Trade finance embraces the art of the NFT
Proponents of the technology have described non-fungible tokens as a unique opportunity to establish ownership of specific assets across the trade finance spectrum. Are they right?
In September, XDC Network and Tradeteq launched what they described as the world’s first trade finance-based NFT transaction with invoice finance company Accelerated Payments as the asset originator.
As a unique unit of data or token stored on the blockchain, a non-fungible token can be used to represent any assets, including trade finance assets. To ensure a secure migration of these assets from an off-chain product to an on-chain token, Tradeteq and XinFin partnered with a traditional off-chain asset custodian as well as a digital-asset custodian.
“A token-based, non-fungible financial instrument focuses on ownership and contract specifics, and transforms paper-based contracts typically held by relevant investors incorporating expensive legal frameworks/compartments with no version control – or dubious signature pages – into a cloud-based digital blockchain format that is verifiable, tamper proof, shareable and cost effective,” says Ian Duffy, chief executive of Accelerated Payments.
An NFT can be embedded into a smart contract, giving that transaction a specific authentication or proof of being genuine, observes Rob Gaskell, founder and partner at Appold, an advisory and investment company in the digital assets sector.