Quote from: bitsurfer2014 on March 12, 2021, 03:34:06 AM

Hmmm... I wonder why they haven't used any commercial letters of credit as a way to both secure their transaction. Anyway this could serve as a lesson to all international traders.

On a side note, I think a digital letters of credit could be implemented in a blockchain as a DeFi platform to cater to international trades though I don't know yet a blockchain project that that offers similar services that functions like a traditional letters of credit.

what you dont realise is while the physical copper might be being transported from a smelting facility to a secure store warehouse at a port
that copper has been passing through a dozen 'options' contracts by wall street day traders.
they are signing over digital ownership. and as long as they dont hold their contracts for too long they dont have to get delivery.

take last year. the oil contracts. wall street was trading them. then demand dropped from actual oil refineries due to covid.
so wall street had no one to sell the contract to.. meaning the oil would have been shipped to wall street and flood the trading floor in oily tar..
so to avoid accepting delivery they panic sold all their contracts to literally anyone willing to take delivery.

now if there was no dip in traders. they could have happily kept trading back and fourth. and the oil would have sat there for longer.

the reason why copper sat there for so long was it was being traded non stop for months.. without being sold to an industry that had physical need.
but when the contracts finally passed to a industry that wanted copper physically. they found the copper had been smuggled and swaped for rock. while at the port.

digital credit or proper credit would not have changed a thing
the problem is that goods should be mined and sold direct to end user industry. not locked in ports for months while its left to be digitally traded on markets