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Blockchain-based commodity marketplaces come to Nigeria

Nigeria , 29 Aug 2018

Blockchain-based commodity marketplaces come to Nigeria

London and Singapore based startup Binkabi plans to introduce two Blockchain-based commodity marketplaces in Nigeria, to empower farmers in the West African country and eventually across the continent.

Launched last year, Binkabi is developing a protocol for building Blockchain-based commodity marketplaces, powered by BKBi, a membership and discount token.

The company offers two complementary solutions: Barter Block, a proprietary smart bartering mechanism, and BinkabiDEX, a decentralised commodity exchange platform.

"Both of these solutions are built upon Binkabi's commodity tokenisation protocol, whereby physical commodities and processes in the commodity supply chain are tokenised. The protocol also covers commodity standardisation which is deeply needed by supply chain stakeholders," founder Quan Le told ITWeb Africa.

Barter Block is a direct, cost-effective cross-border commodity marketplace that connects end-buyers and end-sellers of agro-commodities across borders, cutting out middlemen. It features a smart bartering mechanism, and uses Blockchain technology to increase transparency.

BinkabiDEX offers a Blockchain-based trading and settlement layer for commodity exchanges, leaving them to focus on business development, order book matching and compliance.

"Commodity exchanges built on Binkabi platform also benefit from a global liquidity pool: an ever-growing group of commodity buyers and sellers and third-party service providers such as banks, insurers, logistics companies, quality inspectors, warehouse providers," Le said.

He added that the platform has been launched to combat issues faced by countries like Nigeria in their ability to trade due to the lack of US dollars, while at farm level high yield and production output were not the guarantee of prosperity.

"In most commodity supply chains, farmers receive only a tiny fraction of the profits generated from the output of their labour. Due to massive information asymmetry between geographies, most international trade is conducted through intermediaries who typically charge between 10 and 30 per cent just to move the goods around," said Le.

"Errors, delays and frauds caused by paperwork are rampant. Without the ability to store, farmers at the harvest season are pressured to sell everything immediately to cover their cost, causing an oversupply of crops that further depresses the prices and giving farmers a poor return on investment. Adding to the volatility of commodity cycles and environment dependency, the highly risky nature of agricultural business turns most banks away from providing financing at all."

The two Blockchain-based platforms are designed to solve these problems. Barter Block enables countries to retain higher share of international revenue of agri-food products, and is being rolled out in partnership with Ecobank and Sterling Bank. At farm level, BinkabiDEX is its solution, allowing commodities to be issued on the Blockchain through tokenising warehouse receipts.

"After that the commodities are traded on a decentralised platform. At any point in time the commodity-backed tokens - what we called commodities on the Blockchain - can be redeemed for actual commodities already stored in accredited warehouse," Le said.

Barter Block has been opened to early adopters for a few weeks, and a few hundred companies, mainly in West Africa and Vietnam, have registered. BinkabiDEX is currently being piloted in Nigeria, with Le saying there has been a lot of excitement from the commodity sector and blockchain enthusiasts.

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