Blockchain Technology’s Potential Impact on Global Trading
November 28, 2018 1:58 pm
According to a report released by the World Trade Organization (WTO), the usage of blockchain technology can have a major influence on international trading. As per the study, it is likely that the economic value-add of blockchain on a global scale could touch a $3 trillion mark by 2030.
Different factors must be thoroughly analyzed before the application of a technology. A study by “Blockchain and International Trade: Opportunities, Challenges, and Implications for International Trade and Cooperation” assesses various technical and regulatory challenges that stand in the way of blockchain deployment. The study examines technology’s effect on different industries such as customs clearance, transportation, trading and finance.
The study evaluates specific features of blockchain technology having the potential to enhance transparency and traceability. Furthermore, many international trade processes can be improved using this technology.
According to the report, “The removal of barriers due to blockchain could result in more than $1 trillion of new trade in the next decade.”
The transparency and efficiency of Blockchain will help administer intellectual property rights across multiple jurisdictions. It is also expected to aid government procurement processes. Moreover, the supply chains could also be improved, establishing a system for tracking of shipments and proving their authenticity. Moreover, the technology could offer new openings to micro, small and medium-sized companies.
However, the study cautions that the challenges related to Blockchain technology must be overcome before its deployment. In addition to its impact on global trade, Researchers direct toward the issues related to blockchain technology such as limited scalability, power consumption and security issues. Its impact on international trade must also be taken into account.
Despite its substantial potential, the study specifies “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 report emphasizes developing a multi-stakeholder model in order to find suitable use cases in international trade. According to WTO, a framework is required to ensure seamless networking and 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.”