Blockchain to increase efficiency in crude oil trading
Numerous hydrocarbons and raw materials are moved through a tangled web of global oil trading networks. If you want to start oil trading in just three steps, visit The Oil Profit System , you will get the best liquidity and the platform is immune to volatility risk. From this, the demand for crude oil and other petroleum products is driven by the intricate connections between supply and demand, which affect traders’ operations.
With its decentralized platform, blockchain can improve efficiency and reduce costs for the global energy industry. And given that different types of cryptocurrencies can be used interchangeably to deploy smart contracts, blockchain technology can solve several supply chain problems. According to experts, IBM is already providing solutions for some deepwater projects with its new blockchain platform, ContractNet, which enables “contingency information” between exploration companies. It also provides fully digital, secure syndicated letters of credit”.
As a result, more and more energy traders are approaching the blockchain to create secure and efficient supply chains. A recent McKinsey research report highlighted that the oil and gas industry is already implementing blockchain technology throughout the network for various reasons. For example, this could potentially provide cost savings for the supply chain by providing transparency on the location of oil tankers and the price of crude oil.
By using blockchains to create immutable ledgers that companies among the participants can share, there should be no doubt about who owns or controls assets or data. So let’s discuss how blockchain increases the efficiency of crude oil trading.
Blockchain can reduce the number of intermediary costs:
In addition, since blockchain is a shared record of transactions, it does not require a third party, such as banks, to verify transactions. As a result, it makes transactions more accessible to audit and less vulnerable to fraud. According to experts, several financial institutions have developed various blockchain solutions (e.g. Bank of America and JP Morgan).
Blockchain can improve transparency:
For example, many oil traders use digital certificates to prove their ownership to complete/verify transactions. And the transparency provided by digital certificates can be verified by users through the blockchain.
Blockchain can provide better security:
From the above discussion, it is clear that users can use blockchain to secure data used in transactions in the future, and users will add more security features (eg encryption). Furthermore, as a shared data structure, it is easily auditable. As a result, discrepancies between data entered into the system by participants will create an audit trail that may even lead back to those who changed the original record. It makes the supply chain more efficient and secure.
Blockchain can enable more autonomy:
Each participant on the blockchain platform has full autonomy to decide which transactions will be included in the shared ledger and which data people will use for verification. It means that different oil traders can collectively decide their process for sending transactions to a shared ledger on a decentralized global platform. As a result, the entire supply chain is automated, making transactions more efficient and better protected against manipulation.
And finally, blockchain technology will give participants access to new sources of capital through the development of smart contracts. For example, using Smart Contracts, oil traders can set up payment terms and make payments with other cryptocurrencies (e.g. Bitcoin and Ethereum) instead of fiat currency. Therefore, using ICOs can provide an alternative source of capital for energy traders who do not have access to conventional banking infrastructure.
Blockchain fuels innovation in the oil industry:
As discussed above, trading crude oil is complicated, time-consuming and expensive. In addition, the many steps involved in the crude oil supply chain can use up many inefficiencies in the industry. Blockchain technology can solve this problem by giving participants more autonomy to maximize efficiency and reduce costs.
Blockchain can offer an alternative method to securely manage all stages of your project:
Blockchain increases trust and security by providing a completely transparent ledger. It is therefore possible that record keeping becomes more efficient through having a common public database. In addition, users can use blockchain to determine who owns assets such as IP, copyright, etc.
Companies within transport tracking can use blockchain:
In the future, it is possible that blockchain technology could provide a more reliable and transparent method of tracking oil tankers. It will be particularly beneficial for areas where weather conditions are harsh and remote locations.
According to experts, this can simplify the tracking process by providing a centralized information sharing platform. In addition, given that the blockchain is decentralized, all participants in the system can share data, which reduces ambiguity in logistics and supply chain management.
To conclude:
Oil trading is an extremely complicated industry with many stakeholders involved. Hundreds of thousands of barrels are traded between different companies across different continents daily.
As a result, many different players can be involved in the supply chain and oil transport. Therefore, blockchain technology can provide an efficient and decentralized solution to simplify the process of trading crude oil. The Singapore-based program “The Fund for Global Goals” is reportedly working to support blockchain applications in trade finance at the World Bank.
