HSBC claimed on Monday it had performed the world's first commercially viable trade finance transaction using blockchain technology.

The bank issued a letter of credit for U.S. food and agriculture firm Cargill. The trade finance transaction involved a bulk shipment of soybeans from Argentina to Malaysia. The letter of credit was issued from HSBC to Dutch lender ING.

Letters of credit are issued by one bank to another to guarantee that a payment will be received by a seller under a set of conditions. Traditionally this process would take a large amount of time, numerous paper records, and a lot of back and forth between the various parties involved. Blockchain technology promises to change that.

Blockchain, the technology that underpins bitcoin, enables transactions to be recorded across a vast network of computers. In the case of bitcoin, it records all of the transactions that happen on the network, creating a public ledger. Banks have taken the principles behind bitcoin's blockchain – such as the idea of decentralized ledger – and tried to apply it to processes that they are carrying out.

For this transaction, HSBC used a platform developed by blockchain start-up R3 called Corda. R3 works with a consortium of banks to come up with blockchain solutions to a variety of problems.