Container Modification of the Month: March, 2021
The Bitcoin of Shipping Containers
The container shipping industry has an old fashioned system where booking a container on a ship requires no monetary deposit – it relies on trust between the client and shipping company. The problem is that the sector is full of untrustworthy people who do not always ship the container they promised the shipping company they would. This is estimated to cost shipping lines $23 billion US every year.
The solution in the eyes of a Hong Kong based cryptocurrency company called 300 Cubits is for cryptocurrency coins to be put on the table when a contract is agreed. When either party – shipping line or customer – pulls out of the deal, the loser in the contract gets all the money on the table. Over this blog we will break this down into digestible chunks and help you assess whether this new system may work.
Open ledger
One key facet of the blockchain is that the details of each participant of a transaction is recorded not only in the contract that they possess but in every transaction that takes place from that instant across the whole of that cryptocurrency.
This means that in order to renege on a contract and to lie your way out of it you would have to possess 51% of all the coins of that cryptocurrency and to change the details of the transaction across those coins you possess. The alternative is to have more computing power than exists on the planet to break into all the coins in that currency and to change the contract on all 51% as the transactions are encrypted so heavily. In short, everyone has to be honest as it is impossible to forge or fake.
Smart contracts
The founders of the Ethereum (ETH) cryptocurrency developed cryptocurrency beyond a simple currency and into a system called ‘Smart Contracts’. Read about this here.
According to Investopedia, “Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. They render transactions traceable, transparent, and irreversible.”
Each TEU coin is both a deposit and a contract between shipper and shipping line. If you’re still with us (and not too confused as we charge into the brain boggling world of cryptocurrency!) you will see that the 300 Cubits coin is designed to force honesty into a world of dishonesty that has lost the shipping industry hundreds if not thousands of billions of dollars over the years.
TEU coins
The TEU coins both record the promise from the customer as a contract that they will have a container on the dock for the shipping line to take to sea and is a form of tradeable currency that, should either party renege, can be sold on for hard cash by the party that loses out.
A slightly more complicated issue is that a large number of shipping lines and their clients are being given millions of TEU coins to prime the market. At the same time a ‘secondary market’ is being set up to trade those coins for cash so the TEU coins have value. In theory the losing party in a reneged contract can sell the TEUs they gain and some of the losses made by shipping lines can be regained through the sale.
Will this work?
The TEU coin has been around for around a year now. But it hasn’t had the market penetration that its founders may have wished for.
The tech magazine Hacked doesn’t seem to believe that the TEU coin will survive. Here’s their viewpoint as at August 2017:
“Governments and corporations which benefit from negotiable contracts, i.e. whoever is on the take in the shipping industry. Like as not, the self-same people are also at the helm of a few of the companies being targeted by this disruption. While shipping customers might see this idea as totally revolutionary, and a few Hong Kong-based veterans might have a great solution they’re getting fully behind, what you’re really asking for is the whole pie. Use of the TEU token is going to be dependent on companies making use of it – being willing to sign immutable contracts, implementing technology to ensure them, and so forth. Problematic to say the least. From a technological standpoint, sounds like fun. From an investor’s standpoint, sounds like either unicorn or minotaur.”
In short, where the shipping lines may flock to this as the biggest losers in this game, the biggest winners in the game of dishonesty need to come to the table as well. In Hacked’s viewpoint, this will be a case of a leopard changing its spots, and a world where dishonest players who win starting to become honest at a loss to themselves!
Gateway Container Sales
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