In investing in Ethereum it is estimated that as much as $23 trillion worth of goods and services are traded annually on the global supply chain network. However, this system is often riddled with inefficiencies ranging from quality issues, lost deliveries, and delayed payments. Therefore, many economists have advocated replacing these inefficient systems by creating decentralized digital ledgers to record transactions between trading partners, a distributed ledger system, or blockchain.
The listed portion below examines the viability of Ethereum-based and will demonstrate how a decentralized ledger can help reduce friction in an otherwise outdated economic model. It correspondingly concludes predictions for future applications of these technologies across industries and governments around the globe, let start.
Concept of Decentralized Ledger
Distributed ledger technology has been used in finance to record transactional data in a decentralized database for efficiency and security purposes. In these applications, the ledger is distributed amongst many computers that store identical copies of all transaction records.
It means that there might be two thousand copies of a single ledger held by different institutions and individuals around a particular region or country; none of these copies is identical, but they are all consistent with each other; this creates complete transparency and trust among users as they can quickly verify transactions on their copy against every other copy.
The blockchain of ethereum was the first distributed ledger technology in use today, and it is the underlying technology behind cryptocurrencies such as Bitcoin and ether. It is responsible for maintaining a secure and transparent decentralized public ledger of all transactions.
The world’s largest banks are currently testing Ethereum-based distributed ledgers for their trading systems. In addition, the Commodity Futures Trading Commission (CFTC) has recently granted LedgerX an order of registration as a Swap Execution Facility (SEF) which allows them to trade Ethereum-based derivatives such as options and futures.
Ethereum-based lending protocols:
Blockchain technology has been applied to provide transparency and efficiency on a much smaller scale. For example, in 2016, the largest crowdfunding platform known as Kickstarter used blockchain technology and innovative contract protocols to allow its project creators to raise funds peer-to-peer without going through a 3rd party service such as PayPal.
A notable example of Ethereum-based lending protocols is one developed in 2016 by blockchain startup Bloq. It’s called “Loanbase” Within this particular lending protocol; users can get a loan of up to USD 100,000 instantly and are required to pay 0% interest on the principal amount for an initial two years. It quickly achieved traction, and by August 2017, the startup reported that it had loaned out USD 20 million in just a year.
Loanbase seeks to maintain its position as the leading peer-to-peer lending service on the Ethereum blockchain by allowing users to borrow fiat currencies, cryptocurrencies, and other digital assets based on their credit score. In addition, the platform values transparency and public loan terms for all to see.
The Built-In Transparency Of Ethereum Based Lending Platforms
Financial institutions have long enjoyed an opaque upper hand over their consumers as they could determine lending rates based upon individual credit scores and information they keep private from their customers. However, blockchain-based lending platforms like Loanbase open the financial system to a new era of transparency as all lending activities are now public and viewable on the Ethereum blockchain.
It reduces the ability of unscrupulous lenders to demand high-interest rates from consumers with no other options. In this process, Loanbase eliminates the need for intermediaries and allows for real peer-to-peer lending opportunities. An example of how Decentralized ledgers can help reduce friction in an otherwise outdated economic model
Today, global trade is made through a complex system of supply chains and shipping routes that large multinational corporations manage with several layers of bureaucracy to get things done like customs clearances, quality assurance checks, and port fees. The movement of goods between trading partners throughout this process is inefficient and often plagued by delays due to a lack of transparency and countless intermediary costs that add friction to the supply chain.
A perfect example of how blockchain-based distributed ledgers can help eliminate some of the bottlenecks within these supply chains is through startups like Ambrosus. Ambrosus has created a decentralized ecosystem for logistics that has the potential to bring enormous efficiencies to global trade. The Ambrosius platform uses Ethereum-based distributed ledger technology to record transactions such as shipment details, temperatures, access logs, and sensor data on a public ledger visible to all stakeholders in the network.
Ambrosus has developed a proprietary sensor technology capable of tracking the movement of goods from the source to primary storage and through the supply chain to the point of sale. They are beginning to implement this technology in food and commodities trading in Europe and China.
The second example of a decentralized ledger system being applied to global trade is through a startup known as Ship Chain, which aims to utilize Smart Contracts on Ethereum’s Blockchain, as well as its proprietary blockchain network, to improve efficiency in all aspects of handling shipments, from booking container space on carriers’ vessels to moving goods across borders.
