The Commonwealth Bank of Australia and Wells Fargo announced Monday completion of the first major cross-border transaction involving blockchain technology, according to a Reuters report.
Australian cotton trader Brighann Cotton Marketing said it bought a shipment of 88 bales of cotton headed for Qingdao, China, from the U.S. division Brighann Cotton in Texas using blockchain.
The blockchain trade totaled $35,000, Commonwealth Bank told Reuters.
The transaction is groundbreaking for the traditional banking industry, which was wary of blockchain technology at first, especially as it gained notoriety in connection with illegal bitcoin transactions. But several of the world's largest financial institutions have recently been looking into ways to harness the benefits of blockchain as part of a cooperative known as R3.
"Existing trade finance processes are ripe for disruption and this proof of concept demonstrates how companies around the world could benefit from these emerging technologies," Michael Eidel, Commonwealth Bank's executive general manager for cashflow and transaction services, said in a statement.
Blockchain technology helps guarantee information has a timestamp and recorded whenever any change happens, ensuring data can be trusted in real time. Beyond financial applications it is now used for record keeping in a growing number of industries, including education, banking and financial services. DARPA is even looking to fund a project to explore whether blockchain technology could be used to help secure highly sensitive data, nuclear weapons or military satellites.
Commercial blockchain technology is picking up steam in the banking and financial industries, according to IBM, with 15% of banks and 14% of financial market institutions reporting that they plan to implement blockchain solutions in 2017.
Experts say blockchain could prove especially appealing for transaction processing in cross-border trades because they can help companies avoid delays often caused by human involvement in such processes.