Reports Disruptive Technologies in Commodity Trading | Page 20

Disruptive Technologies in Commodity Trading Markets
and Unicredit are involved in this project, which uses
Hyperledger Fabric technology, and which spans 11
European countries.
Some of these new initiatives intend to use the con-
cept of an Initial Coin Offering (ICO) to raise funds in
which cryptocurrencies are offered to early backers
in return for legal tender or other cryptocurrencies.
According to PwC 12 , some $13.7billion has already
been raised in this manner so far in 2018, yet over
1,000 such projects have already failed globally this
year. However, there are calls for increased regulation
of the ICO mechanism. Given the hype and invest-
ment pouring into these markets, the analogy with
the dot com era is easy to make. In fact, the FCA 13 is
already investigating a number of cases and seems
set to take action.
There are already skeptics emerging who see block-
chain as nothing revolutionary, and question its cost
and scalability 14 particularly for peer-to-peer trading…
instead they expect blockchain to become an em-
bedded technology where it has specific use. With a
maximum speed of 7 transactions per second, how
could blockchain meet the required performance of a
commodity market and at what cost per transaction?
Meanwhile, GlobalData 15 , expects the hype around
blockchain projects to sharply decline through 2018
as the costs and complexities become better under-
stood.
A ComTechAdvisory Report
Despite that, most of these areas of interest for
blockchain development have impacts on how data
captured or processed by the CTRM, CM and ERP
solutions; so, it’s perhaps not surprising that our re-
spondents believe that it these types of vendors that
stand the largest chance of being disrupted by block-
chain in the future (Figure 6). Over 60% of those an-
swering our survey believed E/CTRM vendors will
be disrupted and over 40% saw a similar fate for ERP
software providers.
However, blockchain-based, proofs-of-concept still
face significant challenges, including concerns about
their performance to match and settle trade transac-
tions in volume, difficulties around the legal definition
of what is the venue (a de-centralized, peer-to-peer
structure makes it difficult to define a centralized ven-
ue operator and some level of governance is still re-
quired), cost considerations, and a host of other criti-
cal concerns around regulation, regulatory reporting,
and developing consensus around processes/busi-
ness constructs by potential members. Certainly,
one of the key advantages of blockchain is that it
eliminates the need for a “trusted” intermediary and
in doing so, eliminates fees and other costs needed
to support that intermediary. However, in eliminat-
ing that intermediary, one needs to understand how
that system will be governed and maintained - who
will manage the peer-to-peer venue? Other ques-
tions without obvious answers include: where will E/
https://cointelegraph.com/news/pwc-report-finds-that-2018-ico-volume-is-already-double-that-of-previous-year
https://www.lexology.com/library/detail.aspx?g=7998fd47-2196-4f34-a284-5d41235b285a
14
https://www.greentechmedia.com/articles/read/blockchain-might-not-be-best-for-energy-trading#gs.4RnAyuM
15
https://www.greentechmedia.com/articles/read/whats-next-for-energy-blockchains-as-ico-hype-fades#gs.2Sru2CQ
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