The commodity trading industry has evolved alongside human civilization and has established itself as the backbone of the global economy. Today, it is a trillion-dollar market and has diversified into multiple categories such as - 1) Energy, 2) Metal, 3) Agricultural, and 4) Livestock.
Even though this sector plays a major role in the economy of all countries, it’s day-to-day operating is still stuck in time. This can be seen from how much of the commodity trading market is dependant on paper-based documentation. This reliance on paper trails severely affects the workflow, which in turn increases costs and time spent.
The commodity trading sector also suffers from a host of other problems that include:
- Supply-chain Complications: The supply-chain in this sector is highly fragmented. There are many players involved, and there are multiple levels of transactions involved. Thus, it is very difficult to monitor and identify bottlenecks in the system.
- Inefficient Payments: Another problem affecting the industry is payments. Most clearinghouses that operate in this sector do not process payments in real-time, but only at the end of the day. This limits traders from taking complete advantage of the market.
- Barriers To Procure Finances: Small traders planning to enter the industry find it difficult to enter the market as there is a high entry cost. This is also because many financiers and banks refuse to provide funds to new entrants without organizing in-depth scrutiny that is time-consuming.
- Absence Of Transparency: With a paper-heavy operation and difficulty in monitoring processes, it becomes easier for malicious elements to defraud the system and even engage in insider trading.
Apart from the above-mentioned problems, there are other factors restricting the growth of this sector. These include difficulties in regulation, space for frauds, and miscommunication.
However, NewzoneEX has envisioned a revolutionary way to address the problems affecting the industry. By using blockchain technology, NewzoneEX will be able to offer a decentralized and immutable platform that will record transactions in a streamlined manner.
Moreover, the platform will benefit the different stakeholders engaged in this industry such as traders, brokers, logistics, warehouses, exporters, and others. The blockchain-based solution will also help reduce costs and save time as it will eliminate the need for middlemen and improve transparency.
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