smart letters of credit
TRANSCRIPT
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
www.vestforsk.no
How does a smart LC work?
Blockchain (e.g. Ethereum)
LC as smart contract Buyer says OK
Payment executed
www.vestforsk.no
Thanks for your attention!
E-mail: [email protected]
Bitcoin address:
1HpvvptgrYJh4xUHerm1ruZtvnyUnnnHkU