Transformation story

Automating on blockchain

we.trade developed a blockchain trading solution based on the IBM Blockchain Platform running on IBM Cloud, using the Hyperledger Fabric framework from the Linux Foundation, to reduce the friction involved in cross-border trade and provide businesses with a simple way of conducting international transactions.

Companies are brought onto the blockchain platform by their bank, which eliminates potential concerns about the ability to trust counterparties. Previously, the numerous legal, financial and cultural risks associated with trading with a foreign partner may have discouraged companies from trading internationally. However, all users of the we.trade platform have already gone through international Know Your Customer processes to ensure they comply with applicable anti-money laundering regulations, mitigating these risks considerably.

Blockchain serves as a secure, shared database that cannot be controlled by any single entity and has no single point of failure. Every entry on a blockchain is given a timestamp and a unique cryptographic signature. The blockchain platform developed by we.trade and IBM has two main features that help empower enterprises of all sizes to take part in international trade: distributed ledger technology (DLT) and smart contracts.

The DLT ensures that all relevant parties have access to the same information regarding trade deals at the same time, and that no single party has control over this data. If Company A makes a change to the terms of its trading agreement with Company B, then this will alter the cryptographic hash in the blockchain, and all other parties, including Company B, banks and any other intermediaries, will be alerted to the change immediately.

Often, companies have found that a barrier to trading with businesses in other countries is the difficulty of guaranteeing that a contract will be enforced. Any delay to a payment or a delivery can be very damaging, as cashflow may rely on the timely fulfillment of the trade contract.

we.trade’s built-in smart contracts eliminate this form of counterparty risk. The smart contracts guarantee that if one party in a transaction fulfills the necessary requirements, as previously agreed and recorded in the blockchain, the payment process is executed automatically. The smart contracts ensure that all parties receive instant triggers demonstrating how one side is following the agreement and notifying the other when it is time to implement their side of the deal – such as by sending payment. The fact that the contracts are written into the platform’s code removes the need for any underpinning legal system or enforcement mechanism.

we.trade selected IBM as its technology partner in part due to the company’s deep expertise and long experience of working with the financial services sector. The company was also impressed by IBM’s global reach, which enables it to implement complex projects all over the world – this is vital to accommodate we.trade’s global ambitions. IBM’s ability to develop and support all aspects of the platform, unlike competitors, was another key differentiating factor.

we.trade worked closely with IBM Blockchain Services to implement the platform. The IBM team carried out a functional analysis of the company’s requirements and held a series of discussions at the start of the project in order to gain a clear picture of we.trade’s aims for the platform. The team established a minimum viable network, before progressing to a commercial platform with a defined operating model tailored to we.trade’s needs in only a few months.

Roberto Mancone notes: “IBM was the natural partner for this project for several reasons. Firstly, they have an excellent relationship with the major players in the banking sector. This is key, because to attract more corporates and bring greater liquidity to the platform in the long term, we need their banks to have faith in the underlying system. We believe there is no more trusted partner in the financial services industry than IBM.

“Secondly, we were attracted from the start to the strengths of the IBM Cloud. By the nature of our business, we needed a cloud environment that was flexible and scalable, with high availability and a truly global reach. The IBM Cloud was the obvious choice.

“We have been very impressed with the way the IBM Blockchain Services team has worked – while there were a few other companies operating in this space who launched before we did, we.trade has saved 9-12 months by working with IBM, and has come to market before all of our competitors. This is due, in large part, to the speed and professionalism of IBM Blockchain Services.

“It’s natural to encounter unexpected challenges when implementing a project as groundbreaking as the we.trade platform. However, the IBM team has been extremely valuable in that they set the tone for the entire project – they were very responsive and agile in the way they helped us overcome any issues that arose.”