300cubits, a new Hong Kong-based blockchain initative, is looking to fundamentally change the container shipping industry through the creation of a de facto industry focused cryto currency called TEU.
The company announced on Tuesday it will conduct its initial token sale of TEU on August 16.
TEU is an ERC20 compliant token distributed on the Ethereum network and will be tradable on various crypto currency exchanges globally.
Johnson Leung, co-founder of 300cubits, believes a booking deposit in the form of crypto currency is the solution to one of the biggest pain points in the container shipping industry – trust or the lack thereof between carriers and shippers.
Leung has 20 years’ experience split between shipping and investment banking. For the past few years, he has seen some of the largest bankruptcies in the shipping industry.
“The root of the problems, in our view and admitted by many industry executives, is that the industry is unable to execute agreements in its daily operations; and forecast for future business cycles or hedge the cyclicality nature of the industry,” Leung says.
According to Leung, the TEU token as a currency for container shipping allows the industry to reconstruct discipline for agreements. In the short term, the TEU tokens could be used as a booking deposit to reduce the so called ‘ghost bookings’ or ‘rollings’. Long term, Leung sees TEU tokens providing better forecast and hedging tools against the volatility of the industry cycles.
“As booking deposits, the TEU tokens’ value will naturally be linked to the value of actual freight rates. Hence, the trading of the TEU tokens will become the leading indicator for freight rates, serving as much like a peer-to-peer crowd prediction platform for the container shipping industry,” Leung explains.
Leung sees great potential for the development of blockchain technology in shipping and compares it to the internet 25 years ago.
“Blockchain is full of potential. The attributes of blockchain such as immutable agreement and past transaction records; trust-free in the sense that we no longer need trust to do business; and the system security that is allowed by a decentralised environment all sounds like music to my ears after following shipping for the past 20 years. But these are just what we have barely found out in a new technology,” Leung says.
Currently legality on the crypto currencies is still ambiguous but Leung does not see any legal concerns in use of TEU tokens.
“The Hong Kong Monetary Authority considers crypto currencies as commodities. So the use of crypto currencies in a similar function as money is similar to bartering. We however believe better defined legal framework in this space would allow legitimate blockchain businesses to thrive,” Leung maintains.
“The Ethereum is by nature a decentralised system. Anyone will have the option to develop an API (application programming interface) to connect their existing user interface with Ethereum to make use of the TEU tokens,” Leung concludes.