Trade Finance-Present Scenario

According to the International Chamber of Commerce (ICC) 2017 report, world trade flows will grow at an annual rate of about 4.3% to reach nearly $19 Trillion by 2020. Majority of this trade is driven by global infrastructure development due to increased population and urbanization. As per Global infrastructure hub 2017 report, by 2040, the global population will grow by almost 2 Billion people — a 25% increase. Also, rural to urban migration will skew this growth more towards urban areas leading to an urban population growing by 46%. This will trigger massive demand for infrastructure support, especially in an urban area and to keep pace with this growth, the global infrastructure investment needs are forecasted to reach $94 Trillion by 2040, which is an average of $3.7 Trillion per year. Based on current spending levels, the shortfall is more than $18 Trillion which is around a Trillion dollar gap every year.

To fuel this massive infrastructure growth, financial institutions and banks are supposed to pump money into the ecosystem. However, decreasing trust factor and increasing risk have made it difficult for businesses and individuals to access trade finance or they are denied trade finance due to increased regulatory and compliance limitations of traditional financing system.

Of the global financing needs today, infrastructure remains the most sizeable and critical financing need for both developed as well as developing countries. And, even after being pivotal to any country’s social-economic progress, infrastructure financing still remains underserved. Why? Financing sector suffers from a lot of inefficiencies. Infrastructure financing being the most unglamorous industry receives very less support from the private sector leading to an increasing tax burden on govt. and consequently on the general public. Inefficient, time-consuming and paper-based financing further adds to the cost of capital. Even finance rates vary a lot worldwide and presence of intermediaries makes centralized funds inaccessible to people. Therefore, the present financial ecosystem is incapable of fulfilling the burgeoning financing demand, leading to huge loss of opportunity for global trade and in turn, economic development which requires a disruptive technology like blockchain to innovate financing mechanism to complement traditional banking and finance.

Blockchain — the disruptive technology that can revolutionize trade and finance

In simple words, blockchain technology provides a means of establishing a public, distributed database or set of records or set of transactions that are cryptographically secured and immutable in nature. These are no central points of failure in the system — all thanks to the distributed decentralized nature of the blockchain network and its consensus mechanism.

Unlike, traditional banking and finance that is dominated by intermediaries including banks, governments and central authorities as a means to establish ‘trust’, blockchain is a trust-less, yet secure, immutable system that removes all barriers in banking, trade and finance.

What is XinFin doing?

XinFin.org, which is an open source hybrid blockchain platform, aims to address the global trade and finance deficit by leveraging the fast-evolving blockchain technology and by using the XDC01 protocol with participation from governments, financiers, buyers, suppliers, regulators and communities. XinFin’s federated distributed consensus mechanism replaces the wasteful energy-intensive mining making XDC essentially mining-free. Having been evolved into a delegated proof of stake consensus, XinFin network allows nodes with higher XDC stake and higher voting power, hence ensuring transparency on its network as any invasion results in nodes losing their stake — all thanks to the punitive smart contracts built atop XDC blockchain.

Built on the paradigm of consortiums, the XDC Blockchain is unlike any other public or private blockchain. While the public state of the XDC blockchain is shared by all the participants' nodes that stake in XDC network as per BFT consensus, the private state is formed by the groups of nodes that run permissioned consensus-driven networks accessible only to authorised members. Although the private network state is maintained in its respected state, a record of transactions and smart contracts are accessible to users on the public state maintaining data privacy and security. XinFin Network is fully compatible with ethereum ecosystem, therefore, all apps build on ethereum codebase can be easily integrated atop XDC Blockchain.

A distributed database, XinFin Hybrid blockchain allows for all documentation exchange on a trusted network. All kinds of transactions, documents and contracts related to financing and other industry processes are digitally recorded on XDC blockchain. XDC blockchain replaces the complex processes with an organized, trusted and automated workflow that uses smart contracts and peer to peer frameworks for lending and repayments, trade, settlements etc.

XinFin Network is a regulatory compliant. Providing KYC on XinFin Network is mandatory. All the participants on the TradeFinex platform will be required to submit basic and adequate identify information including contact details. Entities using XDC platform would keep their regulatory and compliance procedures and other monitoring activities like KYC, AML (anti-money laundering). A peer-to-peer platform TradeFinex comes with the added advantage of supporting credit data in the form of hash so that financiers can take better decisions and time repayments can be ensured.

A word about TradeFinex.org

Powered by XDC protocol, TradeFinex platform enables peer-to-peer transactions between financiers, suppliers and beneficiaries. A conceptualized marketplace platform, TradeFinex connects global participants of the trade and finance and enable them for global contracting, financing, payments and settlements.

TradeFinex platform is for individuals, governments, regulators, financial institutions, corporates and others who regularly engage in trade and finance and look for new means of low-cost financing to complement traditional finance. Through this platform, beneficiaries can raise money literally from any part of the world.

XinFin is leveraging the power of TradeFinex, its decentralized enterprise-grade hybrid blockchain enabled trade and finance platform. Offering the benefits of immutability, security and peer-to-peer settlements features of XDC protocol, XinFin’s TradeFinex platform would help bridge the $15 trillion global infrastructure gap.

How is TradeFinex helping unbanked population get easier access to funds?

TradeFinex recently completed a pilot in a remote area of India. Irinse Foundation along with TradeFinex successfully completed real trial transaction in a remote location of Asia where they got sewing machines, computers and network infrastructures financed by independent financiers in a standard SandBox limit. The platform was trialled in India taking the support of local governing bodies. Similar kind of projects is being financed in various developing countries across the globe.

TradeFinex on XinFin Hybrid Blockchain enables Unbanked Population with P2P Trade Finance

Recently, the platform has applied for Sandbox license across seven jurisdictions and counting.

TradeFinex-An Open API based platform for trade finance

Enterprises, governments, institutions can use TradeFinex, an Open API based platform; as a tool for fulfilling their trade finance needs. Due to the massive response from various ecosystems and fintech partners worldwide, TradeFinex is now evolving into an Open API platform with which many businesses, Fintechs, rural bodies, ERP systems can connect to.

XinFin.org successfully demonstrated financing of a solar plant using blockchain powered TradeFinex platform as a tool. The simulation involved digitizing and representing a solar plant on the blockchain and demonstrated that any projects including those of national infrastructure importance can be financed peer to peer without burdening the treasury. Demand for cross-border finance can be met by greater cooperation between governments and Blockchain capital by the creation of new models of investment and financing.

TradeFinex Infrastructure as an Asset Class (IAC) Sandbox-Consortium Membership

The TradeFinex.org team has also initiated a consortium with open invitations to address peer-to-peer trade finance and asset tokenization of real-world assets by keeping regulatory bodies, beneficiaries, financiers and fintech companies around Consortium-led governance will make TradeFinex truly decentralized which allows it to sync with the core philosophy of blockchain.

TradeFinex invites Global Public Investors (GPIs), regulators and financial & government institutions to be a part of this consortium. All consortium members will both be a part of the ecosystem and will help in introducing the right instruments, their standardization and closely working with regulators for holistic business development. Members interested in consortium membership can click on https://www.tradefinex.org/publicv/partnership and become part of the global campaign.

Although tradefinex.org is not open for the transaction, it will soon be unveiling its APIs to the public so that interested community members can build use cases and applications on its regulatory compliant XinFin Hybrid Network.