World’s 1st Blockchain Commodities Platform Launched

Trading firms and global banking majors have joined hands to launch the world’s first Blockchain powered commodities trading platform. This platform will host trading of commodities ranging from wheat to crude oil and everything in between.

The First of Its Kind

For the last few years, banks as well as major trading companies have been carrying out multiple pilots across various commodities. However, none have really succeeded in creating a platform that could host the trading of multiple types of commodities.

This will be the first of its kind, where any company can join the platform and trade in commodities. This new platform will be run by startup called komgo SA, which is based out of Geneva in Switzerland.

Founders of komgo include industry majors such as ABN AMRO, Citi, BNP Paribas, Credit Agricole Group, ING, Gunvor, Koch Supply & Trading, Mercuria, Macquarie, Natixis, MUFG Bank, Shell, Rabobank, Societe Generale and SGS.

This new venture will digitize the trading and commodities finance processes via a Blockchain open platform. This platform has been developed in partnership with ConsenSys, the Ethereum based infra and solutions firm.

So far, the core development team that is supporting the venture komgo as already successfully completed two Blockchain Proofs-of-Concept (PoC) – one for energy and the other for soft commodities. The first one has been dubbed Easy Trading Connect 1 and the second was is called Easy Trading Connect 2.

According to the press release issued by ABN AMRO, the first product released by komgo – which is due to go live later this year – will first be used for the energy sector, with a focus on trades involving crude oil cargoes plying the North Sea. Then, in 2019, komgo will expand its platform to include agricultural products as well as metals.

Improving Efficiencies in Commodities Trading

Blockchain, which started out as just a platform for cryptocurrency trading, is coming into its own as people realize how vast its applications are. Many are now looking towards this tech as a solution to the inefficiencies and lack of transparency found in the trading and settlement space.

As a high-tech ledger that utilizes a shared database to update transactions in real-time, and also process them in minutes instead of days and hours, industries are hoping that Blockchain will simplify the entire process. This will be done by replacing current processes that require reams of paperwork to be signed by multiple parties with a digital letter of credit.

The first time Blockchain in the commodity trading process was successfully utilized was in April this year, when one of the 4 major Chinese state-owned oil companies shipped gasoline from China to Singapore.