US commodities trading and agribusiness software provider The Seam, which has cleared or processed over $7 billion through its cloud-based platforms, is forming a blockchain consortium in conjunction with IBM for the billion dollar global cotton industry deployed on the Hyperledger Fabric, with the project kicking off early this year and poised to yield significant efficiencies.
By using a secure, distributed and immutable digital ledger through the blockchain, the protagonists behind the project scheduled to commence over the first quarter of 2017 posit that it enables companies to work together on a “foundation of trust, increased speed and reduced interference.”
Working with IBM, the company headquartered in Memphis, Tennessee, has revealed its intention to lead an “industry-wide collaboration” to create a supply chain and trading ecosystem built on IBM blockchain technology, specifically using the Hyperledger Fabric, which provides a foundation for developing blockchain solutions with a modular architecture, pluggable implementations and so-called container technology.
The development should be seen in context of applying blockchain technologies to global supply chains that could generate multiple billions in annual efficiencies according to the likes of ΅Big BlueΆ - IBM. While leveraging open source best practices, Hyperledger Fabric enables confidentiality, scalability, and security in business environments.
Hyperledger Fabric
In terms Hyperledger FabricΆs differences compared with other blockchain implementations, the Network is permissioned (with Bitcoin it is public; Ethereum - public or permissioned), Transactions are (Bitcoin - anonymous; Ethereum - anonymous or private), and the required Cryptocurreny is none (unlike Bitcoin (bitcoin) and Ethereum (ether, user-created cryptocurrencies). And, the language for Hyperledger Fabric is Golang and Java.
The initiative sees some big industry players involved with the ownership group behind The Seam, including the likes of cotton leaders Calcot, Cargill, ECOM Agroindustrial Corporation Ltd., EWR, Inc., Louis Dreyfus Company, Olam International, Parkdale Mills, Plains Cotton Cooperative Association and Staple Cotton Cooperative Association.
Combined with Smart Contracts, the technology is described as having “powerful implications” for global trade with cross-border settlement and instantaneous transfer of currency or other assets - when defined conditions are met.
Mark Pryor, Chairman and CEO of The Seam, commenting said: “This new technology will be transformational for the cotton industry. There are numerous organizations, processes, systems and transactions involved from field to fabric.
He added:" Situated at the intersection of agriculture, finance and technology, The Seam with the help of IBM, is uniquely positioned to introduce blockchain technology to cotton-affiliated businesses worldwide.”
History Of Innovation
The Seam has had a successful history of innovation. Back in December 2000, the company began operating the worldΆs first online, anonymous and neutral trading exchange for cotton trading, on which tens of millions of bales have been traded and cleared on its platforms.
Since that point the company has leveraged its software platforms and application development expertise to expand into other commodity segments, including grains, peanuts and dairy. And, more recently this September the firm launched a cloud-based commodity management system for the peanut industry, the first of its kind.
Blockchain technology encourages broad involvement with the benefits of a network effect whereby a service becomes more valuable the more participation it has. For its part, IBM will play a key role in driving global adoption, with its digital footprint in all cotton producing and consuming regions.
World Cotton Trade
According to the National Cotton Council of America, world cotton trade for 2016 was estimated at 35.8 million (m) bales, down from 36.1m in 2015. The US was expected to capture around 29% of world trade through exports amounting to 10.2m bales in the most recent annual period.
Consortium Approach
Arvind Krishna, Senior Vice President, IBM Research, noted: “Blockchain offers enormous potential to drive innovation throughout the cotton industry. A consortium approach using IBM Blockchain and the Hyperledger Fabric can help create greater efficiency and serve as the foundation of a robust system for massive collaboration.”
Pryor at The Seam elaborating on the rationale for the IBM collaboration, for which discussions started in late 2016, said: “IBM is paving the way for blockchain technology development and expansion. The technical contributions made to its open source Hyperledger Project highlights IBMΆs collaborative approach to bringing businesses and industries together, allowing for broad adoption and faster innovations.” According to The Seam it is believed to IBMΆs first foray in this space.
Benefits From Initiative
The multi-billion-dollar cotton industry still exhibits inefficiencies throughout the supply chain. Indeed, as Pryor pointed out: “Most of those involve the massive information and asset exchange between parties, along with many intermediaries that are currently in the critical path of timely transaction settlement.”
IBM estimates that applying blockchain to global supply chains could generate more than $100 billion in annual efficiencies.
Cotton Blockchain & Cloud Footprint
In terms of the cloud based services and how this initiative pans out in the US and internationally, IBM has a global footprint that includes more than 50 cloud data centers representing every major continent.
Pryor contended that: “The nature of distributed ledger (blockchain) technology, combined with this global cloud footprint, is a perfect match for ΅localΆ country needs involving cotton-affiliated businesses transacting throughout the supply chain. The Cotton Blockchain will extend throughout a vast cloud infrastructure.”
Financial details to the project remain undisclosed at the current time despite inquiries made by Forbes with The Seam.
Source: Forbes