potential” across businesses that increasingly need to store and exchange massive amounts of data.
According to recent reports we have seen farmers already see the possibilities, as do the food and energy industries
Michigan State University estimated fraud costs the global food industry as much as $40-B a year. In August, IBM said it’s working with a group of companies including Wal-Mart Stores Inc., Nestle SA, Tyson Foods Inc., Unilever NV and McCormick & Co. to identify ways they can incorporate blockchain.
JD.com Inc., China’s 2nd-largest e-Commerce platform, Wal-Mart, IBM and Tsinghua University said last week that they will work together to create a blockchain-based system for collecting data about the origin, safety and authenticity of food.
De Beers is investing in a blockchain platform that traces the origin of diamonds in a bid to boost confidence in an industry that has been marred by the sale of so called ‘Blood”diamonds from war zones.
Blockchain also is becoming a Key tool for shipping companies.
AP Moller-Maersk A/S in March debuted a ledger system with IBM that will help manage and track the paper trail of tens of millions of shipping containers.
About $16-T of physical raw materials are transported around the world each year, and better tracking offers the promise of big reductions in record-keeping costs.
Current spending on documentation alone accounts for 7% of global trade, according to the Global Alliance for Trade Facilitation.
But, the widespread adoption of blockchain systems will take time to implement, as the transition to new systems are disruptive and requires investment, not to mention concern about the risks of putting that data online.
Notably, blockchain brings much-needed innovation in an industry where the current process has been and for the most part still is paper and labor intensive.
Earlier this month the embattled President of Venezuela talked about creating digital petrocurrencies backed by the country’s reserves of Crude Oil, Nat Gas, Gold and Diamonds.
Last week, a group announced plans to use blockchain to create OilCoin, a US-government regulated digital currency that would be backed by Crude Oil.
Consumers could also benefit from wider adoption of the technology.
In Thailand, power producer BCPG Pcl said last month it plans to use the blockchain to allow customers who produce energy through solar rooftops to engage in internet-based energy trading.
The potential is huge to increase efficiency and to create value propositions. Because once blockchain implemented and working, change will come fast, and then the transformation of the value chain becomes a very viable option.
Deutsche Bank (NYSE:DB) is thought to be the 1st major European bank to open trading in Bitcoin futures.