A Ukrainian shipping company based in Odessa, a port city, called Varamar Ltd. plans on exploring the advantages and disadvantages of accepting bitcoin transactions to enable frictionless global trade and investment, especially with those countries that have sanctions placed on them.
Firstly, adopting bitcoin as a method of payment will help streamline the process of paperwork and reduce the costs of international fees for both parties involved in the transaction. Additionally, the use of the blockchain network allows customers to be reached in countries levied with sanctions and to be included in the global trade. For instance, one Swedish investment firm has used bitcoin in such a way to gain exposure to Iran’s growing stock market.
According to Alexander Varvarenko, the founder of Varamar Ltd., negotiations for the first bitcoin transaction is underway with a client, with the cryptocurrency’s potential to reduce transaction fees, paperwork and increase business deals with those countries that would otherwise be exempt. Varvarenko said:
“Paperwork for transactions is a complicated issue with banks, and bitcoin payments will help solve that by being faster. It could also help solve payment problems in countries like Pakistan, Russia, Sudan, Yemen, and Qatar, which have safe companies but are victims of sanctions being imposed against their governments.”
While the idea of bitcoin creating a solution for those countries with trading restrictions is commendable, legislative breaches may lead to further repercussions which need to be taken into account.
Varamar Ltd. is not the only shipping company looking to adapt to the technological advances such as using bitcoin as a payment method. The Russian broker Interchart LLC is working on establishing bitcoin payment methods for those customers that are excluded from using traditional payment methods such bank transfers.
Ivan Vikoulov, managing partner at Quorum Capital, a Gibraltar-based grain trader revealed a collaboration with Interchart LLC to create a bitcoin payment systems, but admitted, “We still have to do our homework on this as it’s a new way of payments.”
This project aims to make the conversion of bitcoin into dollars much simpler by working with banks and bitcoin wallet companies. Vikoulov said “The industry has been under stress as majority of vessels are registered offshore, and many vessel owners have banks in the Baltics, where there is a squeeze to send and receive payments in dollars.”
The shipping sector is increasingly involved in experimenting with bitcoin and blockchain technology to improve trade finance and supply chain transactions. While the use of bitcoin has a positive impact on the shipping industry, it still has a relatively small number of transactions. However, this is likely to change as bitcoin matures and delivers scaling solutions.
Varamar Ltd.’s project is showing that through the use of decentralized technology, the international shipping industry is likely to see significant efficiency gains and may signal commodities will begin to be transacted for the cryptocurrency.