Blockchain in international trade – a development in the making
With blockchain tipped to hit mainstream adoption, experts seem to be wondering how the technology could lift the international trade spectrum. It is believed that blockchain-supported international practices can ensure better management of global supply chain channels.
According to a report by the World Trade Organization (WTO), an intergovernmental platform, blockchain’s addition could add three trillion dollars of economic value to international trade by 2030. The report further mentioned that blockchain’s leverage to remove obstacles could secure over one trillion dollars of new trade in the coming decade. “I believe blockchain has impacted international trade by improving supply chain efficiency. Blockchain is considered unique in its ability to provide immutable, decentralized records that can provide an audit trail, recorded in a ledger, open and accessible to all,” says Pratik Gauri, founder and CEO, 5ire, a blockchain-based platform, to FE Blockchain.
Market research projects showing the use of smart contracts can help trade finance through automatic payments and removal of middlemen. Insights from the United Nations Conference on Trade and Development, an intergovernmental organization, highlighted that blockchain can secure data transfer in international business using mutual recognition agreements. It is understood that governments and organizations can help stakeholders connect and reduce the cost of moving goods across continents.
“Smart contracts can improve coordination between exporters and importers by automating agreements, conditional payments and other manually intensive processes. Tokenization of documents, blockchain-based letters of credit, Central Bank Digital Currencies (CBDCs) can make international trade faster than available alternatives,” said Ravi Chamria, co-founder and COO, Zeeve, a Web3.0 oriented platform.
Reportedly, countries such as China, the United Arab Emirates, Singapore, among others, have entered the blockchain-based international trade landscape. For example, companies such as IBM and Maersk created TradeLens to offer global blockchain-based shipping solutions.
Moreover, blockchain’s future in cross-border settlement may be beneficial for aspects such as cross-border cooperation, standardization and business arrangements. The Asian Development Bank, a regional bank, mentioned that the global trade finance market has the capacity for development by finding a $1.6 trillion gap between the demand and supply of trade finance.
“As countries and companies adopt blockchain for international trade, we can expect to see efficiency, transparency and security in cross-border transactions. This could lead to an interconnected global economy that is less dependent on traditional financial intermediaries,” concluded Shrikant Bhalerao, founder of Seracle, a blockchain-as-a-service platform.
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