In encouraging developments for blockchain adoption in international trade, HSBC bank announced yesterday that it has successfully conducted the first ever trade deal on the blockchain.
Using the R3 consortium’s Corda distributed ledger technology, HSBC was able to issue a letter of credit on behalf of agricultural and food processing giant Cargill, which is also one of the largest private companies in the world. Letters of credit are issued by banks on behalf of clients and sent by the initiator of a trade to the counterparty, guaranteeing payment for goods that will be delivered at a certain time.
Vivek Ramachandran, head of innovation and growth for commercial banking at HSBC, told the Financial Times: “The next stage is actually encouraging as many participants as possible to sign up to the utility.”
This is still a process bedevilled by cumbersome paper chains, although is is just one part of a wider process that includes other paper-based documentation governing title and bills of lading.
The R3 consortium includes all the major banks. R3 has been criticised by industry watchers for its claim that Corda “was never designed to be a traditional blockchain platform”. In order to guarantee interoperability between permissioned distributed ledgers compromises have been made, so for example all data is not shared with all participants.