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World's First Commercial Transaction Using Blockchain Done By It: Clams HSBC

World's First Commercial Transaction Using Blockchain Done By It: Clams HSBC
The first successful commercially viable trade finance transaction with the help of blockchain technology in the world was conducted by HSBC, the bank claimed on Monday.
A letter of credit was issued on behalf of U.S. food and agriculture firm Cargill by the bank. A shipment of soybeans from Argentina to Malaysia in bulk was done through the trade finance transaction. HSBC issued the letter of credit to Dutch bank ING.
A guarantee of receiving of a payment by a seller, following a transaction meetings certain conditions, is ensured by a letter of credit and is drawn by one bank on another. Typically, this process of issuing a letter of credit involves a long process and time and a large number of paper records. There is also a lot of interactions back and forth between the various parties involved. All of these can be reduced significantly with the use of blockchain technology.
Cryptocurrencies are driven by the blockchain technology and this technology allows recording of transactions over a large network of computers. All of the transactions that take place in the production and exchange and trade of bitcoins within a network are recorded by blockchain which helps in the creation of a public ledger. The principles behind bitcoin's blockchain are being attempted to be applied to the transactions that banks are carrying out.
Corda, a platform developed by blockchain start-up R3 was used by HSBC for this transaction. The startup is tied up with a consortium of banks to develop blockchain solutions to a variety of problems.
"The need for paper reconciliation is removed because all parties are linked on the platform and updates are instantaneous," Vivek Ramachandran, head of growth and innovation at HSBC, said in a statement. "The quick turnaround could mean unlocking liquidity for businesses."
Compared to the typical time period of five-to-10 days that is generally required to get such a process through using the paper-based system, the blockchain technology allowed the completion of the process in just 24 hours, said HSBC and ING.
Multiple industries can significantly benefit from blockchain technology, claim its proponents. Those industries that require long paper work trails such as trade finance, health care and insurance are believed to be the ones which can gain significantly from this new technology.
A HSBC spokesperson told the media that the lender is the first to conduct a commercial transaction with the help of blockchain technology even though previous attempts at transactions involving the technology have been conducted on a proof-of-concept basis.
Because of he belief that blockchain technology can cause serious positive disruptions in financial services industry, banks have been investing a lot of money in the technology. 

Christopher J. Mitchell

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