What is BlockChain?
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” -Don & Alex Tapscott, authors Blockchain Revolution (2016)
A new recent Report from the World Trade Organisation has shown the potential and possible impact of blockchain technology on international trade in the coming time. Yesterday on November 27 in the report came and it stated that it can give a big contribution to the financial value of the international trade market of $3 trillion by 2030.
Opportunities, Implications, and associated challenges for the International Trade Cooperation must be considered before the technology’s deployment in various sectors. The study considers the technology’s effect on industries such as trade finance, customs clearance, logistics and transportation.
Blockchain Business Value Forecast. Source: WTO
The study estimates that blockchain has the potential to significantly cut trade costs by increasing transparency and facilitating processes automation, including financial intermediation, exchange rate costs, coordination, and other aspects. “The removal of barriers due to blockchain could result in more than $ 1 trillion of fresh trade in the next decade,” the report reads.
Blockchain is expected to help monitor and preserve intellectual property rights across multiple jurisdictions by delivering more transparency and efficiently enhancing government procurement processes, including fighting public frauds and managing public contracts.
Blockchain has the potential to improve supply chains, allowing for the tracking of shipments and proving their authenticity. Additionally, the technology could open new opportunities to micro, small and medium-sized companies.
On the other hand, the study warns about challenges that must be addressed before deploying blockchain, as well as its impact on international trade. The researchers point out limited scalability of blockchains due to the predetermined size of blocks, in addition to energy consumption and security issues.
Although “blockchains are highly resilient compared to traditional databases due to their decentralized and distributed nature and the use of cryptographic techniques, they are not completely immune from traditional security challenges,” the study states.
The report stresses the importance of developing a multi-stakeholder approach in order to find appropriate use cases in cross-border trade. According to the WTO, blockchain requires frameworks that ensure the interoperability of networks and provide clear legal status for blockchain transactions across jurisdictions. The report concludes:
“Blockchain could make international trade smarter, but smart trade requires smart standardization — and smart standardization can only happen through cooperation. If we succeed in creating an ecosystem conducive to the wider development of blockchain, international trade could well look radically different in ten to 15 years.”
Earlier this week, Ethereum cofounder Vitalik Buterin said that the misapplication of blockchain technology in some industries leads to “wasted time.” Buterin argued that although there are a number of companies that try to establish higher standards by using blockchain technology, he does not think the technology is applicable in every industry.
Report Source: Bitcoin insider & WTO (World Trade Organisation)