Benefits of blockchain applications over current real-world processes

The risks inherent in transferring goods or making payments in the absence of safeguards (such as a trusted mediator) inspired the involvement of banks and led to the creation of the letter of credit and bill of lading. A consequence of these processes was not just additional cost (banks charge commission to issue letters of credit) or additional overhead. Applying and waiting for export licenses to be awarded also increases the turnaround time. In an ideal trade scenario, only the process of preparing and shipping the goods would take time. Recently, the adoption of SWIFT messaging over manual communication has made the document application and collection processes more efficient, but it has not fundamentally changed the game. A blockchain, on the other hand, with its (almost) instantaneous transaction commitments and assurance guarantees, opens possibilities that did not previously exist.

As an example, the one variation we introduced in our use case was payment by installments, which cannot be implemented in the legacy framework because there is no guaranteed way of knowing and sharing information about a shipment's progress. Such a variation would be deemed too risky in this case, which is why payments are linked purely to documentary evidence. By getting all participants in a trade agreement on a single blockchain implementing a common smart contract, we can provide a single shared source of truth that will minimize risk and simultaneously increase accountability.

In subsequent chapters, we will demonstrate in detail how our use case is implemented on the Hyperledger Fabric and Composer platforms. The reader will be able to appreciate both the simplicity and elegance of the implementation, which can then be used as a guide for other applications to revamp their archaic processes using this exciting new technology. However, before jumping into the code, we will look at the design of a Hyperledger network and we will set up our development environment.