With Blockchain, We’ve Only Just Begun

Opinion | May 22, 2018 By:

CNBC recently reported a story: “HSBC says it’s made the world’s first trade finance transaction using blockchain.”  It detailed a trade finance agreement using Corda’s R3 blockchain to issue a letter of credit from HSBC to ING for a bulk shipment of soybeans from Argentina to Malaysia. This is a significant use of blockchain technology and a harbinger what’s to come.

The HSBC trade agreement illustrates the view that the industry is moving from proofs of concept to test pilots. Although exciting, this is likely only one of many deployments we’ll hear about from here on.  In fact, it might even soon become old news.

Until now, most projects were “great ideas” on the whiteboard, where everything is easy.  These projects have mostly been led by well-funded and well-intended teams who have been promising to deliver on concepts with seemingly unlimited potential, but there were few, if any, working models in production.

We are confident the adoption of blockchain technology into our global economy will impact nearly every business.  However, this prediction needs evidence that the real economy is indeed going to find a way to adopt this technology.

We are now starting to get our evidence.  Not only are these new solutions moving into the market, they’re starting to change the way we do business.

Managing the supply chain is one of the greatest use cases, because so many industries will benefit from the efficiency blockchain promises. Creating a trusted, immutable ledger with automated smart contracts, greatly reduces the friction of moving anything from creation to consumption. Accessing a shared trusted record of real time data as a product moves along the chain, adds transparency, accountability and speed, while dramatically reducing costs. Many strong development teams are working on every aspect of transporting anything of value, including concepts like verification of origin and documentation of every aspect of the product’s journey.

It’s interesting that the letter of credit was issued for a food shipment, as we are tracking a significant number of blockchain-enabled solutions moving into the market to make the food and other supply chains more efficient and transparent.

Although HSBC has captured the headlines, there are several excellent examples of blockchain solutions that are quietly transforming our economy. Everledger is one example that is now mainstream. For the past several years, Everledger, a blockchain-enabled solution immutably tracking provenance and authenticity, has been recording and protecting millions of diamonds and other valuable assets.  This should lower the overall cost of insuring these assets.

If there were any questions about when is a good time to consider blockchain enabling your business to remain competitive, that time is quickly passing.  No one wants to be the last bookstore to go online; as a reminder, that bookstore was Borders.

The use cases now being developed are endless and exciting. Blockchain is the next evolutionary technology, potentially having a greater impact than the Internet. It is a foundational technology advancing AI, the Internet of Things and more. Blockchain will not only disrupt every business, but also touch every person. HSBC’s first trade finance transaction using the blockchain is a great example of projects moving from concept to pilot, but we are only just beginning this journey.