How Bitcoin Blockchain Bring Oil Trading to Revolution
With so many players, dependencies, and risks, the need for transparency and efficiency in the oil and gas industry are paramount. In addition, the public Bitcoin Blockchain presents a new way for parties to establish trust when trading electronically – without needing a third party. However, if you are planning to try the trading trend, then you may choose a trusted oil trading platform to transact with ease.
The blockchain provides "proof of process" for each transaction step, enhancing transparency, security, and reliability — even with one-off transactions. In addition, Bitcoin has shown proven potential when used to trade assets globally due to its speed, lower costs, and lack of commissions that can apply to traditional payment methods.
The emergence of payment protocols that support non-Bitcoin assets on the Bitcoin Blockchain allows for the tokenization and transfer of physical assets. This technology allows stakeholders to issue, trade, and settle an asset based on a blockchain. With more than 800,000 participants representing over 110 nationalities, and members in over 130 countries, blockchain and bitcoin provide an ideal platform for a pilot in this area by bringing together key industry players with the common aim of improving efficiency while reducing costs. Let's discuss how bitcoin and blockchain bring oil trading to revolution.
The Operating System of Oil Companies through Blockchain:
The oil industry is a vast, complex and competitive marketplace. The oil market could be flooded with bad contracts without an efficient monitoring system to alert companies of opportunities. Blockchain technology can help oil and gas companies improve efficiency by increasing transparency and accelerating transaction speeds. In addition, this new technology allows for storing vital information in a decentralized way that is not subject to human error or tampering — a perfect task for the blockchain's robust security capabilities.
The Oil Industry Lacks Trust in Blockchain:
Currently, only two percent of oil contracts are managed through blockchain. At the same time, it remains a challenge for most organizations to understand how it works or integrate its use into daily operations. These significant challenges need to be addressed to revolutionize the oil trading industry.
Blockchain technology is new and evolving, so organizations must invest in a pilot project before users can fully implement it. It is worth noting that for banks, blockchain technology could save up to $27 billion in infrastructure costs.
Uneven Regulatory Treatment:
State regulators will have to work with the U.S Commodities Futures Trading Commission (CFTC) and other agencies to develop regulatory regimes around blockchain applications specific to their industries for such systems, or pilots like this one, to be successful.
In 2016, oil prices were more than 60 percent higher than in 2015. It made employees wary of any organizational changes. The current pilot seeks to address this challenge by tracking the movement of oil rather than the price.
Harnessing blockchain's potential to trade oil and gas could significantly transform the industry. By identifying the issues faced by the industry, the pioneers of blockchain will work with regulators, governments, and supply chain players to implement a system suited to their needs. This pilot project offers insight into what relief the oil trading industry could receive if the bitcoin blockchain brings oil trading to revolution.
Bitcoin Blockchain Revolutionary Assistance to Oil Sector:
First, let’s look at the issue of supply:
Let's assume that bitcoin enables the oil industry to track the location, movement, and condition of oil supplies, monitor market activity, and download records of invoices drawn on the blockchain in real-time. In this case, the oil industry would have three main goals:
The new oil supply blockchain system would be transparent, automatically auditable, and quickly accessible. Each oil tanker would have a device that takes a photo and GPS map of the vessel's position and then sends the information to the blockchain to be stored.
The oil transport industry would benefit from improved efficiency, more flexibility, and faster execution by integrating the blockchain into its systems. When it's time to execute an agreement, their trading partners will have the information to respond in real-time and execute the contract digitally.
With this new information, contract managers could track their assets more efficiently, quickly, and accurately, saving time and money for everyone involved. In addition, the system will eliminate the inefficiency entailed by using paper invoices, which require labor and time to produce, process, and store. Based on this scenario, the oil industry would have a new way to digitize contracts and exploit future opportunities.
The Most Powerful Technology Can Bring The Right Kind of Help:
For example, the oil sector can improve its operational efficiency and costs. Thanks to the blockchain. The oil sector will find a way to save up to $27 billion in the next five years in the United States alone. Instantly and globally, the revolution in cryptocurrencies is reinventing the finance sector. Blockchain technology is one of the most powerful technologies. It will bring many exciting changes.