Cryptocurrencies are making inroads into commodity trading, ships the first consignment from Russia to Turkey

January 31, 2018:  The global shipping industry is facing systemic issues which could not be fully resolved before. The Blockchain technology has now created a strong foundation to address and correct payment-related inefficiencies of the shipping industry.

Prime Shipping Foundation is developing a payment ecosystem to disrupt the way payments are handled in the shipping industry, has already executed freight in cryptocurrency. 

According to a report by the news agency Bloomberg, the first freight deal settled in Bitcoin was executed last month on a vessel carrying wheat from top shipper Russia to Turkey, according to Prime Shipping Foundation, the venture behind the transaction.  

“The consignment was part of the pilot testing of Prime Shipping Foundation’s blockchain payment system for bulk commodities,” said chief executive officer Ivan Vikulov.  

"We are trying to develop a cross-border payment system that’s easier and faster than what’s available now. As far as we know, this is the first freight deal done in a cryptocurrency," Vikulov added.  

The report further says the announcement comes soon after Louis Dreyfus Co., one of the world’s largest foodstuffs traders, said it struck the first agricultural commodity trade to use blockchain. The 166-year-old trading house used the technology to sell a cargo of US soybeans to China’s Shandong Bohi Industry Co. 

The vessel used in Prime Shipping’s transaction carried 3,000 metric tonnes of wheat from Rostov-on-Don to Samsun. While the cargo is small, it highlights the potential cryptocurrencies could play in agricultural commodity markets.

The global shipping industry is one of the oldest in the world and a trillion-dollar business. In fact, nearly all goods, which we buy have likely been shipped before via the world waterways.

The Prime Shipping Foundation was formed as an open-source project by Gibraltar-based Quorum Capital Ltd and shipping broker Interchart LLC in pursuit of disrupting the way payments are handled. The team was working discreetly on the mechanics of the product, which will enable immediate processing of payments and conversion from fiat to cryptocurrencies and back without incurring much additional cost for the customers. The venture is developing its own cryptocurrency and plans to raise funds for it in mid-2018, he said.

As the shipping industry is mostly using the United States Dollar for freight payment and bunkering services, the Prime team developed a complex ecosystem to allow rapid and near-lossless transactions between major fiat currencies and major cryptocurrencies.

At the heart of the ecosystem lays the PRIME Token. By utilising the Prime eco-system freight market participants such as ship owners, charterers, freight operators, brokers, agents and bunker suppliers can increase the efficiency of their operations, simultaneously substantially cutting operating expenditures. The project is currently in its pre-ICO stage with the main ICO planned for mid-2018.

"The Prime Crypto Bank will become the interface between the online world and the real world, allowing a gradual adoption for the shipping industry, without compromising the benefits the new era brings.", Ivan Vikulov, CEO of the Prime Shipping Foundation said.

While accepting payment in Bitcoin comes with its challenges due to market volatility, there are now futures on exchanges such as that run by CME Group Inc. that would allow hedging to take place, Vikulov said. Bitcoin prices have dropped more than 40 percent since reaching a high in December.