LONDON (Reuters) – Banks and global trading companies are launching the first blockchain-based platform to finance the trade in raw materials from oil to wheat, they said Wednesday in a joint statement.
PHOTO FILE: Drilling rigs are parked in Cromarty Firth near Invergordon, Scotland, Great Britain on 27 January 2015. REUTERS / Russell Cheyne / File Photo
The platform will be operated by a company called komgo SA, based in Geneva, Switzerland, and should be broadcast by the end of this year.
Banks and major commercial companies have tested numerous pilot projects on raw materials in recent years, but this venture will be the first to which any company can join.
The founders of komgo include ABN AMRO, BNP Paribas, Citi, Crédit Agricole Group, Gunvor, ING, Koch Supply & Trading, Macquarie, Mercuria, MUFG Bank, Natixis, Rabobank, Shell, SGS and Société Générale.
Blockchain, originally the platform behind the bitcoin cryptocurrency, is seen by many as a solution for trading and resolving inefficiencies, and for improving transparency and reducing the risk of fraud.
A high-tech ledger, blockchain uses a shared database that updates in real time and can process and adjust transactions in minutes without the need for third-party verification.
Instead of sharing a mountain of paperwork between a long list of parts, a trader will instead be able to use a digital letter of credit, greatly accelerating transactions.
komgo will be used for the first time for energy. The first operations will be rough loads in the North Sea, the reference region for much of world trade.
From the beginning of next year, the komgo will expand to agriculture and metals.
The company will work alongside Vakt, an energy trading platform managed by many of the same shareholders of komgo.
"The launch of komgo SA highlights a shared vision for industry innovation and underlines the constant commitment of members to create a truly open and more efficient network in the trade of raw materials "stated Souleima Baddi, CEO of komgo SA.
komgo will provide funding via blockchain for all raw materials and can scale up to new and emerging products.
The platform will be developed in collaboration with the blocking technology company ConsenSys.
Reporting by Julia Payne; Editing by Alexandra Hudson