However, over time, due to massive globalization of trade and the explosion of the financial industry, the number of financial institutions involved in the letter of credit process has exploded! Nowadays, there could be over 20 intermediary financial institutions involved in the process. This requires coordination of many people and systems, resulting in excessive time, cost, and risk throughout the process for both merchants and banks alike.
The promise of blockchain is to provide a logically singular but physically distributed system that provides a platform for a low-friction letter of credit process. The characteristics of such a system would include greater transparency, timeliness, and automation (resulting in lower cost), and new features such as incremental payment.