Oil and gas production, transportation, processing, and distribution are all global activities that involve many international partners. Platforms forinternational funds transfer via bitcoin  offer numerous trading options and help you start the bitcoin trading journey without any dedicated training.   In today’s interconnected world, significant efficiencies can be created by integrating paper-based systems with less complex automated procure-to-pay processes.

However, when it comes to upstream petroleum industry players like oil producers, the end customer of processed products or raw materials such as crude oil and natural gas liquids (NGLs), the solution is more complicated because of the need for manual data entry into paper-based documentation systems at every point in the transaction process.

Blockchain technology is being introduced to improve efficiency and increase trust between parties in transactions.The advantages of data being distributed across the network are improved security and fault tolerance in case any single node fails. Blockchain technology was initially developed to support the cryptocurrency Bitcoin but has many other applications, such as smart contracts or supply chain management.

How does blockchain work?

The technology works like a digital ledger: every user transaction is recorded in a shared database that anyone can inspect. But unlike traditional databases, blockchains are decentralized: there is no central copy that could be tampered with, and every user can maintain their copy of the information.

Bitcoin paved the way for blockchain in decentralized finance and made people realize its potential. In addition, Bitcoin plays an essential role in the oil and gas industry as it revolutionizes the total means of international trade in this field.

Perks:

1. Decreasechallenging cashphaseperiod:

Due to the long-time taken for the cash cycle to occur, it becomes inefficient for the upstream petroleum industry companies, leading to a gradual reduction in cash flow at a particular stage.

2. Improve accounting efficiency:

Companies can significantly reduce the transaction costs and settlement times for removing payments using blockchain technology, principally by reducing bank fees and removing foreign exchange costs.

3. Reduce the number of parties involved in the transaction process:

There are many intermediaries involved in the transaction processes, which increases the total time taken to complete a successful transaction and increases transaction costs significantly. The availability of blockchain will help minimize these intermediaries hence making transactions faster and cheaper. It also increases transparency amongst stakeholders involved in any transaction.

4. Reduction in operational costs:

Blockchain can cut operational costs due to the reduction of intermediaries and the elimination of paper-based documentation through intelligent contracts. For example, all parties involved in a transaction can view all documents or data at any time, and there would be no need for any proof of purchase from suppliers.

5. Increase trust levels between trading partners:

Blockchain technology provides an excellent way to verify transactions without relying on a third party like a bank or government. In addition, due to the presence of cryptographic keys in every transaction, trading partners are sure that data cannot be manipulated or changed by any party involved, nor can it be accessed by anyone else except those involved in the transaction itself.

Different Applications of blockchain and bitcoin:

In the oil and gas industry, blockchain technology has started to be applied in many different applications. The use of blockchain will bring transparency and security in many areas of operations and transactions.

The transport sector:

In the transport sector, blockchain technology can help manage and track a chain of assets involved in a shipping deal, including shipping containers filled with goods or freight cars loaded with supplies.

The logistics sector’s supply chain:

Logistics is another massive area at risk from Blockchain technology’s impact. The tech giant IBM recently announced it had struck a big deal with Maersk for proof-of-concept blockchain systems for the supply chain management.

Features of blockchain that can help in the oil and gas industry:

  1. Blockchain can help to identify the process chain and improve efficiency by using smart contract.
  2. Blockchain can reduce transaction costs, improve dispute resolution, and keep track of assets.
  3. Since blockchain has central data management, the companies could update transaction records in real time without errors and service disruption.
  4. Blockchain is a secure way to track physical assets in the supply chain since it can provide unique identification and reduce fraud and conflict of interest issues like double payment.
  5. Blockchain eliminates double payment by eliminating the need for third-party verification (such as a bank).

Closure:

Blockchain is the technology of the future and is already applied in many different industries. The oil and gas industry can also benefit from it by eliminating intermediaries, reducing costs, increasing transaction speed, etc. In an industry that has always been slow to adopt new technologies, it’s about time that blockchain is given a chance to deliver the benefits oil and gas companies need to go with the flow of the 21st-century global economy.

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