Hong Kong-based CargoX raised $7 million through an initial coin offering to build its smart contract-based house bill of lading solution.
A new shipping technology company on Wednesday said it has raised $7 million through an initial coin offering (ICO) that will help support development of a set of blockchain solutions.
The company, Hong Kong-based CargoX, has designs on developing so-called smart contracts to transfer house bills of lading onto a blockchain solution it is building. House bills of lading are issues by non-vessel-operating common carriers (NVOs).
The coins, also called tokens, can be used to pay for CargoX’s smart contract solutions, but those interested in the blockchain-backed bill of lading solution can also pay with traditional currencies.
“Our platform will support all the legacy payment options with fiat money, but as we are a startup based on blockchain technologies, we are working on implementing cryptocurrency payment as well,” said CargoX founder Stefan Kukman. “There will be various service levels supported, and there will be additional features and services provided to holders and users of our CXO utility tokens.”
The ICO serves two purposes in this application. It helps CargoX raise funds as opposed to seeking venture capital investment, but the coins can also be used to transact within the solution. So, the sale of the CXO tokens is ancillary to the product offering.
That’s different from another crypto-token liner shipping model that emerged in the second half of 2017 called 300Cubits. That company issued tokens, called TEUs, to underpin a solution that would penalize shippers and carriers for no-show or overbooking behavior.
CargoX, meanwhile, said it wants to be a neutral platform for global trade documentation and is starting with the bill of lading approach. The solution comprises an app, a document exchange protocol, and a governing body, which is currently being established.
“The next step is to demonstrate the viability of our platform with a test shipment,” Kukman said.
That pilot, scheduled for the second quarter of 2018, links a logistics company with its clients on a shipment from Asia to Europe.
“Technology companies often lack the shipping and logistics expertise necessary to break into this industry,” Kukman said. “On the other hand, logistics companies venturing into the tech field may be held back by their reliance on established, old-school business practices.”
To register, CargoX collects “know your customer” and NVO license information “to establish roles and permissions on the platform.”
“Once companies register, they will receive their public and private key for signing the Smart B/Ls. This can be done in the Smart B/L distributed application provided by CargoX, or with the help of the CargoX Smart B/L API (application programming interface) integrated into the company’s system.”
That integration can take a few hours or weeks, depending on the workflow of the company, CargoX said.
The ultimate goal of bringing bills of lading to the blockchain solution is to create a common, encrypted repository of data. The secondary benefit of that process would be the potential to eliminate bank-backed letters of credit for suppliers, as the smart contract would automatically trigger payment.
“The shipping industry currently wastes billions of dollars on spending related to letters of credit, which are used in global trade as a payment guarantees,” Kukman said.
In terms of how the blockchain-backed bill of lading would function in practice, Kukman said that data will be encrypted and stored in a decentralized storage application.
“These are much safer than centralized storage, as they use the same blockchain security mechanisms as the billions of dollars worth of cryptocurrencies such as bitcoin currently in circulation,” he said. “Actual ownership (of the document) will be traded (sent) in the same way people send tokens today, from one wallet to another.”
New coin launched to support shipping blockchain platform
