French bank Natixis, information technology firm IBM and commodities trading group Trafigura have been working together for some time on a blockchain project for commodity trade finance in crude oil transactions in the United States.
The end result is a distributed ledger platform, built on the Linux Foundation open-source Hyperledger Fabric, that is designed to modernize the largely paper-heavy global crude oil trading industry.While currently in the pilot stage, the companies have mapped out how a centralized, distributed ledger could improve transparency, efficiency and security between the various participants in crude oil trading - all of which currently operate using individual ledgers. Commodity trade finance is an "antiquated arena," Natixis head of energy and commodity finance Arnaud Stevens said. "The current process is paper and labor intensive, we have multiple friction points with high processing costs and limited automation. Distributed ledger technology brings some much-needed innovation into our industry," he added. Commodities trade finance refers to the funding of the trade of commodities and...