The Future of International Trade Will Rely on Blockchain
Blockchain has gained immense popularity in recent years, thanks to the numerous benefits it offers. As a result, many industries, including trade, have adopted this technology. Here's how blockchain will impact global trade in the near future.
Blockchain is a distributed journal of transactions that stores transactions in a non-changeable state. This technology has evolved over the years, with many organizations adopting it. This trend is set to continue, with some recent studies suggesting that more than 75% of administrators interviewed expressed their certainty that digital assets will be a robust alternative to fiat money for intercontinental finance in the next six to ten years.
So how will blockchain technology help streamline international trade? Read on to find out.
Simplifying the International Supply Chain
Blockchain leverages peer-to-peer systems that one person cannot control, allowing trading partners who don’t trust each other to work together without depending on one credible third party.
Blockchain technologies also enable prompt universal transparency. Transactions integrated into the blockchain come with timestamps, meaning no one can tamper with them. According to experts from the World Trade Organization, businesses can trace transactions and products easily with blockchain technology.
Trade finance, logistics and transportation, certification and customs processes, distribution, insurance, government procurement, and intellectual property are the leading blockchain application areas today. Here are some of the ways blockchain technology will benefit international trade:
Eliminate Paperwork and Promote the Use of Digital Solutions
International trade processes involve lots of paperwork. For many, blockchain is a tool that promotes efficiency in trade operations and helps reduce paperwork. Today, banks collaborating with IT firms and fintech startups are studying the capability of technology. While pilot projects may be inspiring, administrators should address various regulatory and technical issues before deploying the technology on a large scale.
International Trade Finance Will Become Cheaper and Easier
Some of the core benefits of integrating trade finance with blockchain are:
- Lack of Exchange Rate
Using cryptocurrency allows you to use the same value without the need for financial exchange.
- Rapid Movement of Money
Cryptocurrency transactions are almost instant, with transfers posting immediately, while blockchain payments are certified in less than ten minutes.
- Protected Payments
Users require the money upfront, eliminating the possibility of payments failing and the cancellation of credit transactions.
- Reduced Fees and Taxes
Because cryptocurrency is a peer-to-peer financial system, it’s not governed by taxes. Transaction fees also hardly exist.
- Extensive Records
Blockchains developed from cryptocurrency transactions generate secure and precise records that administrators can easily track and validate. Some supervisors even link shipments to transactions in the blockchain to facilitate easy tracking of logistics and business.
Interoperability of the Supply Chain
Through blockchain, suppliers, manufacturers, customers, distributors, and vendors will have access to the necessary data and reduce delays across the chain. Moreover, the technology will enhance product tracing from the manufacturer’s position to the shelf. Some agricultural organizations are currently leveraging blockchain to prevent supply chain-based contamination.
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