How many of us have ever wanted to change the world? There is a wide range of activities and projects we can pursue to follow that ambition, from going into politics or journalism or working on the ground for an NGO in some country of need. Well, add trade finance to that list because Envoy is using it to make some radical improvements to the global economy.
Envoy is revolutionizing the trade finance industry by putting everything on the blockchain, a system of decentralized, distributed ledgers that’s currently having an impact on just about every field imaginable. As you’re about to find out, blockchain’s influence on trade finance will completely revamp trading and make the process more efficient and cost effective — with far-reaching consequences for the global economy.
Trade finance is a general term referring to the practice (usually of banks or specialized institutions) to fund trade around the world and a critical part of global economic infrastructure. Let’s work with a simplified example. When a retailer orders goods from a supplier, he doesn’t want to assume the risk of paying up front from his own pocket. What if the delivery is lost or the products aren’t what was promised? The supplier, on the other hand, is also keen to avoid risk and is probably unwilling to ship his products before being paid by the retailer. Someone needs to finance this trade.
This is done when a third party reduces the risk that the other two face by paying the supplier so that the goods can be shipped to the retailer. Once the retailer has his wares and starts selling them, he will pay back the third-party financer in installments.
Those are the basics of the system driving much of the trade around the world, but the details are bulky and inefficient. Cash-to-cash cycles often last for six months or more; all supply chain finance is bogged down by a lack of capital, risks of fraud and antiquated techniques where everything is done with paper and rubber stamps. Transparency is also an issue and financers are usually hesitant to fund trades between parties that aren’t already well-established with high credit ratings. Solving these issues can transform the global economy, increasing liquidity across the board and help prevent hidden cash flows that support forced labor and even war crimes.
Enter Envoy, with a blockchain-based trade finance marketplace that addresses all of the fundamental issues limiting global commerce.
Putting the entire trade financing process on the blockchain finally gets rid of all the paper flying around the room. We saw it happen in countless different industries with the dawn of the personal computer. Without paper, filing and manual tracking through archives, costs are reduced all around and everything becomes quicker and more efficient. While blockchain is notoriously secure thanks to its decentralized nature, Envoy has taken things a step further by hosting their work on a private ERC20-based blockchain, where a few trusted nodes make everything cheaper and quicker.
Envoy also brings new capital into the market and makes financing available to everyone, even the little guy. In the Envoy marketplace, both individuals and institutions can act as financiers while contracts can be partially funded by many different people directly on the platform, distributing the risk.
Finally, Envoy is helping change the world in a more tangible way, since the transparency of blockchain and the unalterable quality of its smart contracts makes it possible to trace supply chains and avoid those that are lining the pockets of criminals or owners of factories where conditions don’t meet necessary standards.
There are lots of ways to make the world a better place. But one of the best ways is to help drive and create opportunity around the globe by breaking down barriers, reducing costs and establishing an immovable platform of fairness for everyone to adhere to. That’s what Envoy is here for.
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