Blockchain technology can be a viable tool when put in the right hands. HSBC is one of the many banks exploring the boundaries of this innovative technology. The company recently conducted and completed its first trade finance deal using a distributed ledger. It’s a very positive development for the blockchain industry, as global adoption seems imminent.

HSBC Has a Major Breakthrough

It is evident financial institutions all over the world are quite keen on how blockchain technology can transform and revolutionize their business models in the future. As of right now, a lot of tests are taking place, but not too many real-world projects have been unveiled. HSBC is coming one step closer in this regard, as the bank has completed its first trade finance deal using this technology.

It is a viable infrastructure for trade finance transactions, which means global blockchain adoption may be imminent. Considering that this is a $9 trillion market, trade finance could become the market that puts blockchain technology on everybody’s radar. At the same time, this particular industry is the bread and butter of traditional banks, which risk becoming obsolete if this technology gains any major traction.

The blockchain trade in question involves a letter of credit for Cargill, a well-known US-based food and agricultural group. With this transaction having been completed successfully without any problems, it’s apparent the blockchain infrastructure used for this test is commercially viable. That doesn’t mean it will be used in a real-world environment anytime soon, but it is clear there will be a lot of attention on this infrastructure moving forward.

Most blockchain industry experts expect blockchain technology to make a major impact on the trade finance industry moving forward. Although this business model has been around for centuries, very little has changed in terms of the underpinning technology or payment flows in general. With a lot of paperwork associated with this particular model, it is evident blockchain can make a positive impact. It reduces paperwork, fees, and the time needed to complete transfers on a global scale.

One of the main points of interest regarding this trial is how the process can be replicated for any other parties involved It is not a concept native to just Cargill, although very few technical details regarding this infrastructure has been provided at this point in time. Without these details to go by, it remains anybody’s guess as to how HSBC successfully completed this transaction and how it can be used for different parties in the future.

Despite all of this positive momentum, it seems unlikely blockchain technology will make a big impact in the very near future. Widespread adoption will be hindered by regulatory requirements and potential technological bottlenecks. There is a high rate of failure associated with blockchain projects, which is a factor most people tend to overlook in this day and age. Even big banks such as HSBC aren’t immune to failure in this regard, for obvious reasons.