Blockchain technology has the potential to transform international trade by streamlining trade financing, speeding up intellectual property protection, lowering the time and cost of customs processing, and easing cross-border payments. The global commerce environment may become more efficient, secure, and transparent as more companies and governments adopt blockchain solutions, opening up fresh possibilities for development and innovation.
Simplifying and Securing Supply Chains
By offering an immutable record of every transaction and movement of commodities, blockchain technology can aid in the development of a supply chain that is more transparent, effective, and safe. This makes it possible for businesses to trace products from their point of origin to the final customer, ensuring the products' authenticity and quality.
- Example: An illustration of a blockchain-based solution for streamlining and digitizing international trade procedures is the TradeLens platform from IBM and Maersk. Real-time access to shipping data and papers is made possible by the platform, increasing transparency and lowering the possibility of fraud or counterfeiting.
Streamlining Trade Finance
Trade financing procedures sometimes depend on paperwork and include a number of intermediaries, which causes delays and raises expenses. By enabling safe digital transactions and smart contracts, which run automatically when certain criteria are satisfied, blockchain can accelerate these operations.
- Example: in 2018 HSBC and ING Bank successfully conducted the first trade finance transaction ever to use blockchain. In this transaction, soybeans were shipped from Argentina to Malaysia, and instead of the customary 5–10 days, the complete operation took place in under 24 hours.
Reducing Customs Clearance Time and Costs
Due to the significant documentation and verification needed, clearing customs may be a time-consuming and expensive process. By offering a safe, digital platform for information exchange between customs authorities, importers, and exporters, blockchain can assist to decrease these inefficiencies.
- Example: The Australian Border Force, Singapore Customs, and the Singapore Infocomm Media Development Authority have started a blockchain pilot. The pilot project intends to streamline trade document exchange, lower expenses, and boost overall customs clearance efficiency.
Enhancing Intellectual Property Protection
Intellectual property (IP) theft and counterfeiting pose serious obstacles to global trade. By offering an unchangeable record of IP asset ownership, licensing, and transfer, blockchain technology can aid in the protection of intellectual property rights.
- Example: The World Intellectual Property Organization (WIPO) is looking into using blockchain to administer IP rights. The company is thinking about the technology for safely storing and authenticating IP assets like patents, trademarks, and copyrights.
Facilitating Cross-Border Payments
Cross-border payments can be made much more quickly and cheaply thanks to blockchain technology. Traditional international money transfers can include several middlemen, which leads to expensive costs and lengthy processing periods. By removing middlemen and offering a decentralized ledger for recording transactions, blockchain can facilitate quicker, less expensive, and more secure transactions.
- Example: The blockchain-based payment network Ripple has teamed up with a number of banks and financial organizations to enable low-cost, real-time international money transfers. With end-to-end tracking and transparency, the company's xCurrent solution enables banks to settle cross-border payments instantaneously.