Commodity trade is one of the largest trading platforms in the world with an estimated total annual value of around two trillion US dollars in the US alone.
Commodity trade is one of the largest trading platforms in the world with an estimated total annual value of around two trillion US dollars in the US alone. The exchange of goods such as foodstuff and raw materials for various industries is very important in every economy, but over the last few years has been operating in an outdated trading environment. The centralized nature of this form of trade gives birth to an air of exclusion resulting in a monopoly. However, as the world of information technology continues to evolve, new technologies which have the power of disrupting this monopoly are being invented. One of these emerging trends that are expected to have a tremendous impact on the commodity market is the blockchain technology.
The prospect of blockchain revolutionizing the field of trading commodities has seen companies like Chaintrade starting to explore the idea of having a platform that uses Blockchain to trade food product as well as raw materials. According to Chaintrade trading commodities on to blockchain will solve historical issues that have been ailing this type of trade for decades. Some of this issues that the use of Blockchain technology aims to resolve includes;
In the current commodities trade setup, one does not have an alternative rather than trusting the institutions and the relevant authorities with the monopoly of trading the commodities. However, with increased adoption of e-commerce, and a good number of people losing their money online to fraudsters, the trust is slipping hence the need for an alternative. Most centralized institutions have seen the Blockchain technology as a competitor due to its trustworthiness. For example, Chaintrade seeks to democratize the market by giving each and every person a chance to sell in the market. According to Chaintrade CEO Vincent Vasquez, a more inclusive market is efficient and reliable. The Blockchain technology enhances inclusivity in commodity trading hence making the trade more efficient.
Making commodity trade cheaper and more inclusive
By digitizing commodity trade, Chain trades aims at making it accessible to more people and making food, raw materials and other commodities available in all parts of the world without any barrier. According to the company CEO, trading commodities using the blockchain technology can lower the cost of trading by up to 50%. This, in turn, helps in decentralizing the trade and open up the market for more people. A cheap and affordable market will result in more hobby traders entering the commodity market, and due to the high level of transparency in Chaintrade, both aspiring traders and experienced traders will have a healthy trading platform.
Focus on crypto traders
The group CEO aims to attract established crypto investors because the market is economically viable, and the prospect of it depending on the Blockchain technology in the future is enormous. The company funding models stress on crypto investors such as VCs and banks that have embraced the cryptocurrency ideology. This will help commodity trade to take off since they already have experience with crypto trading and they know how Chaintrade can disrupt the existing commodity trading model. From our discussion with financial institutions and commodity trade experts, we have gotten very encouraging feedback and its evident that Chaintrade is the future of commodity trading.