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94 Companies Join IBM and Maersk's Blockchain Supply Chain

IBM and shipping giant Maersk have recruited a sturdy crew for their global trade blockchain platform.

Revealed Wednesday, the companies have already signed up more than 90 firms for the platform since it was spun off from Maersk in January. They have also finally given it a name: TradeLens.

Leveraging Maersk’s leviathan-like scale, TradeLens has attracted a wide variety of entities, ranging from dozens of port operators and customs authorities to logistics companies and even rival ocean-going carriers, such as Pacific International Lines, all of whom have been testing the platform.

The pilot stage now complete, TradeLens is available for participation through an early adopter program and is expected to be fully commercially available by the end of this year. 

And to drive home the message that TradeLens is an open and neutral platform, IBM and Maersk have updated their marketing strategy, now describing the project as “joint collaboration” rather than a joint venture.

“At the time of the launch, we wanted to be clear that we were not offering a bespoke Maersk- or IBM-only solution,” Michael White, head of global trade digitization at Maersk, told CoinDesk 

While Maersk and IBM remain the only two shareholders, and both invested in the technology and jointly own the IP, White emphasized it is completely open to ecosystem participants.

“It was never about a joint venture,” he said, although the Maersk press release for the launch described it as such.

But an IBM spokesperson said the original 49/51 percent ownership split will no longer apply under the collaboration model the two are now going to market with, in response to feedback from the industry.

Both IBM and Maersk will sell access to the TradeLens platform. The selling party will contract with the customer and receive all the fees and revenue rather than sharing it with the other partner, the IBM representative added.

This new model allows them to bring the solution to market faster, and be more flexible than the previously planned joint venture model, the spokesperson said.

Common tongue

TradeLens is built on the IBM Blockchain platform, which uses the open source relative of Linux, Hyperledger Fabric, and this presents a possible interplay with other IBM and Hyperledger projects.

“We have architected all of these solutions so that it’s very easy for data to be exchanged between the two different blockchains – take TradeLens and IBM Food Trust for example – if clients were to be inclined,” said Todd Scott, the vice president of global trade at IBM Blockchain.

To help foster this open supply chain ecosystem, TradeLens is pushing its open APIs for shipping as well as work being done with shipping standards bodies such as CEFACT and industry groups such as OpenShipping.org.

“On top of the bedrock of blockchain technology we are working with standards, and also have 125 or so APIs, and we are going to give all that access to the developer community so they can even create additional technologies of their own on top of it, ” said Scott.

However, not everyone will see this as such a great and gregarious invitation to the industry.

“It’s fine for them [IBM and Maersk] to say ‘we are open for everyone to join,’ but all they are really saying is ‘come and use our system,'” said Sean Edwards, chairman of the International Trade and Forfaiting Association.

Edwards, who is also head of legal at Sumitomo Mitsui Banking Corporation Europe, said getting everybody to speak together is not a new problem and the answer, he said, has been to try and create ecosystems like Universal Trade Network (UTN), only they haven’t really got off the ground yet.

Referring to other blockchain solutions aimed specifically at banks to optimize trade finance (which is related to but different than the supply chain processes TradeLens is digitizing), Edwards said the situation may become one where, just as consumers have a multiplicity of passwords and systems that we use, banks and other entities may have to be present on a number of different platforms.

“Either there are common enough standards that all the different underlying technologies can actually speak to each other, or you have initiatives that are so big everybody uses it,” said Edwards, adding:

“I don’t think somebody like Maersk is going to solve that.”

Courting HSBC

And notably, TradeLens is not the only boat in this race.

In addition to the well-established supply chain payments platform TradeShift, which connects over 1.5 million companies across 190 countries, banking giant Citigroup is in stealth with a combined trade finance and supply chain platform which will leverage not only distributed ledger technology (DLT) but also the internet of things (IoT) and artificial intelligence.

Hence, TradeLens is at pains to come across as neutral and therefore appeal to the widest possible audience.

