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Silk Road Coin (SRC) transforms commodity trade

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We're all used to the idea of digital currency - spending and receiving money that isn’t physically in front of us. But digital currencies still remain something of a mystery, writes Colin Stevens.

How might we use money in the future and whether we can even trust digital currencies such as cryptos are just two of the many questions being asked. Yet, its easy to see how digital currencies transforming the global trade and money movement.

Two major new reports, just published, seek to help us better understand this cryptic kind of currency and also dispel some of the myths surrounding the new technology.

One of the new entrants to this market is Silk Road Coin (SRC), a digital “utility token” designed to digitalise trade in Europe and New Silk Road Area.

LGR has developed a SRC business ecosystem, blockchain based digital environment which combines cross border money movement, trade finance and global supply chain and where SRC is used to fuel trade between buyers, traders and sellers. The SRC business ecosystem provides multi-dimensional perspective for physical goods and money movement in trade finance. It allows financial visibility and more efficient cash management supported by financial planning. The SRC business ecosystem also enables efficient supply chain finance through PO financing, factoring, payment option swaps etc. Furthermore the financial services solution reduces trade finance, money movement and currency exchange risks and costs.

From the global supply chain perspective, SRC business ecosystem uses SRC to issue smart contract, collects and validate trading documents in real time bases and so detect and fraud or discrepancies. It also deploys smart containers that provide data insights and requirements are to enforce and ensure the successful transport of products. To eliminate product loss, safety issues, blind spots and discovery for continuous monitoring and improvements. All this assures higher visibility of end-to-end supply chain and reduced product warehousing and wastage.

The use of SRC in the SRC business ecosystem therefore provides many financial benefits to its owners and drives down total transaction cost.

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We estimate that SRC can be adopted by 80% of companies trading in Europe and China, which make up to one third of the total world population.

A separate White Paper, also by LGR Global, says that for those looking for a “comprehensive trading ecosystem”, SRC in SRC business ecosystem, provides stability and predictability and ultimately save costs. In the SRC business ecosystem, SRC is the only mechanism for trading partners to access to SRC business ecosystem services. Therefore, SRC will transform the trade in the Europe and New Silk Road which makes SRC “a great investment opportunity.”

LGR Global chose to establish itself in the European Union, specifically in Estonia which is renowned for a blockchain-friendly yet rigorous regulatory environment. LGR Global, is so convinced of the potential benefits that it plans to launch a Digital Trade Finance Platform in the New Silk Road Area (Europe-Central Asia-China). It is worth recalling perhaps that the New Silk Road Area is huge, consisting of 68 countries, many with their own currencies. Cross-border trade here means that the companies and stakeholders that participate in economic transactions are consequently faced with increased operational and other risks in comparison to other geographical areas.

The Silk Road Area itself has been the recipient of international attention of late due to enhanced trade and growth, as well as increased business partnerships between Europe and China. Foreign ownerships and subsidiary development are also on the rise, leading to a drastic increase in international trade and cross-border money movement transactions.

This is an area which represents 60% of the global population, 33% of the world’s GDP, and posts incredibly high and consistent rates of economic growth.

LGR Global CEO Ali Amirliravi said: “While for many companies the Covid-19 might have slowed their operations down for LGR and SRC business ecosystem it has been a great growth opportunity”. Due to Covid-19, the multi-commodity trading transactions, which are traditionally been dominated by big banks, are now facing new era. The LGR policy paper says the Covid-19 pandemic has highlighted problems that currently exist in international trade, cross-border finance and global supply chains.

It says that within the multi commodity trading industry, overall trading volumes have moderately decreased. At the same time, first, high supply chain financing and money movement costs and bank delays have begun to critically impact the profitability of multi-commodity trading companies.

Second, due to inefficiencies in global supply chain, companies today have very low predictability and visibility whether they goods will arrive and when. Therefore, companies use excessive safety stock to protect themselves from any supply chain disruption, which again lead to high working capital levels.

The report says that due to Covid-19, some key changes have occurred in the commodity trading industry – leading to a sudden increase for “digital trade finance solutions.”

The global Covid-19 crisis has also demonstrated the need for immediate action within international supply chains and markets, says the report, adding, “It is a critical time for infrastructure upgrades, digitalisation and increased transparency. While the pandemic has caused a lot of negative effects on the global scale, a potential positive impact is that it has made clear to the industry and the public at large that changes do need to be made to optimize processes and improve the overall functioning of international trade and trade finance.”

In summary, LGR Global says the Silk Road Coin offers a secure and controlled business environment that can revolutionize international commodity trade in a fast growing market.

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