Vakt, a new platform that uses J.P. Morgan’s Quorum blockchain to trade commodities, launched privately to select traders of crude oil last week. Major companies in the field, such as BP, Equinor, Shell, Gunvor, and Mercuria are part of this launch and look to benefit from the blockchain's inherent speed, transparency, and security. Vakt is the world’s first fully operational, enterprise-grade blockchain platform in the commodity trading market.
Although the preliminary launch is limited to Brent Crude, a specific type of low sulfur oil extracted from the North Sea, Vakt’s goal is to widen the platform to all physically traded energy commodities. The company plans to include U.S. crude oil pipelines and refined product barges in Northern Europe as early as Q1 2019.
The platform tracks the trading of oil contracts from the initial trade to the final settlement, enabling instantaneous secure ‘A-Z’ tracking of all the transactions and gets rid of the inefficient system used now that, believe it or not, relies on a combination of fax, email, and phone calls.
"To be great, a trading company needs two things: good technology and speed. By radically streamlining post-trade processes, VAKT offers both. This is a big step for the physical energy trading markets and I see VAKT becoming the industry-standard."
Blockchain’s ability to maintain a distributed ledger that everyone agrees upon allows the companies to trust the data they are given and eliminates a lot of the scrutiny and second-guessing of the current system.
This represents another realization of the blockchain as a way of tracking commodities. J.P. Morgan announced last month that its Quorum blockchain would be used to tokenize gold bars. Vakt plans on syncing up with Komgo, another Quorum-based platform, that aims to allow banks to offer blockchain-based financing solutions to Vakt users. As a result of them both using Quorum, integration between the two will be easy. This strengthens J.P. Morgan’s position in the blockchain-for-enterprises market, and pits them head to head with IBM as the two top dogs. According to a report from Tractica, the global market size will grow from $4.6B in 2018 to $20.3B by 2025.