London Metal Exchange Supports Forcefield Blockchain Initiative to Track Global Metals via Mercuria
Blockchain technology has been tipped as the answer to most global industries, and rightly so, those who have already integrated the technology to their system have most probably a positive story to tell.
For that reason, most industries are heads-up to impress the blockchain technology with some however reluctant to do so.
One sector looking to take advantage of the technology is the mining supply chain, which for some time now, has had several issues concerning the movement of the physical metals.
The Forcefield Initiative
A consortium of banks and metal traders has decided to build a blockchain-based system which will be responsible for tracking the trade of the physical metals across the globe.
According to a report from individuals familiar with the effort, the group which is headed by Swiss trader Mercuria intends to provide a better picture of how the metals flow across the globe. The initiative dubbed “Forcefield” includes some banks like ING and Macquarie.
In Full Support of the Initiative
The initiative looks so good that now the London Metal Exchange (LME) which has the bragging rights as having the world's largest market for metal derivatives, is in support of the initiative.
Although LME chief executive didn't specifically comment on any involvement with the initiative, he praised the system saying that it will help in identifying the location of the metal, proof of the metal without anyone knowing what the metal is or where it is.
The London Metal Exchange has over 500 approved warehouses in 34 different locations across the globe, where metal on behave of holders are stored. However, despite having several approved warehouses, there's none approved warehouse in China which happens to be the globe's largest consumer of metals. Therefore, it makes it hard for consumers as well as traders to be sure of the metal's provenance and the general state of supply and demand.
The system will help buyers in the sector to easily track the source of the metal and also help the metal traders to prove the ownership of their stock.
One thing is for sure, the metal trading industry requires such a system, and if the initiative delivers on their objectives, then it will be a massive win for the community. Nevertheless, the metal trading community requires a transparent system to ascertain how these metals are acquired, whether illegally mined, traded or even to finance conflicts.
The big question remains if the technology will work with political and economic problems, given that using technology sometimes gets tricky with such situations.
But all the same, blockchain technology is meant to solve these kinds of issues and LME backing the Forcefield initiative is a significant step to realizing the technology's real potential.