The World Trade Organization (WTO) released a report on what Blockchain could do for international trade today – and given its researchers, albeit with caveats, say it could add close to $3 trillion by 2030, we can probably agree it thinks it’s pretty positive.
Specifically, its economists reckon Blockchain has the potential to significantly cut trade costs by increasing transparency and facilitating processes automation, including financial intermediation, exchange rate costs, coordination, and so on.
In Blockchain and International Trade: Opportunities, Challenges, and Implications for International Trade Cooperation, the group then looks at Blockchain applications and challenges it says must be considered before the technology’s deployment in various sectors before going on to look at its possible impact on trade finance, customs clearance, logistics and transportation.
One use case is its potential to help better administer IP (intellectual property) rights across multiple jurisdictions by delivering more transparency and efficiency, and enhance public sector procurement processes, including dealing with fraud and managing public contracts.
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Supply chains could also be improved, allowing for the tracking of shipments and proof of authenticity, it notes – before pointing out the ‘usual suspects’ we need to consider before policymakers and CEOs considered doing this at scale – like limited scalability due to the predetermined size of blocks, as well as the juice you need to mine it and security issues.
On the latter front, the study states that while Blockchains are indeed emerging as “highly resilient” compared to traditional databases due to their de-centralised and distributed nature and the use of cryptography, “they are not completely immune from traditional security challenges,” for example.
Blockchain and International Trade: Opportunities, Challenges, and Implications for International Trade Cooperation also stresses the importance of developing a multi-stakeholder approach in order to find appropriate use cases in cross-border trade as at global scale it will need “frameworks” so as to ensure full interoperability of networks and agreed legal status for blockchain transactions across jurisdictions.
“Blockchain could make international trade smarter, but smart trade requires smart standardization — and smart standardization can only happen through cooperation,” it states, but then concludes optimistically, “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.”