The use of alternative currencies has hit the ground running with the shipping industry. The proposed currency is a Bitcoin payment system. PRIME Token has been developed as a cryptocurrency that is specifically configured for the shipping industry. The maiden voyage for the new system occurred on the 1st of December 2017 with the first invoice of this form issued to ship wheat from Russia to Turkey.
The brains behind this initiative is the Prime Shipping Foundation which is run on a project basis on behalf of the parent company Quorum Capital. Another partner in this venture is InterChart LLC, a global shipper broker. The underlying objective of the scheme is to provide an easy, safe and convenient payment processing framework that operates on a two-way channel. The resultant funds can be taken in and out of the cryptocurrency pool according to the needs of the parties to the agreement.
Given the fact that PRIME Token is a very new development, there will be many in the shipping industry that do not really understand what it is all about. That is why it is a good idea to first explain briefly what it all means and how it works.
What is PRIME Token?
This is really the shipping version of Bitcoin. Its conceptualization is that of a means of transferring value without using the old traditional currencies such as the US Dollar. PRIME Token has the advantage of being fully compatible with the e-Format meaning that it is even easier to manage, store and trace. The Initial Coin Offering (ICO) is scheduled for 2018. Some of the potential beneficiaries include all the main players within the shipping industry including:
- Ship Owners
- Ship Chartering Agencies
- Freight Operating Companies
- Brokers and Brokerage Entities
- Shipping Agencies
- Bunker Suppliers
The usage of PRIME Token will be quite wide and will incorporate virtually all the transactions that typically happen in a shipping context. After full certification by the Bitcoin group, the new token will officially act as a linkage between traditional payment systems and the modern era of e-Transactions.
One of the advantages of PRIME Token is the possibility that two-way conversions with fiat money can happen in real time without the need to pay excessive fees and fines. This will bring not only convenience to the shipping industry but will also indirectly reduce operating costs. For an industry that is already facing a tough time, this is welcome news indeed.
The currency has the additional advantage of being able to cross jurisdictions easily without going through all the hoops and loops that are associated with traditional banking. Bitcoin has been particularly active when liaising with traditional financial institutions with a view to creating a framework that eventually leads to a full e-payment service. The crypto-assets have been licensed in Gibraltar which is known to take a very progressive view of these developments.
Industry insiders such as Ivan Vikulov of the foundation are very optimistic about the eventual union of the two types of currency. These may be comforting words for those that are looking forward to alternative payment systems but it is also worth noting that there will be some disruption as a consequence of PRIME Token. That often means winners and losers in the game.
How Will it Disrupt the Shipping Industry?
The very first disruption is the breakdown of the monopoly of traditional banking. That might mean that certain international restrictions against money laundering and tax evasion may also be at risk. Bitcoin does not have an unblemished record when it comes to dealing with the issues of international and national law. It is therefore not beyond the realms of possibility to consider the risk that PRIME Token may become a means for evading the old rules.
The shipping industry is worth trillions of dollars and affects the economies of the biggest economic powerhouses in the world today. It is also a very old industry in as far as it tends to retain its rituals and procedures for a long time. That then creates a potential conflict between the conservation of shipping as we know it and the new payment system that calls for increased flexibility across the board. Of course, there are certain systemic operational issues such as time-delays which PRIME Token might deal with, at the very least in the short run.
De-linking the US dollar from many shipping transactions may not be acceptable to the Trump Administration or indeed for any future US administrations. PRIME Token has the benefit of operating within a complex ecosystem with instantaneous feedback loops which will increase the attention on the needs of the customer. The ultimate objective is to ensure that there are virtually no losses during the shifts from crypto to fiat currency. To that end, many are looking to the middle of 2018 when PRIME Token will really kick off.
The PRIME Token ICO: Mid-2018
The middle of 2018 is going to be an exciting time for PRIME Token because that is when the full operations are anticipated. This may include loyalty points and rewards for those industry players that switch to the new currency. There may also be some teething problems that might inspire the shipping industry to think again about the wisdom of fully embracing PRIME Token so quickly.
The fact that many of the cryptocurrencies are mainly based in Asia makes the transition easier for the Asia-USA routes. The middle of 2018 will also provide some hard evidence of whether the shipping industry is continuing to overcome its demons of 2016 and 2017. Many people that would otherwise use air freight may switch to ocean shipping once the payment systems are more conducive. The conclusion is therefore that PRIME Token is a reality and the question is how industry players are able to take advantage of it moving forward.
All shipping companies that want to benefit from the entrance of PRIME Token must be prepared to reconfigure their systems early. That means considering the option of an online platform which can process payments. Because this is a long painstaking process, it makes sense to start the initial steps now. This may be in the form of new websites that are cryptocurrency-enabled.
Others may choose to announce their full embrace of the new payment systems as well as their own initiatives that are designed to make life very easy for the customer. What is not in doubt is the fact that PRIME Token is going to change the shipping industry over the long run. Industry players cannot ignore it unless they want to lose credibility (and by extension customers) in the new age of e-payments.