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The commodities market is one of the world’s largest trading platforms, with an annual value of over $2 trillion USD in the United States alone. Trading and moving commodities derivatives (like foodstuff and raw materials) is an considerable and vital part of the economy, but it is also an outdated market.
Because of the monopoly that many of the existing exchanges have when it comes to trading commodities derivatives, there is an air of exclusion. It also means there is a high price to pay just to be involved in the market. Essentially, it is the highly centralized nature of these exchanges that gives them this power.
However, in this era of disruptive technology, Blockchain is continuing its expansion into the traditional investor and trading markets. So, it is perhaps unsurprising to find that companies like ChainTrade have begun to explore the idea of creating a Blockchain-based platform to trade food and raw materials.
ChainTrade claims that by moving the commodities exchange onto the Blockchain, it will be possible to solve many of the issues surrounding centralization.
A trustworthy exchange
In today’s economy, people have little choice but to trust the major institutions and centralized authorities who have an exclusive monopoly on trading and commodities. However, for many investors, that trust is slipping, as they search to find alternatives. The Blockchain and its related technology are coming into the space as a competitor to many centralized and institutionalized authorities, including the commodities exchange monopoly.
“The commodities markets are made up of established exchanges that enable traders to buy and sell food and raw materials. ChainTrade is a powerful tool that not only makes commodities trading more efficient but which will democratize the markets by making them accessible to everyone,” said Vincent Jacques, CEO of ChainTrade.
“The more inclusive a market is, the more efficiently it’s able to operate. We’re deploying Blockchain technology specifically because it can shake up the commodities market by delivering greater efficiencies. This is because the ChainTrade model is built with trust at its core (Smart Contracts) and so removes the need for costly middlemen.”
Cheaper and more inclusive
The ChainTrade team’s goal in all this is to update the commodities market and bring it into the 21st century. They hope to provide better access to food, raw materials and energy in all parts of the world with full transparency.
By moving the marketplace onto the Blockchain, ChainTrade and CEO Vincent Jacques believe that they can lower fees by up to 50%, when compared against traditional commodities exchanges. This will help attract more people to the decentralized exchange, and open up the market much more than it is today.
A cheaper and more affordable market will mean more hobby traders can enter the commodities trading market. And because of ChainTrade’s transparent and inclusive nature, the market will be opened to anyone who wants to join it.
Aiming at the crypto investors
Jacques hopes that with the frenzy of crypto investors always looking for new and viable markets, his company can attract them with the promise of a well established and firm market.
“Our funding model places emphasis on institutional crypto investors, including VCs and banks with an interest in crypto such as Citibank because many of them already take part in commodities trading, and so understand the ways in which we can disrupt the current model,” Jacques added.
“To date, we’ve been greatly encouraged in our discussions with institutional investors who clearly see the potential for ChainTrade to transform the commodities markets and usher in a new era of open-access, highly efficient and fully transparent trading.”