‘World first’ blockchain trade executed by Barclays
(13 September 2016 – Europe) Barclays and Israeli startup Wave have executed what they claim is “the world's first trade transaction” using blockchain technology.
They said the transaction reduced the process from between seven to 10 days to less than four hours.
The transaction guaranteed the export of almost US$100,000 worth of cheese and butter from Irish agricultural food co-operative Ornua to the Seychelles Trading Company.
"We've proved the reality of this technology and the client, Ornua, has asked us when they can do the next transaction in this way, which proves how user-friendly the entire process was," said Barclays' global head of trade and working capital, Baihas Baghdadi.
According to a statement, the transaction was executed by means of a letter of credit - a widely used way to cut risk between importers and exporters. However, traditional trade finance transactions involve a complicated paper trail that can take as long as a month to be completed and are open to document fraud.
In this transaction, both parties were able to transfer the shipping, insurance and other original documents that had been cryptographically sealed via the blockchain.
"I've been here for more than two decades and I never even dreamed of a solution where you can remove completely the documents from the circle and just get everything moving around the world on an electronic basis within minutes, rather than days of couriers and shipping and all that," said Baghdadi.
Wave was one of eleven companies to have gone through the Barclays Accelerator programme in New York last summer, during which time it received expert mentoring from the bank.
Gadi Ruschin, CEO at Wave said: “Effective use of blockchain technology really can have a huge impact on the future of trade. Studies show that as much as five percent of the cost of a trade transaction comes from the handling of documentation, so there is a significant opportunity to improve this element of the trading process.”
According to the bank, the two firms will work together to extend the service to other trade finance clients.
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