Location Swap

Understanding Location Swap

Location Swap is a term used to describe the process of exchanging asset-backed tokens that represent physical goods but are stored in different locations. These tokens are created on the blockchain and serve as proof of ownership for real-world assets. They contain detailed information about the characteristics, size, and current storage location of the goods.

During a location swap, the token holder simply changes the physical location from which they can claim the asset. It’s important to note that the actual goods themselves are not affected by the swap; they remain in their original storage locations. Only the ownership of the token, which represents the right to the assets, is transferred.

The concept of location swap is particularly relevant in today’s global economy as it can help reduce transportation costs and prevent product shortages. By utilizing goods that are already available at the desired location but not immediately needed by their current owners, location swaps can optimize the distribution of assets.

The blockage of the Suez Canal in 2021 highlighted the interconnectedness and dependence on global supply chains. In a token-based economy, location swaps can be used to efficiently manage goods that are already stored in warehouses but not immediately required. By exchanging these goods with those in transit at a premium, both parties involved in the location swap can benefit. If the premium is lower than the risk of running out of goods, such as raw materials in a production line, it becomes a profitable solution.

Author:

Johannes Schweifer is the CEO of CoreLedger, a company that enables businesses of all sizes to leverage the advantages of blockchain technology. Schweifer has co-founded multiple blockchain start-ups, including Bitcoin Suisse. With a master’s degree in Chemistry and a PhD in distributed computing and quantum chemistry, he is a dedicated problem-solver.