Skuchain: Here's how blockchain will save global trade a trillion dollars
Global supply chains use a fundamentally broken system that locks up many hundreds of billions of dollars within a complex milieu of intermediaries and financiers. However, blockchains change value transactions that have come to exploit the need for trust.
We are talking about an $18tn (£12.6tn, €16.5tn) market dominated by antiquated, paper-based methods such as letter of credit and factoring that accounts for about $5tn of annual trade today. Letters of credit have been around for hundreds of years and have not really changed. They work by couriering hard copies of documents around the world, while banks employ hundreds of people to review those documents.
Mountain View-based Skuchain sees the potential to make the existing system faster and cheaper, while making financing available to small and medium-sized businesses in locations where it wasn't previously accessible. It has development projects under way with multiple international banks and has just announced funding from Digital Currency Group, Amino Capital and Fenbushi Capital, the first China-based VC that exclusively invests in blockchain companies.
Travis Giggy, head of international business at Skuchain, told IBTimes UK: "Letter of credit [LC] is an expensive process and it's a real pain in the ass, which is simply not available to businesses in emerging economies."
He said traders are starting to move away from LC but like everything in supply chains, it's a slow process. Open account systems are prevalent ($15tn) but require a high degree of reputation. "90% of trade is financed and if you are not an established player, you can't get the open account terms and you can't get a letter of credit from your bank and get a loan for the cash in advance transactions." He added the potential savings would be in the hundreds of billions and rising.
http://www.ibtimes.co.uk/skuchain-heres-how-blockchain-will-save-global-trade-trillion-dollars-1540618
