Will Treasurers Use Cryptocurrency to Pay Suppliers?

bitcoin

There are many projects and proof of concepts going with Blockchain technologies and trade, that I tell a venture capitalist friend of mine that while CRISPR is even more revolutionary than blockchain, the impact is less understood by markets. I mean blockchain is focused on disrupting traditional trust advisors, while CRISPR can give us mutant insects and solve for autism. How cool is that?

And yet when it comes to all the projects around trade finance, shipping, supply chain, and invoice finance, you read about many companies planning to change the world. I’m not going to get into will they succeed or not, but back to the question in the title. In order to show progress, we need a proof of concept with a few major companies willing to do skunkworks to enable suppliers to get paid via some cryptocurrency, say Etherium, tied to smart contracts. This is not only to prove that the tech will work, but will work because real problems are being solved.

There are several interesting companies at the moment that are working on liquidity in the supply chain. Below is a brief on a some of them.

Sweetbridge

Former CEO of TraxTechnologies Scott Nelson is behind Sweetbridge, which can be defined as a settlement bus to eliminate UCC filings and basically tie ownership of assets to digital currency.  Basically they have a way to take a distributed accounting system and manage it inter-enterprise - or translated into English - provide a way for large corporates and their value chains to access liquidity without impacting their traditional funding needs.

Hirjo, formerly Fluent

Lamar Wilson, the founder behind Hirjo, owned 2 Cold Stones when he was a young man, so he certainly has the entrepreneurial spirit. I watched his team code at a Hackathon last year in St. Louis. It reminded me of my days back at Carnegie-Mellon staying up all night coding in Pascal and Fortran.

When I last checked in with Hirjo, they were trying to boil the ocean with supply chain finance, working on several projects to inject liquidity in the supply chain. One project was with JPM to develop a trade asset registry business with the blockchain, and another was a way to tokenize invoices for finance.

They have since made several partnership announcements, including Euler and SAP-Ariba.

Populous

Populous is introducing smart contracts, blockchain technology and digital tokens to the invoice financing space. They have raised more than US$10mn in crowdfunding in just five days, and are piloting its new platform, which lets firms and individuals sell or buy invoices globally. GTR did a piece on them here

Tradeix Ltd.

Rob Barnes, a founder behind PrimeRevenue, is behind TradeIX. TradeIX describes itself as the world’s first shared platform for trade finance, and uses distributed ledger technology, API-driven platforms to in their words, “ provides a more connected, secure platform for facilitating the movement of assets and credit around the world.”

For all the vendors above and others that are trying to change the world with distributed ledger, the challenge will be significant, especially the movement to finance supply chains. This is not a technology problem.  As one treasurer said, blockchain is not necessarily a starting point for a general treasury. There is enough going on in the CFO/Treasurer’s world with rising rates, moves away from LIBOR, trade agreements, FX, regional treasury centers, regulations, etc. to make it hard to move up on the agenda on skunkwork projects like this.

But spending time on new innovations that can help both inject liquidity in the supply chain and reduce financing costs is a worthwhile pursuit.

Any corporates that are interested in speaking further about the above or other vendors to assess potential pilots, please contact me at dgustin@tradefinancingmatters.com

Don't forget to sign up for TFMs weekly digest delivered to your inbox every Monday here 

Related Articles

First Voice

  1. Glenn Blackman:

    In some hi-tech sectors perhaps there may be a demand, however it’s not a demand that we have experienced yet in our work with SMEs needing invoice finance to improve their business liquidity. People tend to shy away from what they don’t understand anyway.

Discuss this:

Your email address will not be published. Required fields are marked *