One of the largest agricultural firms in the world has completed its first deal using blockchain technology for the purposes of tracking the cargo and executing the contract.
Louis Dreyfus Company shipped 60,000 pounds of soybeans to China from the United States in the deal. The buyer was Chinese agriculture producers Shangdong Bohi Industries and the transaction was aided by the by financing from ING, Société Générale and ABN Amro.
This is a reassuring sign for commodities shippers as they have been hoping that blockchain technology and smart contracts can handle some of the more tedious steps in the shipping process. This includes letters of credit, inspections, and other tasks that are currently emailed or faxed when goods are traded.
Louis Dreyfus used only about 20% of the paper it normally would have in such a transaction according to the company’s global head of operations, Robert Serpollet. “Our expectations were high, but the results were even higher,” he told the Financial Times.
Other ways the technology brings about quicker, safer, and more efficient ways of settling transactions are through gauging the progress of shipments in real time, data verification, and reduced risk of fraud.
The promise of blockchain technology has convinced multiple industries to run trials with smart contracts including the oil industry, banks, and others who engage in frequent large trades.
However, for the technology to work at a large scale more players will have to warm to the idea of blockchain technology and come onboard. “For the new platform to work, we will need to design an industry standard which will bring together the main players of the agricultural commodity space,” said Serpollet.
Some organizations have already done just that for their industries. Groups such as the Blockchain in Transport Alliance (BiTA) have brought together players from across their respective industries in order to establish standards for the technology in their fields.
BiTA has assembled a group of transportation industry players who aim to harness the potential of the technology for their industry. The association now has well over a thousand applicants and the interest continues to rise.
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