Numerous hydrocarbons and raw materials are moved through a tangled web of global oil trading networks. If you want to start Oil trading in only three steps, visit the Oil Profit system , you will get the best liquidity, and the platform is immune to volatility risk. From this, demand for crude oil and other petroleum products is driven by the intricate connections between supply and demand, impacting traders’ operations.
With its decentralized platform, the blockchain can improve efficiency and reduce costs for the global energy industry. And, given that different types of cryptocurrencies can be used interchangeably to deploy smart contracts, blockchain technology can resolve several supply chain issues. According to experts, IBM is already providing solutions for some deep-water projects with their new blockchain platform, ContractNet, which enables “readiness information” between exploration companies. It also provides fully digital, secure syndicated letters of credit”.
As a result, more and more energy traders are approaching the blockchain to create secure and efficient supply chains. A recent McKinsey research report highlighted that the oil and gas industry is already implementing blockchain technology throughout its network for various reasons. For example, this could potentially provide cost savings for the supply chain by providing transparency regarding the location of oil tankers and the price of crude.
By utilizing blockchains to create immutable ledgers that companies amongst participants can share, there should be no question about who owns or controls any asset or data. So, let’s discuss how blockchain increases the efficiency of crude oil trading.
Blockchain can reduce the number of intermediator costs:
In addition, since blockchain is a shared transaction record, it does not require any third party, such as banks, to verify transactions. As a result, it makes transactions more accessible to audit and less vulnerable to fraud. According to experts, several financial institutions have developed various blockchain solutions (e.g., Bank of America and JP Morgan).
Blockchain can improve transparency:
For example, many oil traders use digital certificates to prove their ownership to complete/verify transactions. And the transparency provided by digital certificates can be verified by users through the blockchain.
Blockchain can provide better security:
From the above discussion, it is clear that users can use blockchain to secure data used in transactions in the future, and users will add more security features (e.g., encryption). Furthermore, as a shared data structure, it is easily auditable. As a result, discrepancies between data entered into the system by participants will create an audit trail that could even lead back to those who altered the original record. It makes supply chain management more efficient and secure.
Blockchain can enable more autonomy:
Every participant on the blockchain platform has full autonomy to decide which transactions should be included in the shared ledger and which data people should use for verification. It means that different oil traders can collectively decide on their process of submitting transactions to a shared ledger on a decentralized global platform. As a result, the whole supply chain is automated, making transactions more efficient and better protected from manipulation.
And lastly, blockchain technology will allow participants to access new sources of capital through the development of smart contracts. For example, by using Smart Contracts, oil traders can set up payment terms and make payments using other cryptocurrencies (e.g. Bitcoin and Ethereum) instead of fiat currency. Therefore, using ICOs could provide an alternative source of capital for energy traders who do not have access to conventional banking infrastructure.
Blockchain fueling innovation in the oil industry:
As discussed above, crude oil trading is complicated, time-consuming and expensive. In addition, the many steps involved in the crude oil supply chain can use up many inefficiencies within the industry. Blockchain technology can solve this problem by giving participants more autonomy to maximize efficiency and reduce costs.
Blockchain could provide an alternative method to manage all stages of your project safely:
Blockchain increases trust and security by providing a completely transparent ledger. It is, therefore, possible that record keeping will become more efficient through having a shared public database. In addition, users can use blockchain to decide who owns assets such as IP, copyright etc.
Companies in tracking transport could use blockchain:
In the future, it is possible that blockchain technology could provide a more reliable and transparent method of tracking oil tankers. It would be especially beneficial for areas where weather conditions are harsh and remote locations.
According to experts, this could simplify the tracking process by providing a centralized information-sharing platform. In addition, given that the blockchain is decentralized, all participants in the system can share data, reducing ambiguity in logistics and supply chain management.
Oil trading is an extremely complicated industry with many stakeholders involved. Hundreds of thousands of barrels are sold amongst various companies across different continents daily.
As a result, many different actors can be involved in the supply chain and oil transport. Therefore, blockchain technology can provide an efficient and decentralized solution to simplify the process of trading crude oil. The Singapore-based program “the Fund for Global Goals” is reportedly working towards supporting blockchain application in trade finance at the World Bank.