smart letters of credit

www.vestforsk.no

Smart Letters of Credit

How blockchain technology

can make trade and finance cheaper and faster

Svein Ølnes and Parth Desai

DFIN-513 Work group project, 21st of April 2016

www.vestforsk.no

Joint development with a bank

Secure funding

Seek competence in trade & finance

Service for the banks, not a service to replace banks

LCs: Huge volume and value

Conservatively $3-$4 trillion of trades done with LC as payment

Appr. 1 % fee for today’s LCs (that is $30-$40 billion a year!)

Lowering the fees of only 10 % will generate $3-$4 billion in margins

The solution: Smart contracts/Ethereum + Ripple

Smart letters of credit

www.vestforsk.no

A credit issued by a bank as a guarantee of payment for the

seller

The payment is effectuated after certain conditions are met

goods received

x days after shipping (Bill of laden)

after x days

Governed by the International Chamber of Commerce’s (ICC)

UCP 600 (Uniform Customs and Practice for Documentation)

What is a letter of credit?

www.vestforsk.no

How does LC work today?

www.vestforsk.no

How does a smart LC work?

Blockchain (e.g. Ethereum)

LC as smart contract

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How does a smart LC work?

Blockchain (e.g. Ethereum)

LC as smart contract Buyer says OK

Payment executed

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Thanks for your attention!

E-mail: svein.olnes@gmail.com

pdesai587@gmail.com

Bitcoin address:

1HpvvptgrYJh4xUHerm1ruZtvnyUnnnHkU