Commodities trading over exchanges makes up for a global market share of about 2 Trillion USD every year.
This volume is presently traded on centralized exchanges that are concentrated within a few marketplaces in the world.
Centralization is Exclusive
As a result of this concentration, the commodities trading market has become expensive as fees are high for traders and producers. This, in turn, makes it an exclusive venture only reserved for major banks and investors as bigger players get better fees at better terms.
Considering how crucial food and raw materials are to global sustenance and development, allowing its underlying market to be controlled by only a few individuals and organizations is unhealthy for effective supply. The hitches therein, mostly linked to the exaggerated cost of services can be blamed for the rising prices of food and raw materials on a global level.
Vincent Jacques, CEO of ChainTrade says:
“Today’s exchanges of food and raw materials are heavily centralized, charge high fees, and are exclusive to a few institutional investors. We will free this market thanks to the blockchain: exchanges will be decentralized and accessible to all, fees will be dramatically lower.”
Improving market accessibility by decentralization
ChainTrade, an originally Singaporean startup that is currently present in 6 countries is moving the exchanges of futures and options on food and raw materials (commodity derivatives) to a decentralized blockchain, allowing anyone to participate, both small and big players.
By implementing blockchain technology, ChainTrade intends to dramatically reduce the fees paid by traders, buyers, and sellers. By using Smart Contracts, traditional contracts and intermediaries will be cut down and eliminated.
With the vision of making food and raw materials trading accessible to anyone, anywhere, without barriers, ChainTrade is creating a decentralized exchange using the Ethereum Smart Contracts that will be accessible from the web, mobile or any other endpoint.
“It is time to bring competition to this business, decentralize the exchanges, open them to anyone who wants to be part of it and dramatically lower access costs. The blockchain technology will allow us to do just that: revolutionize the world of commodity derivatives”, says Jacques.
Artificial Intelligence will cut cost
Considering the volume of funds involved in global commodities trading, governments and security agencies are concerned and making efforts to ensure that such avenues are not used for illegal transfer of funds especially by drug pushers and terrorists. In order to achieve this, existing exchanges embark on expensive KYC and AML processes.
According to a recent survey by Thomson Reuters, an average bank spends about $48 million a year on KYC compliance. This accounts for part of the fees charged by these exchanges and subsequently borne by the players within the industry.
In addition to using cryptocurrencies and Smart Contracts, ChainTrade plans to use Artificial Intelligence to enforce KYC and AML good practices, thus dramatically reducing the cost of being KYC and AML compliant.
Artificial Intelligence will cover link analysis, data analysis, and pattern recognition to ensure that only genuine traders participating in the platform and not criminal or terrorist organizations.
A tokenized platform
To achieve its objectives, ChainTrade is embarking on an Initial Token Sale that is scheduled to run from 9th October 2017 to 31st December 2017.
The CTC token is a utility token that allows its holders to use the ChainTrade platform and trade the Smart Contracts available on the platform.
Raising funds through the token sale will provide the required funds to launch and operate ChainTrade while giving investors a token that will be used to access and use the platform. It will serve the objective of releasing the CTC token into circulation and set an initial market price.
With ChainTrade decentralized exchange, all classes of investors will be able to participate in the options and futures trading of commodities as restrictions such as high fees, locational barriers, and sentimental preferences will be completely eliminated.