Fortune: R3CEV members independently achieve huge breakthrough in global blockchain transactions

Rage Comment : Commonwealth Bank of Australia and Wells Fargo Bank of the United States are both members of the R3CEV blockchain alliance. However, this time the two banks independently cooperated with local cotton traders in Australia to conduct blockchain transaction trials, using blockchain to track the goods throughout the process and automatically pay for the goods. The goods are expected to arrive in Qingdao in early November. I believe the entire industry will pay close attention to this milestone moment.

Translation: Annie_Xu

The first cross-border transaction between banks combined multiple blockchain applications to ship a batch of cotton from the United States to China. The two banks were Commonwealth Bank of Australia and Wells Fargo.

The Texas branch of Australian cotton trader Brighann Cotton Marketing transported the goods to Qingdao; the total value of 88 bales of cotton was US$35,000 and the transaction was conducted through blockchain.

Blockchain is an Internet-based transaction processing and settlement system. Banks believe that blockchain can improve efficiency and thus reduce costs. Data is automatically copied in a full network environment and distributed to all participants, becoming a best record without even requiring third-party verification.

Michael Eidel

Michael Eidel, Commonwealth Bank’s executive general manager of cash flow and transaction services, said:

“Existing trade finance processes are ripe for change and the proof of concept has shown us how global businesses can benefit from it.”

The deal is not the first to use a decentralized database, but it marks a milestone for traditional banks, which have been reluctant to do so because of the difficulty regulators have in tracking their cash flows.

R3, a blockchain alliance consisting of more than 70 financial institutions around the world, leads the entire banking industry in exploring the advantages of blockchain in speed, efficiency and accuracy.

One of the benefits of blockchain is that it removes the human element from the transaction process. Cross-border transactions have long been hampered by payment processing and time zone differences, making blockchain technology even more attractive.

R3 has been working to advance the role of blockchain smart contracts, which enable automatic payments under pre-set conditions, such as the cotton trade trial.

Commonwealth Bank said the goods are currently being shipped from Singapore to Hong Kong and are expected to arrive in Qingdao in early November; and although the two banks belong to the R3 alliance, they carried out the entire experiment independently.

Brighann Cotton declined to comment.

Chris Lewis, director of international transaction services at Wells Fargo, said the bank is committed to developing new technologies, but "there are still many regulatory, legal and other issues that need to be resolved."