A consortium of commodities traders, banks and the world’s largest goods inspection company have joined forces to launch a blockchain platform in Switzerland, which is intended to ease the administrative burden of shifting oil, grain and other products around the world.
The Komgo venture will be based in Geneva, which is home to many of the world’s best-known commodities trading companies and is one of the most important global hubs for the industry.
Commodities trading has long been held up as one of the more promising sectors for blockchain technology. This is because the shipment of goods across the world requires constant monitoring by multiple parties and involves complex financing measures.
Blockchain acts like an interactive database, controlled and updated by its members rather than a central authority. It also has a built-in function for users to jointly validate transactions which cannot be altered once agreed upon.
Swiss-based companies, such as Gunvor, Mercuria and inspections outfit SGS were named as part of the consortium on Tuesday. The group also includes Shell and a variety of banks such as Citigroup, BNP Paribas and Société Générale that specialise in the financing of such trades.
The platform will initially launch in November with two options: the first to standardise and facilitate the Know Your Customer (KYC) process while the second product will allow users to digitally and securely submit letters of credit to finance deals.
“The potential that distributed ledger technologies (DLT) have in transforming the commodities sector is clear,” said Komgo’s Chief Technology Officer Toon Leijtens in a statement. “We can now achieve a long-term ambition to improve security and operational efficiency in the commodity trade finance sector.”
The Ethereum-based platform was co-developed by blockchain software specialists ConsenSys.