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Simplifying Trade Finance with Blockchain

The main pain points of trade finance today include manual processes, outdated tracking systems, multiple international platforms for trade, and money laundering and fraud prevention.


Distributed ledger technology, more broadly known as blockchain, offers solutions for several of these challenges [^1]. To begin with, contract creation and invoice factoring are currently manual process that require the trading entity to provide financials and other documentation to the bank, which must then be reviewed and validated. Blockchain can effectively record and validate contracts such that the manual validation efforts should be dramatically reduced along with the associated costs. Moreover, because the blockchain is decentralized and disintermediated, it can also reduce fraud risk, such as bills of lading, which can currently be financed multiple times.

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