Speaking to potential data privacy concerns for companies that compete with Maersk’s subsidiaries, White said the Maersk side of the collaboration team is a distinct and separate entity with no involvement with the commercial activities of either Maersk Line (the shipping container business) or Damco (the logistics provider).

On top of these Chinese walls, the platform itself features privacy protections, White said. “Sensitive information from other carriers are kept on separate nodes, so Carrier A cannot see Carrier B ‘s information or carrier C’s information,” he said.

Looking ahead, another possible blockchain interoperability play for TradeLens would be some of the trade finance blockchain platforms built on IBM Blockchain and Hyperledger, such as we.trade and Batavia.

Although it’s probably still rather far off in the future, you could imagine an all-encompassing platform, so that if radio frequency identification (RFID) trackers indicate physical proximity to something, a payment can be released or a document signed, or similar.

On the subject of trade finance, IBM said banks were present among the 92 TradeLens pilot partners, but these were not being named. However, CoinDesk learned from a source in the trade finance arena that HSBC has “met with TradeLens a couple of times and agreed to reconnect post-launch.”

And both IBM and Maersk agreed a world of opportunity awaits with regard to bringing trade finance banks, marine insurers and the like on to TradeLens as the platform takes to the waves.

Maersk’s White concluded,

“We have found is there are number of industries and institutions including financial institutions and insurance companies, that are looking to take advantage of this platform.”

Shipping container image via Shutterstock

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IBM-Powered Blockchain Platform Completes First Live Trades Via Five Major Banks

European blockchain trading platform we.trade confirmed it had completed its first live operations today, July 3, involving twenty companies and five major banks.

The blockchain platform, which claims to provide a “more efficient and cost effective way” for banks and businesses to trade worldwide, uses IBM’s Blockchain Platform, powered by Hyperledger Fabric.

Part of various blockchain solutions currently under appraisal by the banking sector, the platform counts Deutsche Bank, HSBC, KBC, Natixis, Nordea, Rabobank, Santander, Société Générale and UniCredit as its founding members.

Together, according to Dutch institution Rabobank, the collaboration highlights the banks’ ability to “innovate.”

“These trade(s) represents a great example of traditional banks innovating to meet their clients’ needs by working with we.trade,” the bank’s chief digital transformation officer Bart Leurs commented in a press release.

Currently available in eleven European countries, the platform’s expansion plans appear to depend on further lenders coming on board.

Meanwhile, bank-sponsored blockchain platforms are becoming an increasingly crowded space both in Europe and beyond. Spain’s Santander became the first to offer blockchain settlements for retail customers using Ripple in April, while remittances also form the basis for a major project between banks in Asia, also involving technology from IBM.

At the same time, other plans appear to have fallen by the wayside, Rabobank remaining silent on its ‘Rabobit’ cryptocurrency wallet project since March.

As Cointelegraph reported in June, some sources fear banking demand for blockchain services is overrated, and the technology actually has less to offer to the sector than many assume.

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HSBC Exec Warns 'Digital Islands' Could Inhibit Blockchain Trade

When HSBC’s Vinay Mendonca thinks about how distributed ledger technology (DLT) will reshape global trade, he sees two scenarios – one inspiring, the other dispiriting.

In the best case, blockchains and other digital platforms should do for the global value chain what shipping containers did for the physical transportation of goods. Just as the standardized dimensions of containers allowed them to move around the world easily from ship to rail to truck, DLT with data standards and interoperability ought to create seamless flows of value.

But without such standards, trade finance could end up on “digital islands,” or silos disconnected from each other, said Mendonca, the global head of product and propositions for global trade and receivables finance at HSBC. And he believes that would do no one much good.

It’s perhaps not surprising HSBC is thinking about interoperability; the bank has a finger in just about every trade platform of note.

HSBC was the first bank to partner with and invest in Tradeshift, the digital trade platform which boasts 1.5 million suppliers in 190 countries (Goldman Sachs led a further $250 million funding round earlier this week).

