Introduction
Cryptocurrency is considered one of the most cutting-edge and important inventions of humankind. For the first time in human history, people can make fund transfer of any value to someone thousands of kilometres away in just a few minutes without any intermediaries. Meanwhile, logistics is the industry with the highest number of transactions and goods value. Therefore, if cryptocurrency is adopted in Logistics, a considerable amount of time and money can be saved.
Problem
The biggest problems in cross-border fund transfer are:
- High cost
- Lengthy transfer duration
- Complex procedure
Solution and benefits
Figure 1: Comparison between conventional fund transfer and Cryptocurrency transfer
Using cryptocurrency, companies can resolve all the problems of conventional fund transfer. For comparison, a fund transfer of $1,000 from the US to Hong Kong will cost $56, accounting for 5.6% of the transfer value. Besides, this method requires you to trust a third party to perform such transfer, such as banks or fund transfer companies. Meanwhile, the conversion of USD fiat into cryptocurrency to send from the US to Hong Kong and then convert back into USD fiat costs only $18 and requires no intermediaries. Seller and buyers can make fund transfer in real-time without any procedures or if yes, they can be fully automated.
In the near term, as cryptocurrency gains popularity as a medium of exchange, less fiat money will be used. At that time, the transfer of cryptocurrency costs only $1 or less.
Stable Cryptocurrency is a type of cryptocurrency with a fixed and volatility-free value. For example, Tether (USDT) is traded stably for 1 USD. Every day, more than $18 billion of USDT is traded.
Apart from funds transfer, Blockchain-based cryptocurrency can make automatic fund transfer using smart contracts. For example, when a condition is met, money can be automatically transferred. Or cryptocurrency can be “locked” in a special account that cannot be withdrawn by anyone. When all special conditions are satisfied, the amount of money encrypted in this account can be automatically unlocked and transferred to the programmed stakeholders. This application can also be adopted for the Letter of Credit.
(Read more: Blockchain Monitoring Portal: Secret Weapon in Blockchain Projects)
Practical application
Currently, many countries, such as Japan and China, are examining to create their stable cryptocurrencies. Facebook, for example, has studied and published their stable coin called Libra. Libra can disrupt the global financial industry and promote wider acceptance of cryptocurrency, thanks to the access to 2.5 billion Facebook users worldwide. Libra will be monitored by Libra Association which engages numerous global powerhouses [1]. In 2018, HSBC performed the world’s first L/C transaction using Blockchain technology and cryptocurrency [2]. JPMorgan Chase, a multinational provider of financial and investment services and also the world’s sixth-largest bank, developed its own cryptocurrency called JPMCoin. JPMCoin is used for international transactions of its corporate customers.
Walmart, the world’s largest supermarket chain (by revenue) is also undertaking research to invent its own cryptocurrency to replace credit cards. Walmart’s customers can use this cryptocurrency to accelerate the transaction and reduce transaction fee from 3-15% on average to less than 1%.
Many large companies are also actively engaged in the application of cryptocurrency in payment and fund transfer, namely, Mitsubishi UFJ Financial Group (MUFG), AirAsia, Arias Intel Corp., Amazon, Tencent, Google and Rakuten. [3]
(Related reading: The Quest of Bringing Blockchain Technology to Enterprises: Challenges and Requirements)
Products and services
Blockchain CoE under FPT Software FWI has conducted a number of in-depth research on cryptocurrency and gained a profound understanding of both the technical aspect and trading market of cryptocurrency. Shortly after Facebook’s announcement on the impending issuance of Libra in 2020, Blockchain CoE’s engineers have experimented and developed a PoC for an e-wallet that can send and receive Libra.
The development orientations of the team are:
- Developing cryptocurrency e-wallet for enterprises.
- Connecting this e-wallet with other systems of the enterprise (financial and accounting software, etc.)
- Automatic or conditional transfer of cryptocurrency, using Smart Contract.
- Combined with 2 other PoCs on Bill of Lading and IoT device to perform automatic funds transfer for shipment fee and payment of goods.
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References:
[1] Diem (digital currency) - Wikipedia
[2] HSBC says it’s made the world's first trade finance transaction using blockchain - CNBC
[3] 10 Global Enterprises Looking to Issue Their Own Cryptos - Cointelegraph
