UK-based global metal trading firm, The London Metal Exchange (LME), the market leader for metal derivatives is backing an initiative to trace metals using blockchain.
LME is encouraging the use of blockchain to increase transparency around its metal operation. Swiss commodities giant Mercuria is a part of this initiative as a leader and banks like Macquarie and ING are also on board.
Aim of the Initiative
Titled “Forcefield,” the blockchain-based initiative will allow the metals industry to counter environmental groups which demand them to have less secrecy on how they work around the global network.
LME chief executive Matt Chamberlain denied confirming anything on the initiative but told the Financial Times (FT), “You know where your metal is, you have proof of your metal, but nobody can see what your metal is and where your metal is.” FT later explained that this initiative would help the industrial consumers to trace the source of their metals and it will also give a secure ownership to metal traders over their assets.
The Expected Benefits
The LME tracks metals like zinc, aluminum and copper which is located in its warehouses and has a global network but a lot more amount of metal is stored and traded outside of the exchange. Also, they have no verified warehouses in China which is the largest consumer of metals that will affect their market and it will be harder for the consumers and traders to be certain about their supply of metals.
This initiative will give the metals industry a strong storage and tracking system and it will also reduce the need to have one controller of the database who can have too much power to handle.