Blockchain to revolutionise commodity supply chains says Masters
Blockchain’s proven usefulness in monitoring and making supply-chain operations more efficient is set to disrupt the commodity market landscape, according to a former JPMorgan trader.
Guests at London Metal Exchange’s LME Week annual dinner listened to speaker Blythe Masters tell them of the revolution about to hit commodity trading, as distributed ledger technology offers greater confidentiality, less paperwork and better traceability – ultimately bringing greater efficiency to the market.
Complex and inefficient
Masters, who was formerly head of global commodities at JPMorgan, is now chief executive of Digital Asset Holdings, a New York-based tech start up.
She told the audience of international metals producers and dealers that supply chains are notoriously complex and inefficient, where commercial practices remain mired in antiquated paperwork processing that leads to higher costs, weaker security and corruption and unethical provenance.
“Blockchain technology has the potential to impact mining industry supply chains profoundly,” Masters said, adding that there were “tens, if not hundreds of projects under way”.
Indeed, Standard Chartered – with large commodity dealing operations, particularly in Asia – is already developing a commercial application for a trade finance blockchain platform that digitises many of the supply chain processes.
And last month, a number of banks and commodity traders including Macquarie, Mercuria, ABN Amro, BNP Paribas and Citigroup, unveiled a new blockchain venture that aims to go live with two products by the end of the year: a system for the exchange of digital letters of credit and a know-your-customer onboarding tool.
Masters concluded at the LME dinner: “Blockchain facilitates the exchange of critical trade documents, bills of lading, letters of credit between connected users securely and confidentially,
“The implications for metals mining, shipping, storage, and logistics industries are not trivial.”