At the Euler Hermes Digital Agency, we are constantly looking for ways to improve Trade Finance through new technology, aiming to simplify the interaction we have with our clients.
At EHDA we recently completed a blockchain experiment called Smart Invoice. The purpose of the experiment was to prepare the building blocks required for Trade Credit Insurance on Blockchain. The newly created Smart Invoice allows a business issuing an invoice (the seller) to upload that invoice to the Ethereum Blockchain and monitor the receipt of payments (made by the buyer) and the evolution of the payment status of the invoice.
An Initial Coin Offering (ICO) is a new technique for project financing. Right now it is primarily used for Blockchain related projects but it could be used for any type of projects. It is similar to IPO (Initial Public Offering) in terms of how the company distributes the “shares” to investors. However, these “shares”, also called coins or token, can be attributed any right towards the project, and their uniqueness, value and transferability is guaranteed by a Blockchain (often Ethereum). This allows investors to track the use of the money transferred to the project and to freely and rapidly sell or buy their coins.
What is the main disruptive idea here? In fact, Blockchain enables the project owners to create tokens, that have a unique value linked with the application/product being developed. Hence, people can buy those tokens in advance, knowing that not only the value is guaranteed, but also that they could either sell them right away or sell them later- once the application is available.
At EHDA our mission is to find new ways to disrupt the trade finance industry. It is only natural that we investigate the opportunities of Blockchain technologies for handling trade relations between a buyer and a seller and how the other actors could interact on the same platform, thus providing benefits to everyone.
In this article I will present how we approached the partnership with one of our clients and what we achieved. A second article will follow to present EHDA views on Blockchain, how it can change Trade Finance and what are the main challenges for adoption.