2018 saw Hong Kong deploy several distributed ledger technology (DLT) projects, moving from the proof-of-concept phase to actual live transactions, according to a recent report.
DLT, or blockchain, as it is commonly known, is the technology behind cryptocurrencies like bitcoin. Companies in various industries invest in developing DLT for its ability to promote transparency and its promise of immutability that ensures data stored in “blocks” cannot be interfered with.
As reported earlier by OpenGov Asia, a Hong Kong jewellery group, backed by an American Institute, launched a blockchain pilot for diamonds in four retail stores in Hong Kong.
The group is the first in the city to use blockchain to deliver digital diamond grading reports, which reduces the need for keeping traditional paper reports while providing security, traceability, and accessibility to customers.
Upon purchase of a diamond, a customer can receive the diamond grading report and other details on his mobile phone via the group’s app. More than 3,000 diamond grading reports have already been on blockchain during the launch. The group plans to extend the pilot to over 10 stores and 10,000 diamond reports by the end of its 2019 fiscal year, as well as to its stores in China.
Hong Kong’s first industry-wide DLT push
At the end of October 2018, the city’s blockchain-based trade finance platform was finally launched about 19 months after the plan for the government-led, multibank projects were unveiled in March 2017.
Spearheaded by the Hong Kong Monetary Authority (HKMA) and 12 participating banks, the blockchain platform aims to digitise trade documents, which for decades had relied on manual and paper-based processing.
The platform is the first industry-wide blockchain initiative in the city and the first full-fledged platform for commercial use. It enables banks and their corporate clients to submit and record purchase orders, invoices and applications for trade financing.
The blockchain technology boosts efficiency and lowers financial costs for companies by cutting down on paper, making transactions easier to process. It also reduces the risk of fraud and identity in letters of credit and other transactions used in trade finance theft.
The platform is already reducing the time for approval of trade loan applications to four hours, compared with the usual one-and-a-half days, according to a statement issued by HSBC during the platform’s launch.
HKMA plans to the platform to other trade platforms abroad to further facilitate cross-border transactions. In particular, the government regulator said in a statement that the platform will collaborate with European-based digital trading platform which counts several massive banks as its participants, and uses similar technology.
In November, the shipping sector saw nine leading ocean carriers and terminal operators start a blockchain consortium to develop the Global Shipping Business Network (GSBN).
Initiated by a major shipping technology provider, the GSBN is envisioned to establish a digital baseline for global shipping, connecting all industry stakeholders, including carriers, terminal operators, customs agencies, shippers and logistics service providers.
First on the docket is to establish standards to ease the seamless sharing of documents and data across all stages of the shipping lifecycle. The GSBN will provide the foundation for new applications that can transform documentation flow for shipment management, including dangerous goods documents, invoices and cargo release.
The tech is game-changer and will bring massive benefits to all aspects of operations and end-to-end visibility throughout the entire supply chain, the director of corporate finance business development at a major port noted.
The first planned application will allow shippers to digitize and organize their dangerous goods documents and automatically connect with relevant parties to streamline the approval process.
Permissioned blockchain networks are the future
Looking ahead, the future lies with permissioned blockchain networks, according to the senior growth and innovation manager at a major global bank.
Permissioned blockchains mitigate the data privacy and security challenges of public blockchains by restricting participation in the blockchain to approved parties. To join the network of computers that can validate transactions on a permissioned blockchain, one has to have the approval of other members of the network.
Such blockchains are also popular among industry-level enterprises and businesses, for which security, identity and role definition are important.
The innovation manager pointed out that while the technology around blockchain is still nascent, it is hoped that a few major blockchain networks will emerge soon enabling industry-wide participation.