The Blockchain Revolution: A Game-Changing in Letter of Credit (L/C)?

Abstract

The paradox cannot really be avoided is that ‘modern technology’ is supposed to be more secure but are generally hard for people to trust. The blockchain appears as people assume it is such a panacea for the bright future of Letters of Credit (L/C). Conventional way of L/C that is a paper-based system in which it is needed to share and validate documents between parties in different countries make L/C mechanism slow, inefficient, and expensive. Involving advanced technology to payment method in international trade, while fantasize that L/C does not require such complex global paper-chase, this situation shall lead to a single system, transparent, end-to-end trade executed quickly between buyer, seller, and their respective banking partners This study found that blockchain will save effort, cost, time, number of document flow between various entity.

Keywords:letter of credit, trade finance, blockchain, smart contract