HSBC has claimed a major breakthrough in the development of blockchain with what it says is the world's first finance transaction conducted using the technology.
The UK-based banking giant says it completed a transaction concerning a shipment of soybeans from food and agricultural company Cargill, providing more proof that blockchain can become the backbone of significant financial deals.
The deal was completed using the R3 Corda platform, which has been developed by over 100 of the world's leading banks, and raised $107 million from backers including HSBC back in May 2017.
The transaction, terms of which have not been revealed, was completed using Corda's letter of credit (LC) system, which enabled processing time to be reduced from a standard five to 10 days to 24 hours.
The news provides further fuel to the debate that promotes blockchain as a solution to modernising modern finance and trade, many of which still rely on outdated computer platforms, or even paper-based systems.
HSBC says that the Cargill deal proves blockchain is ready for commercial use, as the deal could also be quickly replicated to allow for fast future trades. LC systems currently help guarantee over $2 trillion worth of transactions.
“At the moment, buyers and suppliers use a letter of credit, typically concluded by physically transferring paper documents, to underpin transactions,” Vivek Ramachandran, global head of innovation and growth at HSBC’s commercial banking unit told Reuters (opens in new tab).
“What this means for businesses is that trade finance transactions have been made simpler, faster, more transparent and more secure.”
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