Blockchain continues to take on an increasingly important role in the mainstream of the global trade community. Recent developments indicate that stakeholders around the world, including governmental and non-governmental bodies, are increasingly looking for ways to integrate the technology into various international trade applications.
Although blockchain began as the underlying technology to support the crypto-currency bitcoin, the technology was clearly perceived as having potential for uses beyond digital currency applications. Blockchain is a distributed ledger technology — that is, it is a digitized method of recording and verifying information. One of blockchain’s primary features is that it is a de-centralized technology, meaning that it eliminates the need for intermediary authentication from various institutions, such as banks.
Instead, blockchain operates through a network of computers that process a complex algorithm authenticating various transactions. Once these transactions are authenticated, they form a block of data that gets added to a chain of previously authenticated transactions. Another of the technology’s features is that it uses encryption methodologies to ensure that transactions are kept secure. Overall, Blockchain has been praised for its ability to efficiently and securely process digitized transactions.
A number of recent developments have helped blockchain become a more mainstream technology in the trade area. For example, the International Chamber of Commerce, which supports 45 million businesses globally in 130 countries, announced the creation of the Blockchain/DLT Alliance. The Alliance “aims to support supply chains and cross-border trade finance.” Among other things, the Alliance will help support systems to prove a commodity’s origin and to issue bills of lading and letters of credit, all of which would be tracked directly on a blockchain-based platform without the need for intermediaries. Although other blockchain-based platforms currently exist, the effort by the International Chamber of Commerce to adopt the technology and support its integration into trade processes marks a significant step in the effort to digitize trade.
The International Chamber of Commerce’s announcement comes at the same time that the European Union (EU) has announced the formation of the International Association of Trusted Blockchain Applications (INATBA). The EU’s effort is aimed at “promoting standards and regulatory convergence to support the development and exploitation of innovative blockchain technologies.” Following on the EU’s establishment of the European Blockchain Partnership in 2018, the INATBA was formed in order to provide companies and organizations with an “assurance that their use of blockchain will comply with relevant standards and regulations, irrespective of location.” On a related matter, the EU also announced that it will increase the amount of data available for artificial intelligence and blockchain projects, providing further support for the broader adoption of blockchain technology by businesses and organizations.
In addition, last week two major global container lines joined the blockchain-based shipping platform TradeLens. As previously reported, TradeLens’ platform is designed to reduce the cost of global shipping, improve visibility across supply chains and eliminate inefficiencies stemming from paper-based processes. With these additions, TradeLens now “accounts for shipping data of over half the number of container lines that sail across international waters.”
There is a significant momentum for the use of the blockchain technology by the international trade community. As analysts note, blockchain technology “is still in its innovative infancy” and has a strong potential to facilitate trade by “easing trade finance, improving customs procedures, and tracking the provenance of goods.” It is likely that the trade community will see more blockchain-based projects come online in these areas and that the global trade community will continue to establish standards governing its use.