HSBC has also gone well past the proof-of-concept stage, completing the world’s first blockchain-based trade finance transaction with food giant Cargill and R3’s Corda platform. Further, it’s a key member of the We.Trade consortium which uses Hyperledger Fabric – and that’s not including a number of Asia-specific consortiums and projects of which it’s part.

To Mendonca, it’s important to bring the interoperability discussion to the table as early as possible.

He told CoinDesk:

“A fundamental challenge for all of us is to make all this fit together. So, how do we make sure the Cargill solution on Corda has interoperability with the national trade platform in Singapore, as an example?”

Hence, an “international set of standards that everybody complies with” is needed, Mendonca said.

Setting standards

Stepping back, the HSBC executive’s concern for how to connect various platforms grows out of a realization that trade finance cannot be digitized in isolation.

It has to be about the total digitization of trade: issuing purchase orders, accepting invoices, shipping goods. Within that merging of physical and financial supply chains, clients can have a discrete step for a financing option, said Mendonca, “so not a completely different process, but really have that embedded within the existing process.”

Would that it were so simple.

One problem is that construction of much of this architecture is at the R&D stage and so different initiatives and splinter groups are inevitable.

Mendonca said it is difficult to call how things will progress, but he guessed there could be some consolidation happening before too long.

“Some working groups may merge with others that are more advanced,” he said, adding that he now only gets excited by projects that can scale for real, as opposed to PoCs done in a lab or a sandboxed environment.

Returning to the question of standards, Mendonca touched on some practicalities whereby the industry needs to decide, “are these the standards we will all accept on an invoice, on a purchase order?”

Then, if that can be achieved, “what technology you use to make it happen is probably slightly less of a problem.”

Agreeing on the standards is likely the bigger challenge, he said:

“We will have to pull together as an industry to make that happen and it’s not going to be easy. But to be fair, I think this time around, every working group realizes that it has to be a building block; interoperability shouldn’t be an afterthought.”

Collaboration or competition?

This all sounds great, but it’s well known that big banks are touchy about sharing anything that could give their competitors an edge.

As well as being careful about data sharing, using platforms like Tradeshift that are essentially “bank-agnostic” means valued customers engage with multiple banks.

However, Mendonca pointed out that HSBC has actually been doing this type of thing for years with the SWIFT for Corporates channel, a service provided by the international financial messaging network for treasurers of multinationals.

“Its big benefit is being bank-agnostic, ” he said. “For instance, you don’t have to connect to five different banks; you connect once and you can give an instruction to all those five banks. So stuff that was put in place a while ago for cash is now available for trade.”    

The intuitive play in a more distributed world, then, is to define which factors banks need to collaborate on, and those they compete on. They can agree there’s a need to collaborate on the exchange of purchase order and invoice data, for instance, because this will make customers’ transactions more efficient.

On the other hand, HSBC would compete with others on the reach of its network to support transactions across the globe, Mendonca said, or the advisory capability of its trade experts and the service levels it offers.

As such, HSBC is not intimidated in any way by other big banks joining it on any particular platform, said Mendonca, concluding:

“We have been offering supply chain finance solutions to clients for years. When they tell us they are looking at a bigger picture, we understand these end goals.”

HSBC bank image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Banks Ink Blockchain Trade Finance Transaction with Food Giant Cargill

Banking and financial services giants HSBC and ING have completed a trade finance transaction for agri-food trading company Cargill using a single blockchain system.

Claimed as a “world first,” Reuters reports, the live commercial trade finance transaction saw an export of a shipment of soybeans from Argentina to Malaysia, during which Cargill Geneva sold the goods on behalf of its Argentine arm team and Cargill Singapore received them on behalf of the Malaysian arm of the firm.

HSBC said that while other trade finance deals have been carried out using blockchain together with other technologies, the Cargill trade was the first to use a single blockchain application, the report indicates.

According to news source GTR, the transaction was carried out using a letter of credit tool within R3’s distributed ledger technology (DLT) platform Corda.

