By Michael Kuchar – Once touted as a bubble bound to burst, not only have cryptocurrencies managed to prove this notion wrong, but have also widened their horizon to several sectors of business. Cryptocurrencies and their underlying blockchain technology find application in Travel, Hospitality, Health, and the Energy sector, among other avenues of business.

That being said, cryptocurrencies have the potential to reshape oil trade altogether – How exactly though? Read on to find out, and learn much more.

How Cryptocurrencies are reshaping Oil Trade

Inventory management in today’s date, witnesses several outdated processes. While some organizations have moved to better, and more efficient inventory management techniques, several others persist with outdated techniques. Using blockchain technology in due course of inventory management, could help oil companies manage possible infiltration, process reporting and tracking, decentralization, and data accuracy, among other potential uses.

While inventory management is one of the ways oil companies are, and should be using blockchain technology, there are several other potential uses of cryptocurrencies, and their underlying technology. Smart contracts could be a fascinating proposition, when it comes to oil trade. Given the sheer size of the industry, drawing up, and following up with contracts has always been an issue with contractors. The use of smart contracts in oil trade could be a God-sent for all involved parties.

Smart contracts could be drawn up between all involved parties, and each involved party would receive their share of a deal, in due accordance to the conditions stated in the smart contract. None of the involved parties would have to bother about non-compliance, as the smart contract/contract would ensure that either all parties receive their due, as per the specified date, or neither party receives their due, if any party defaults, when it comes to providing their intended service.

According to bitcoin profit review 2020, the potential of an oil-backed cryptocurrency is enormous. While there are already some oil-backed cryptocurrencies in circulation, at the time of writing, like OilCoin, and Bilur Energy, among others, these cryptocurrencies lack state support. The launch of a widespread, and acceptable oil-backed cryptocurrency could, and should see stability of (its) price, given the relative stability and volume of the market at this point of time.

The use of smart contracts would eliminate the slowness of execution of some facets of trade, and eradicate the necessity to pay a broker as well. It would also lead to greater transparency, and compliance, as all parties will be affected, if any party taking part in a transaction defaults, when it comes to providing the service they are hired/sought after to offer. Crude oil is one of the most exported products in the world, and tokenizing barrels of oil, held in reserve, would only give credibility to a token, thereby enhancing its stability. While Russia was planning on launching an oil-backed cryptocurrency of their own in 2019, called Neft-Coin, there is no news of the same yet. We should see significant developments with respect to oil-backed cryptocurrencies in the near future.

Conclusion on How Cryptocurrencies are reshaping the Oil Trade

As is the case with all new forms of technologies, blockchain technology and cryptocurrencies cannot be expected to revolutionize the oil industry immediately. Acceptance, and widespread integration takes time, and effort, as people are used to the methods and processes they have been making use of, in due course of their oil trading career.

As has been mentioned in due course of this article, there are several applications of blockchain technology, and cryptocurrencies, when it comes to reshaping the present, and the future of oil trade. Widespread acceptance of cryptocurrencies as a whole, will only see this process speed up over time.

About the Author:

Michael is an experienced financial trader using Forex, Commodities and Cryptocurrencies. In addition to trading, he runs businesses, trains traders and develops trading technology products. His other passions are boxing and traveling.