Goods swapping is one of the ancient and most basic forms of trade. But over time, people became less used to swapping and bartering in preference of fixed monetary exchanges. From a consumer perspective, the sharing economy has reintroduced swapping into the mainstream.
While some major brands like Uber and Airbnb still embrace cash transactions, other platforms have emerged that enable users to interact directly and exchange goods and services. But business bartering or swapping goods and services in the digital age experience a myriad of challenges.
How do Location Swaps Work?
As we have been explaining in most of our blogs, you can tokenize real-world assets using blockchain. Let us assume two parties taking part in a global marketplace for the trade of gold bars, using blockchain tokens that represent the gold bars as an underlying asset. The digital tokens give the holder the right to claim the underlying asset in the location where the asset is physically located.
One party can be in Paris, but they own tokens for gold bars in New York City. This individual may require their bars to be in Paris to use them for manufacturing jewelry. The individual can achieve this by visiting a blockchain exchange and offer their gold bar tokens for the equivalent bars located in Paris.
The other party may be based in New York City, but they own tokens for gold bars in Paris. The two individuals can connect on the marketplace and exchange their digital assets, fulfilling their desires.
After completing the swap, the individual in Paris will have tokens representing gold bars in Zurich, which they can use to take physical custody of the gold. Likewise, the individual in New York now has tokens for gold in their location. They can claim the tangible asset or trade the tokens to generate more profits.
The Benefits of Location Swaps
For a business in need of raw materials for manufacturing and production purposes, location swaps offer significant cost savings. They minimize shipping and import expenses since the suppliers are already present where the raw materials are required. Besides, a business can benefit from the advantages presented by procurement based on geographical arbitrage.
The business takes several weeks to months to make supplies. This creates meaningful planning that consumes time and resources. Shipping delays may hinder production, further leading to loss of sales or procuring goods elsewhere, suffering more costs.
Trust and Transparency
Since every blockchain token contains an underlying asset with an attributed value, business handling location swaps can easily verify that each party owns equal value assets before taking part in any trade. This raises the mutual trust beyond that of a traditional bartering system.
Generally, asset-backed tokens present a massive potential in the business world. Location swaps allow parties to transact with trust, transparency, and security. These advantages imply that the world economy will soon experience the return of bartering, generating new and far more effective methods of procuring goods.
Tokenizer Blockchain Banking Platform
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