The letter of credit involved was issued by HSBC, while ING served as the advising bank, and the process was slashed to 24 hours from the paper-based standard of 5-10 days. While the letter of credit was exchanged over the blockchain, while bill of lading and other transaction elements were not, the report adds.

Following the successful transaction, HSBC is focusing on more live tests and ultimately aims to promote the system for industry-wide adoption, Vivek Ramachandran, global head of innovation at HSBC Commercial Banking, told GTR.

“We’ve still got a few more steps to do before we get to widespread adoption,” he was quoted as saying.

The news comes after HSBC revealed its plans in February to launch several pilot programs based on existing proof-of-concept (PoC) projects.

“Going from that PoC in 2016, we’re at the tipping point of getting our customers involved in live transactions in the coming weeks and months. The technology has come a long way, we’re much more comfortable with its security and scalability,” the bank’s senior innovation manager Joshua Kroeker, said at the time.

Shipping containers image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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HSBC Completes ‘World’s First’ Blockchain Trade Finance Deal, Ships Soybeans

UK-based banking giant HSBC has reportedly completed the world’s first ever trade finance transaction powered by blockchain, the Financial Times (FT) reported today, May 14.

As multiple news outlets report, HSBC, which is the world’s largest trade finance institution, completed a letter of credit for food and agricultural giant Cargill, the US’ largest private company in terms of revenue.

The deal in fact processed last week and involved a shipment of soya beans from Argentina to Malaysia.

The success of the trial transaction means there is potential for blockchain to take hold in the global trade finance market, which is reportedly worth $9 tln, FT reports.

“We don’t envisage the platform as anything other than a utility,” the FT quotes Vivek Ramachandran, head of innovation and growth for commercial banking at HSBC as saying in a statement.

That “utility” could however ultimately involve some of the world’s largest corporations looking to save on processing costs and improve security over paper-based deals.

HSBC had been looking into the technology’s role in trade finance for at least a year, partnering with the Hong Kong’s central bank on a proof of concept in March of last year.

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UK Bank HSBC Might Soon Pilot Live Blockchain Payments

International banking giant HSBC is reportedly close to testing blockchain in live transactions.

Global Trade Review reports that the bank could launch several pilot programs based on existing proof-of-concept (PoC) projects in an effort to begin transitioning to live blockchain transactions. The move was announced during a private media call earlier this week.

HSBC senior innovation manager Joshua Kroeker said at the time that the launch would mark the fruition of trials conducted over the course of two years, including one announced in August 2016 that tests the use of a blockchain in replicating letters of credit.

At the time, the trial aimed to develop trust between two or more entities by creating a system to authenticate data, as previously reported.

The process was successful, Kroeker said, continuing on to say:

“Going from that PoC in 2016, we’re at the tipping point of getting our customers involved in live transactions in the coming weeks and months. The technology has come a long way, we’re much more comfortable with its security and scalability.”

Many of HSBC’s clients have begun the process of digitizing their operations, but letters of credit is one area where most have difficulty, he said.

“This product is one of the first we’re going to pilot, which is going to be exciting,” he said.

The bank is currently integrating customers into its pilot programs. Should they prove successful, the projects will be fully implemented into live production environments, though this step will require additional work on both the blockchain application and the network, Kroeker said.

Currently, the plan is to launch a live network in early 2019, according to GTR.

HSBC image via Steve Heap / Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Banks Back Syndicated Loan Market Built on Corda Distributed Ledger

A group of banks and financial technology providers have unveiled a new syndicated loan marketplace built on top of the Corda distributed ledger platform.

The list of banks involved includes BNP Paribas, HSBC, ING, State Street and BNY Mellon, with two other unnamed institutions also taking part in the initiative. Today’s unveiling from Finastra, which was formed by the merger of software firms D+H and Misys earlier this year, follows a previous pilot phase.

The project aims to create a new kind of syndicated loan market, where multiple lenders pool resources in order to fund single debtors. The idea is to use R3’s Corda platform (which saw its 1.0 version released on Tuesday) as a hub for administering loans and sharing key information on things like fees and interest rates in real-time during the lending process.

