Blockchain Currency Ready for Container Shipping
The Hong Kong-based company 300cubits aims to partially replace U.S. dollars in the container shipping industry with a token soon to be launched on Ethereum - an open-source, public, blockchain-based platform.
Ethereum is a decentralized platform that runs smart contracts – apps that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference. These apps run on a custom-built blockchain, a shared global infrastructure that represents the ownership of property. Ethereum can do what Bitcoin does in acting as a distributed ledger. It can be digital money too, but unlike Bitcoin, Ethereum is highly programmable and therefore designed to accommodate the construction of complex applications.
“300cubits uses Ethereum to tackle problems in container shipping,” says co-founder Jonathan Lee. “The container shipping industry is a $150 billion industry, but it has been in constant distress since 2008. Unlike ticket booking in airlines, customers in container shipping do not bear any consequences for not showing up for bookings. Industry people complain about the lack of trust between liners and customers. We think the trust-free nature of Ethereum.”
In a few weeks, 300cubits will issue a token called a TEU. The number sold in the initial coin offering will assign value to the tokens. The company will then give a portion of tokens to industry practitioners. The TEU tokens will be used as booking deposits for container shipping where value could be lost if a customer does not turn up with a cargo or a container liner does not load a cargo according to a confirmed booking.
“Industry practitioners will be incentivized to use the TEU tokens because the tokens are given to them for free; they have this so called "ghost booking" issue to fix and their ownership of TEU tokens will appreciate if they use them,” says Lee. “Their recognition and day-to-day use of TEU tokens will further enhance the value of the tokens.”
As booking deposits, the TEU tokens’ value will naturally be linked to the value of actual freight rates. Hence, the trading of the tokens will become a leading indicator for freight rates, serving much like a peer-to-peer crowd prediction platform for container shipping, says Lee.
In the long term, Lee says the TEU tokens may become a defacto settlement crypto currency in container shipping, much like U.S. dollars. “We see the TEU tokens being adopted as a settlement currency for the container shipping industry, which could move the whole industry’s transactions or even the entire logistics industry’s transactions onto the blockchain.”
Lee was a bank regional treasurer and is well versed in fiat currencies, programming and systems and organization build-up. His business partner, Johnson Leung, comes from a shipping background with 20 years’ experience in container shipping both inside the industry with Maersk Line and covering the industry in investment banks like Jefferies and JP Morgan.
Earlier this year, Maersk and IBM have announced a new collaboration to use blockchain technology to help manage the paper trail of tens of millions of shipping containers across the world by digitizing the supply chain process from end-to-end.