17 Jul TradeFinex — The Future of Funding Infrastructure
Job creation is the fuel for economic growth in both advanced and emerging economies. Because of this, I am a massive fan of technology that creates and leverages opportunities that result in immediate and sustainable job creation, as well as economic development.
The two sectors that create the largest significant employment and sustainable economic impact are:
- Critical infrastructure projects
- Nano, Micro, Small and Medium Enterprises (NMSME)
These sectors require financing of all magnitudes in order to thrive. Access to appropriate funding is the major challenge experienced for both these sectors.
It is forecast that $94 Trillion needs to be invested in global infrastructure projects by 2040”
TradeFinex provides a solution for these financing needs. By using a hybrid blockchain, TradeFinex is creating a global trade and financing marketplace that enables both Infrastructure
Projects and NMSME’s to:
- Globally crowdsource investments — with more competitive rates than what may be available locally
- Reduce costs of financing by using fewer intermediaries
- Increases automation and auditability with Hybrid Blockchain smart contracts
- Increase speed transactions — with practically zero remittance fees
TradeFinex global trade and finance marketplace services three interconnected participants: Beneficiaries; Suppliers and Investors.
Let’s look at these three participants in more detail.
There are two major beneficiaries in TradeFinex marketplace, and they are also the largest drivers of employment and sustainable economic growth:
The role of infrastructure is to provide essential services with long lifespans to communities and industry. Critical infrastructure projects include water, health, education, transportation networks, energy, wastewater-treatment plants to name a few. Infrastructure projects are central to sustainable and growing economic development and also provide immediate and significant employment.
Infrastructure projects, by their nature, involve significant long-term investment — ranging from multi-million-dollar solar power plants, to billion-dollar budgets for airports, roads and other major projects.
Governments are the largest beneficiary that seeks investment in infrastructure projects.
Chris Heathcote forecasts that global infrastructure investment will require $94 trillion by 2040 — which can be found in his article published by The World Bank “Forecasting infrastructure investment needs for 50 countries, 7 sectors through to 2040”.
One of the greatest challenges in solving this need for global infrastructure investment is access to global finance on acceptable terms and with transparency.
Nano, Micro, Small and Medium Enterprises (NMSME)
NMSME represents the largest employers and contributors to job creation in every economy in the world.
Access to funding for NMSME’s continues to be complex, expensive and difficult. The quantum of obstacles to funding increase significantly when enterprises are located outside of the developed world and highly urbanised cities.
TradeFinex provides NMSME with a global marketplace to increase access to funding with transparency and for all parties.
Suppliers are the companies that provide the products and services to the beneficiaries.
In some instances, the supplier may also be sourcing investment directly, or in collaboration with the beneficiary. In many countries it is common practice for suppliers to seek co-financing for the development and management of infrastructure projects.
Global infrastructure and NMSME investment opportunities are sought from Governments, Sovereign Funds, Private Equity, Venture Capital, Financial Institutions, etc. They wish to have access to a broader range of global investment opportunities with more transparency, less intermediaries, and lower investment/transaction-related costs.
To demonstrate how TradeFinex would be used to crowdsource finance for a solar power plant and integrating IoT to enable smart contracts you can view this short video here.
Why Hybrid Blockchain is the backbone for TradeFinex
Participants that are invited to join TradeFinex have permissioned-access to review infrastructure projects and NMSME commercial opportunities on a hybrid blockchain — protected by enterprise-grade security and smart contracts to help facilitate transactions.
XinFin’s Hybrid Blockchain offers the benefits of both a private blockchain and public blockchain. It is built on Ethereum and, a fork of Quorum. Quorum is an enterprise-focused version of Ethereum developed by J.P. Morgan.
The private blockchain offers participants an invitation-only/permissioned environment with data-security, privacy, higher transaction speeds with the ability to host multiple private sub-networks within the network.
The public blockchain provides a decentralised verification of transactions providing transparency, immutability and a trustless environment. Additionally, in approved jurisdictions, cross-border settlements can be made using XinFin’s underlying XDC tokens.
Smart contracts will enable XinFin Hybrid Blockchain to be interoperable with other public chains. This is important to provide a transparent and immutable payment mechanism on TradeFinex.
For more information on XinFin Hybrid Blockchain, check out Hybrid Blockchain — the best of both chains.
Transparency is the Future
XinFin Hybrid blockchain enables private, transparent fund allocation and expenditure. This transparency offers significant economic benefit to all parties.
Like trust, transparency should be a prerequisite to good business practice, and it is becoming a bigger trend every year. Currently, transparency is a competitive advantage in the world of business simply because transparency allows companies to build a higher degree of trust with the public eye. Blockchain is pushing this degree even higher.
In an article published by Enrique Aldaz-Carrol on The World Bank website found that using cryptocurrencies and blockchain for tracking infrastructure projects would save up to $2 trillion annually, or 2% of global GDP.
“If a government decides to construct a road, it can now track how each dollar is being spent, identify all the users of the funds, and ensure that only those authorized to spend money do so on originally intended expenses within the permitted time. Fraud and corruption investigations that now take on average 15 months could be performed at the touch of a button and at a fraction of the cost. More importantly, this type of financial tracking would be a deterrent for bribes in the public sector, which amount to between $1.5 trillion and $2 trillion annually, roughly 2 per cent of global GDP. This, in turn, would increase development impact. All it would take is adopting a cryptocurrency and using blockchain software.”
Partnerships & Pilots
Partnerships and pilots are the lifeblood of all technology projects and blockchain is no exception. Pilots provide all parties with a real use case and all the learnings that come with it.
Pilots usually take two forms:
1. Replacing existing processes and relationships with the objective of providing more transparency, remove unnecessary intermediaries and reduce related costs
2. Create new commercial opportunities
One of the most significant benefits of a partnership is that it allows blockchain projects the opportunity to run multiple pilots, for multiple use cases — with the overall objective of having that partner either become a supplier, a customer, or provide access to customers.
TradeFinex has partnered with several key industry leaders that provide access to their members to pilot and participate. In regard to TradeFinex there are two partners in particular worth noting are OMFIFF, and ASSOCHAM
XinFin became the blockchain partner with The Official Monetary and Financial Institutions Forum (OMFIF) for Global Public Investors (GPI) 2018 launch.
OMFIF is a global think tank for central banking, economic policy and public investment relating to central banks, sovereign funds, pension funds, regulators and treasuries, also known as Global Public Investors (GPI), with investable assets of $33.8 trillion.
Their 750 GPI are reviewing TradeFinex as both a resource to identify and assess global infrastructure investment opportunities, as well as a mechanism to provide transparency around the expenditure of their investments.
In early 2018, TradeFinex was launched at the 2nd Global Summit on P2P Digital Asset System Summit in Delhi, India. Here they announced their partnership with India’s largest trade organization, ASSOCHAM.
This partnership provides ASSOCHAM’s 450,000 members access to the TradeFinex platform.
Currently, several of their members are piloting TradeFinex.
TradeFinex = Jobs + Economic Development
In the four months since XinFin concluded their ICO, XinFin has successfully launched TradeFinex in beta and established representation across APAC, North America, South America, Europe and Africa.
The XinFin team is in discussions with all participant groups to onboard them to TradeFinex, and are expected to launch live TradeFinex platform with global case-studies in the September/October 2018.
It is important to note that infrastructure projects in particular, where governments are the beneficiaries, are complex projects.
Therefore, they take longer to secure approvals before being announced to the public.