Philippe Boulas, head of financing solutions for BNP Paribas CIB, said in a statement:

“We believe that the distributed ledger is appropriate in syndicated lending to deliver one single position that is immediately updated when a contract is being handled. The Finastra-led utility, Fusion LenderComm, would allow us to share position data more efficiently and pave the way for a more fluid industrialization.”

The platform, dubbed Fusion LenderComm, already has its own official website, and while its launch date wasn’t disclosed in today’s announcement, the companies behind it are seeking additional backers – particularly lenders who would bring liquidity to the marketplace.

Fusion LenderComm’s unveiling is a notable one, given that the past year has seen a number of banks test applications for syndicated loan markets.

A proof-of-concept platform for issuing syndicated loans, spearheaded this past spring by Credit Suisse, saw participation from a variety of firms, including State Street. Credit Suisse said in August that it is planning a commercial-scale release for sometime next year.

Money image via Shutterstock

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Singapore Regulator Teams With Asian Banks for Blockchain KYC Trial

Three Asian banks and a regulator in Singapore have developed a new blockchain proof-of-concept aimed at streamlining the know-your-customer (KYC) process.

OCBC Bank, HSBC Singapore and the Mitsubishi UFJ Financial Group (MUFG) jointly announced the customer identification system along with the Info-communications Media Development Authority (IDMA). The IDMA regulates the city-state’s media and information communications industries.

The proof-of-concept phase took place between February and May of this year, according to the firms involved. The aim was to shift away from cumbersome, paper-based approaches – which can take days or longer to complete – to wholly digitized ones. By including a shared ledger, banks can verify a customer by turning to information that is being stored and updated overtime.

In a statement, IDMA expressed support for tests of this nature, particularly through the lens of broader work within Singapore on developing new systems to serve an increasingly digital economy.

CEO Tan Kiat How said of the trial:

“IMDA supports the ambitious use of technologies to transform businesses and create value to citizens. This willingness to experiment is crucial in achieving our vision of a dynamic Digital Economy for a Smart Nation. Revamping the KYC process using blockchain technology is one such example. We are heartened that financial institutions are developing innovative FinTech solutions to improve productivity and deliver a better experience to their customers.”

As for the results of the trial, the banks said that the outcome was mostly positive. According to OpenGov Asia, the group reported that the system saw significant uptime during operation and was resistant to tampering attempts.

Looking ahead, the banks are said to be leaning toward additional testing. According to Nikkei, a representative for OCBC said that the group would explore how it might approach launching larger-scale trials.

Image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [email protected].

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First Blockchain KYC Prototype Hits Singapore Banking Sphere

A joint effort by a Singapore government authority and several major banks has delivered the first local know-your-customer (KYC) Blockchain prototype.

In a release today quoted by various local news outlets, Mitsubishi UFJ Financial Group, OCBC Bank and HSBC said they had successfully completed a way for identity procedures to be carried out using Blockchain technology.

The prototype came in partnership with the Infocomm Media Development Authority (IMDA), a Singapore government board run under the auspices of the state’s communications ministry.

Singapore thus becomes one step closer to realizing its longer-term goals of deploying Blockchain structures at the state level.

“This willingness to experiment is crucial in achieving our vision of a dynamic Digital Economy for a Smart Nation,” IMDA CEO Tan Kiat How commented quoted by Business Times.

“We are heartened that financial institutions are developing innovative fintech solutions to improve productivity and deliver a better experience to their customers.”

The KYC solution focuses on customer data sharing between member institutions subject to customer agreement.

The move is timely, coming in the wake of revelations about notoriously lax data security practices from major financial institutions Equifax and Deloitte.

“Our pioneering efforts have resulted in a KYC process that will not only enhance customer convenience but will improve the industry’s operating efficiencies while reducing financial fraud and crime,” OCBC head of e-business Pranav Seth added.

