What the world economy can learn from a food producer
Trading in an efficient blockchain enabled economy
Cargill is well known for providing food. They buy and sell commodities and earn a good profit in a highly competitive environment. Their major competitive strength: bookkeeping.
Bookkeeping? Well, yes!
Their major pillar of strength is an internal ledger to note down the financial activities between the entities trading with each other.
Sounds boring? Maybe. But it pays off big!
This means that the Cargill entities don’t have to pay for currency conversions and for other fees connected to sending money across borders. In some cases, the prices for currency conversions are high.
Changing Vietnamese Dong to US Dollar can cost 12%.
All Cargill does is to write credits and debits in their internal books. No expensive money cash transfer needed. They just have to settle the ledgers once in a while transferring the profits to the entities involved. Of cause, they optimize these cash payments to achieve a minimum in currency conversion.
Moving around figures in a highly international accounting environment pays off. Actually, up to 20%.
And this means, that a competitor has to be 20% more efficient than Cargill to be able to compete with Cargill on the same level!
But what has this got to do with Blockchain and the World Economy?
A worldwide “internal” ledger to settle payments
The idea is to take the Cargill system to global scale. Instead of connecting the entities of the Cargill family it connects all companies, worldwide.
So how should a system look like that enables payments without using money, only transferring the profits?
The system should be a blockchain based solution as these systems are designed for “in between” and provide the best solution when a trustworthy shared ledger is needed.
The system should at least cover the following:
· Provide a shared single point of truth for all involved parties without giving away unnecessary sensitive data
· Include full KYC/AML
· Fully compliant with the respective laws
· Act as unit of accounting
· A fast, low cost medium of exchange
· Provide a reliable stable store of value
· Offer full recourse and indemnification
· Difficult to steal
The bad news is: Asides from a lot of hard work this solution involves a lot of regulatory licenses as the platform will have to have at least the license to transfer money internationally.
The good news is: Such a system is about ready for prime time.
The Sweetbridge Settlement Protocol
As part of the Sweetbridge protocol stack the Sweetbridge Settlement Protocol provides all the above described features. It is complement by the Sweetbridge Liquidity Protocol. Together these two protocols enable an instant settlement
· without receivables
· without payables
· with no working capital
The results:
· Increased cash on the balance sheet
· Decreased working capital required to zero
· Improved profit
· Increased transparency in supply chains
The full Sweetbridge protocol stack adds the “accounting protocol”, the “resource sharing protocol”, and the protocol for “Optimization & Liquid Talent”.
The software development for the liquidity and settlement protocol will be finished soon. The aim for first PoCs with large international customers is Q3 2018, depending on regulatory approval.
Please refer to the Sweetbridge Website and my Medium article on Sweetbridge for more detailed information on the protocols, the stable token Bridgecoin (BRC), and the Sweetbridge Economy with its Discount Token Sweetcoin (SWC).
What would this mean for the global economy?
Everything which is not dug out of the ground on site and created on site is brought to us via a Supply Chain. About two thirds of the global GDP of 54 trillion US Dollars are generated by Supply Chains. Worldwide seven out of eight people work here.
An average for every step in the supply chain process the other side has to wait for 54 days to receive their payment. 32 trillion US Dollars are tied up in this process at any time. According to one estimate from the World Economic Forum, reducing supply chain barriers to trade could increase global gross domestic product (GDP) by nearly 5% and global trade by 15%.
A worldwide ledger to settle payments would increase the efficiencies in the supply chain resulting in a major boost for the worldwide economy.
What would this mean for a company?
Sweetbridge is in a Proof of Concept (PoC) agreement with a large pharma medical device company. The customer estimates that the effect for them would be:
· increase of their balance sheet by 1 billion USD
· reduction of their working capital by 27 days
· decrease of their operating expenses by 2% (= 2% profit margin increase)
The effects for a small business in a developing country environment would be dramatically better. When you are talking about the international rice trade, the price for the consumer could be reduced by 10% while doubling or even tripling the money everybody involved in the rice supply chain makes of the rice.
A future to look forward to!
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Sources
Watch the full 52 min. presentation by Scott Nelson, the CEO of Sweetbridge. The economical data and data on the company level mentioned above are drawn from this video.
