Blockchain technology can also be described as an open public ledger with the purpose of transaction settlement as well as corporate trade finance. Interestingly, in Leveraging low-cost in transactions, open-source technologies contracts are being made transparent, peer to peer, no intermediaries, fast operations and no government restrictions and as well being protected from tampering, revision and deletion.
In terms of international trade liberalisation, Cryptocurrencies have the potential to revolutionize the world. By their nature, cryptocurrencies act as a decoupler of public wealth and government control, something intimately tied to the future of international trade.
It may be Bitcoin, a 2nd, or possibly 3rd generational cryptocurrency that finally cracks the code of adoption and becomes a worldwide phenomenon. No one can predict when this adoption surge will happen; the only reality is that given the technology behind cryptocurrencies; this change is inevitable. In countries such as Venezuela where rampant wealth mismanagement and hyper inflation are prevalent, adoption of cryptocurrencies has increased significantly as a method of trade and hedge of wealth.
Cryptocurrencies are the first method of wealth transfer that cannot be easily controlled by any government entity. So as adoption increases, the less control the government has on the wealth of its citizenry. As adoption becomes a worldwide phenomenon, this effect will be compounded, ultimately lessening the effects of trade embargoes and government sanctions.-Jose Bravo-
Blockchain technology can streamline verification of global shipments, and
process payments internationally. Functions such as tracking, supply chain
management, and logistics can be integrated onto one platform and at a fraction of the cost. — Anne—
As we have seen, a single politician can reverse course in a short time and move the world from increasing trade liberalization to the opposite, using restrictions and tariffs as cudgels for a negotiation. Policy is disconnected from technology.
What blockchain has the potential to make possible is something different, trade transparency. DLT solutions, including digital fiat currencies (blockchain or not), make it possible to provide insights into supply chains. There are a number of operational advantages and a big side benefit, which is to ferret out trade invoice fraud, by far the single greatest source of money laundering.
Besides anti-money laundering, there are other use cases. For instance a client, The KlickEx Group of Aukland, New Zealand launched a pilot with IBM Blockchain in the south Pacific which has the potential to automate certain aspects of trade and increase visibility for all possible supply chain actors (which adds market choice). –Joel Patenaude-
It’s somewhat difficult to say to an extent because looking at blockchain itself is just a way of doing things. Assuming it is international relations that keep blockchain moving on that means blockchain may not be able to tackle those issues. Looking at changes in free trade which is tuned to a particular country’s interests and prospects as well as policies.
Definitely Blockchain could actually influence some issues such as help in solving different issues in trade transactions like payments efficiency involving costs and speed, removal of potential middle men interference in the trade value chain, or even optimize transportation schedules . Its difficult to totally and legally overcome country’s regulations, polices and imposed tariffs, and so on.
Though, payment issues could be handled by private cryptocurrencies but there are still issues of volatility in the prices, and except for some few new experiments on ground now and talking about the current crypto space is that it does not offer some of the properties of real money as a matter of fact, take for instance, they are not being used as a unit of account nor for fiscal payments for now.
As a matter of fact, despite how strong and popular blockchain has become, the blockchain technology based projects must agree and cope with the regulations before the possibility of thriving high and more real. At the basics, you will see that in the global arrangements on trade, there are more realities both politically target policies expressed in form of restrictions, taxes and tariffs and much more than the issues of efficiency and trust. – Carlos Fernandez-
Situation has changes after global trade has begun to slow after it’s quarter of a century growth . Since 2007, the size of the global trade has been declining relative to global economic circumstances but in 2015 during the financial crisis circumstances changed.
The value of trade declined 13.8% in dollar terms in 2015, this report is according to Netherlands Bureau of Economic policy analysis of world trade monitor. Most of the fall was attributed to low demand and price crash as well as some huge structural forces like supply chain issues, according to some economist view.
By revolutionising trade finance and enabling digitisation, the blockchain disruptive technology has the structures to put the global trade on the right and potential level. Trade finance can also be more efficient and secure with Blockchain technology thereby bringing about the reduction of risk bored by the financial institutions like banks with substantial benefits for trade flows and the global economy too.
World trade falls in 2015
Presently we are looking at the world technology today which will greatly impact on global trade and relationships. The World Trade Organisation do have same view on how technology’s development will affect trade more than any other factor between now and 2035 as this technological progress and improvement could boost GDP by 9% in developed markets though it’s going to more in increase in developing markets – up to 20% in Brazil and 55% in China. This advancement will be attributed to a lot of various contributors such as communications technology between countries and transfer of advanced technologies as well.
In the last 25 years there has been an upturn as trade growth continues to soar as a result of absence of the barriers that affects trade growth such as advanced and improved technology in telephone communication and internet, therefore new digitisation of trade will improve future global trade economy.
There are lots of digital technology in existence now but Blockchain stands out because of it’s unique structures. Its more secured, transparent and cheap. Blockchain technology is a secured database with a huge source of information , effective, fast , it’s a peer to peer transaction where only the parties involved can access the database and update it and it’s immutable and no intermediaries to take decisions.
A database, or distributed ledger, keeps undoubted evidence of a transaction, or series of related transactions, that is secure, this is what blockchain application does to any transaction. Right from time, banks has been using the traditional method of paper documentation to verify the genuineness of trades before giving any financial support, but then this method still have not been totally free from risks like paying fraudulent invoices and irregularities in financing etc. Blockchain structure is built to solve these issues.
The social benefits and wider economy in the use of blockchain technology
Blockchain technology go beyond security as one of it’s benefits. By digitising trade, It allows the speed flow of goods, reduces the cost of finance, make finance more readily available for Small and Medium Enterprises and also increases company profit margins by the process of trade digitisation.
Digitisation could actually boost GDP growth but reduces product prices, when accessed from macro economic perspective.
With digital communications this issue of products being delayed at port authorities waiting to be cleared through paper documentations or communications will not be there , transparency will also increase efficiency and trust. Even banks will benefit more as greater visibility of how goods are flowing through the supply chain enables banks to be more able to assess the risks and this could potentially reduce the cost of finance as only relevant and genuine transactions and trades will be treated .
By reducing the capital tied up in the supply chain, digitisation could boost GDP and company profits. Providing capital to SMEs, especially in developing economies and a means of more job creation.
Towards wider acceptance.
The total acceptance of Blockchain, whether it becomes the sort after technology that digitises supply chains is yet to be seen . As good as it is depends on it being widely integrated into the trade ecosystem and including other systems generally. The banks, freight forwarders, distributors, manufacturers, distributors and so on has to adopt blockchain to enjoy it’s full benefits.
Meanwhile a lot of innovation has sprang up into the system show casing various forms of secured network and fast communication transactions waiting to be utilised.
Further more, it’s so evidence that the banks are yet to welcome this new technology for fear of being over taken as the believe that the digitisation of the supply chain poses the threat of disintermediation. Well, It is up to banks to accept and adopt the initiative and lead the way in disrupting trade finance to avoid an unpalatable outcome as Fintech company could leverage the capital markets in their aim to provide trade finance as alternative.
With the structures in which blockchain technology was built on, it’s quite clear that blockchain has the potential to tackle those barriers to global trade, which will ultimately advance our economy and for social benefits generally. But whether it will be this technology or the next one, one thing is definitely sure abd that is ,trade will not continue to rely on good old pen and paper forever.-Michael Vrontamitis–
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