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Is Blockchain Ready for Fiat? Why Banks See Big Promise in Crypto Cash

Central banks could soon see a wave of technological breakthroughs – that is, if the newest members of the Utility Settlement Coin (USC) project have anything to say about it.

Initially designed as a way to minimize the role of clearinghouses by letting financial institutions pay each other directly using collateral-backed crypto tokens, the implications of the work could have a broad impact. Since the collateral associated with those tokens is to be held by central banks, the project is increasingly being seen as a step toward reimagining how fiat currency could be issued.

But the potential improvements go far beyond faster transactions with less risk to counterparties, according to several members of the consortium.

If both an asset and the currency used to pay for it are issued on a blockchain, entirely new financial products could result, they argue.

Lee Braine of the Barclays investment bank told CoinDesk:

“By focusing on new collateralized digital currencies linked to major fiat currencies, the Utility Settlement Coin project could potentially create new asset-backed regulated digital cash instruments on distributed ledger technology.”

Echoing Braine’s enthusiasm was the head of blockchain research and development at Banco Santander, Julio Faura.

In interview with CoinDesk, Faura framed the benefits another way, emphasizing the power of using distributed ledgers to run encrypted, self-executing agreements:

“The idea of having a fiat-backed proxy of central bank money issued on smart contacts for financial institutions to exchange liquidity globally seems a very powerful concept,” he said.

Eliminating risk 

The idea of central banks issuing fiat currency on a blockchain also has the attention of Emmanuel Aidoo, the head of Credit Suisse’s distributed ledger and blockchain program, who says the change could do more than streamline post-trade processing.

Aidoo said he’d been monitoring the USC for 18 months before concluding that the time was right for his bank to get involved. Indeed, it was his belief that the project could impact financial stability on the largest economic scale, that eventually led him to “help drive momentum” for its support.

He told CoinDesk:

“The applications of USC extend beyond payments, and could ultimately optimize efficiencies in margin and collateral obligations and reduce systemic risk.”

Already, central banks around the world are exploring how blockchain technology could assist in a wide range of applications.

Central to such large-scale, diverse promise, is the ability to minimize risk between each of the individual counterparties involved in an agreement.

For example, currently, there’s substantial risk in an exchange process called “delivery versus payment,” which is designed to ensure securities are only moved down the value chain at as close to the moment of payment as possible, minimizing possible exposure to loss due to sudden changes in price.

Another new USC member, digital product manager of cash solutions at State Street bank, Swen Werner, said that “ensuring the settlement of financial instruments follows a strict delivery-versus-payment process is of critical importance to the industry and the success of new distributed ledger solutions.”

Similarly, the head of fintech partnerships and strategy at HSBC, Kaushalya Somasundaram, explained how the solution developed with the help of blockchain startup Clearmatics, could help reduce the number of times such risky exchanges occur.

“It would be a lot more efficient to actually link up the digital currency to the central bank collateral and to be able to transfer the digital currency across,” she said. “Ensuring the cash fungibility happens at once across all the legs of the transaction, and not multiple times, across each leg in a sequential manner.”

Pushing interoperability

Currently, the USC platform is being designed so that the value of the token is derived from collateral stored by Utility Settlement Coin members in central banks – but use of the platform itself is not contingent on central bank adoption.

However, as with any distributed ledger technology, the solution can only be only as powerful as the number of parties who adopt it. At every point of exchange between a blockchain-based asset and a centralized asset the element of risk increases, minimizing the potential benefits of a partial implementation, according to Hyder Jaffrey, the head of strategic investment and fintech innovation at UBS.

In order to minimize those vulnerabilities, Jaffrey joins many of his fellow USC members in his belief that fiat currency issued on a blockchain is essential. To help increase the chances that adoption occurs, several members said they aim to leverage their membership as a way to engage directly with central banks.

“In order to see the benefits on-ledger, you really need the breadth of [central bank currencies] available in similar time frames,” he said.

Still, he concluded with a cautious afterthought:

“That’s probably going to be some time before we see that.”

Digital cash image via Shutterstock

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