Will Etheruem Solve This?

Question

I read an article recently about a blueberry producer in Chile selling his blueberries to a large wholesaler in Scotland. The transaction (for 4 million USD) went through Wells Fargo. Wells Fargo delayed the transaction because a bank employee decided selling blueberries was not legitimate. Lots of time and money was wasted by the blueberry seller. Could the use of Ethereum instead of US bank routing prevent this kind of problem? I know you all are probably busy with other things but being new to crypto, could someone please explain exactly how the two parties could use Ethereum to transact their sales contract instead of having to transact through a US bank? Thanks in advance.

Answer 1

I'm a buyer in England. I want to buy blueberries from someone in Chile. I send money to her bank. Until the blueberries arrive and I confirm that they are fresh, not damaged, I'm worried. If there's a problem, will I get my money back? When the blueberries arrive, I'm happy.

Or, I send a purchase order to the seller, he sends the blueberries and an invoice. When I get the blueberries, I pay the invoice. Until the money clears in his bank, he's worried. Once it clears, he's happy.

With the blockchain, everything can work exactly the same way, but some of the "worry" can be alleviated. Perhaps you, prior to the sale, you both enter into a smart contract where you pay up front half the price of the blueberries, and then, once the blueberries arrive, you release the remaining amount (if they arrive in good order). Of course, there are a million variations because it's all programmable, but you get the idea.

The banks can be removed because the 'value transfer' function can be handled by the smart contract. Any fee the banks might have taken is eliminated. So...you can potentially lower the risk/concern during the entire process and do it cheaper at the same time.

Answer 2

Ethereum could have potentially solved this (or, for certain definitions of "this", definitely).

If your definition of the problem is transferring USD $4M's worth of value between two people without having to worry about your transaction being incorrectly flagged, then the answer is yes. If the wholesaler has USD $4M+ of Ethereum, then the wholesaler can send the corresponding number of ether to the Chilean producer by signing one or more Ethereum transactions that authorizes the transfer from the appropriate account(s) to the Chilean producer's Ethereum account. End of story.

But suppose the wholesaler does not have ether or the producer needs US dollars or Chilean pesos. If your definition of the problem encompasses turning government-issued fiat into code-issued fiat and/or back again, then the answer is slightly more complicated.

Given the quantities involved, one would likely want to use an exchange of some sort. In Scotland, one can purchase cryptocurrencies using the standard banking system to put money into an exchange or to buy from a purveyor of cryptocurrencies; the wholesaler can acquire Ethereum in that manner. The question is then whether this transaction would be blocked by a bank.

Similarly, banks in Chile are required to allow transactions with cryptocurrency exchanges. So the producer can then sell the ether that has been received from the wholesaler and get government-issued fiat at the end of the transaction.

Edit: Thomas Jay Rush's answer above focuses on a a different aspect from the answer above -- the contractual portion. While a smart contract isn't required, it does help ensure that the seller-of-goods can be certain that the purchaser has and will have sufficient funds for the transaction. On the downside, this may create cash-flow issues for the purchaser. One can, without a smart contract, pay in part up front and the remainder at a later date.