ENCOCOIN UNIQUE USE CASE FOR INTERNATIONAL ECONOMY AND TRADE
(An address delivered to a group of international blockchain investors at a recent webinar)
By Blackwells
Conventionally letter of credits and bank guarantees are financial instruments issued by banks and used to make payments internationally between importers and exporters.
There are just 4 parties:
A. Issuing Bank.
B. Receiving Bank.
C. Importer ( Buyer).
D. Exporter (Seller).
An importer here in the United States wanting to import goods from China must normally in the current banking system do the following:
1. Receive proforma invoice from his exporter in Japan.
2. Proceed to his bank in the US to issue either a letter of credit or bank guarantee to the exporter's (seller) bank guaranteeing availability of funds to pay for the import and irrevocably assuring the seller of payment should he ship the consignments to him.
3. Importer's bank issues the payment instrument on behalf of the importer(buyer)to the exporter's bank in favor of the seller.
4. Seller's bank in Japan receives the payment instrument and notifies seller of the receipt.
5. Seller(exporter) applies for a credit line from his bank based using the instrument as collateral in case he or she doesn't have the funds to effect the shipment completely.
6. Seller's bank releases funds to seller at an agreed interest rate.
7. Seller process and ships the consignment to the importer in the US. He confirms to buyer and sends copies of documents to the importer.
8. Importer receives the shipping documents such as the bill of laden, Cert of QnQ, etc
9. Claims for payments are made depending on the contract terms between the parties. There are two major types of contracts involved in imports and exports.
a) CIF(Cost, insurance and freight): The exporter pays for the cost, insurance of the consignment and the shipping cost(freight). The importer bears no obligation after issuance of the payment instrument and he does not take ownership of the goods till they have safely arrived at his own location (destination port). Exporter (seller) cannot discount payment till the goods have safely arrived the buyer's location and checked to be the right quantity and quality specification as agreed in the contract and terms of payment.
b) FOB(Free On Board) contract:
In this type, the importer bears the risk. He nominates a shipping carrier to receive the consignment on his behalf at the Port of shipment in the seller's home country(Port of Origin). He bears the cost of freight and insurance). All that is required of seller(exporter) is to deliver the consignment to the designated carrier nominated by the importer. Once delivered, seller immediately discounts the payment instrument into cash.
All of the above processes takes time and very difficult offline paper works and banking procedures.
The Encocoin "Integrated Cryptographic" Payment Guarantee(EPG) seeks to solve this international trade problem by implementing cryptographic codes to generate payment guarantee on the Encocoin network to effect instant trading and payment processing.
The following problems shall be solved:
1. Valuable time wasted by seller trying to secure export funding/finance credit from his bank in his home country will no longer have to be, because he can easily use the EPG to crowd source instant credit line on the Encocoin network.
2. Shipment and the instrument can be monitored online real time.
3. EPG ownership can be transferred instantly to any third party by trading it on the Encocoin network.
4. EPG is cross-chain and available on the Ethereum network also.
5. EPG can instantly be discounted in cash into any bank account in the world.
With EPG, no more paper works and bureaucratic delays. All transactions are processed within minutes right on the wallet and distributed on the Encocoin blockchain.
EPG can also be used in same country and city to secure real estates asset sales and purchases.
EPG can be generated by any buyer and advertised on the Encocoin network for any real estate or physical asset purchase from anywhere to anyone at anywhere and at anytime. Interested buyers can trade on any EPG offer within their desired locations.
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