Blockchain can make a difference
“Blockchain’s biggest advantage is immutability, meaning data can’t be deleted or edited after it’s on the ledger. For international trade, this provides an opportunity for more transparency across several major industries.”
“Digitizing documents for traditional clearance processes, and transactions in international trade can take up to 120 days to complete, but with bills of lading tracked through blockchain, the need for such processes and potential for double spending is eliminated.”
“Transfer payments and transactions are also quicker and cheaper than currently possible through the SWIFT network, blockchain commissions are lower and without maximum limits, which is especially advantageous for exporting goods”
Additionally, Zen added, these factors help reduce fraud through digitally verified and legally enforced paperless documentation.
In another use case, IBM and Maersk are working on a blockchain-based solution to streamline the global shipping industry. The project, called TradeLens, is designed to digitize the entire shipping process on the blockchain.
The ultimate goal is to create a more efficient and transparent supply chain that accelerates delivery times while reducing costs. To date, 150 organizations have successfully engaged in the project, including major port operators, shipping lines and logistics providers.
According to IBM, TradeLens has processed more than 150 million shipping events and saved users about 20% of documentation costs. In addition, the platform reduces the time required to ship goods by 40%.
Blockchain is still gaining ground in various industries, but it is only a matter of time before its potential is fully realized in the world of international trade. With its ability to streamline processes and reduce costs, blockchain has the potential to change the way goods are traded around the world.
However, despite its promises, there are some weaknesses in the application of blockchain technology in international trade.
Disadvantages of blockchain
The main disadvantage of using blockchain is the fact that it is often associated with high transaction costs. For example, when it comes to cross-border payments, blockchain technology is known to be quite expensive.
This is because blockchain transactions often involve multiple intermediaries, which can increase costs. Additionally, the time required to resolve a blockchain transaction can be very long, which can also increase the overall cost.
Another disadvantage of blockchain is the lack of scalability. Since every block in a block must be verified by all nodes in the network, the system can often become bogged down when processing many transactions.
This can lead to delays in processing transactions, which can be a significant problem in the world of international trade.
Finally, according to Deloitte, blockchain technology is still in its early stages of development, which means it is subject to many risks and uncertainties. For example, there can always be a risk that a critical scalability and privacy flaw could be discovered that could cause a problem on the financial end of the operation.
In addition, there is also the risk that bad actors could exploit the vulnerabilities for fraud or theft. These risks should be carefully considered by those who intend to use blockchain technology in the world of international trade.
Despite these drawbacks, it is important to note that blockchain technology is still in the early stages of development. As the technology matures, it is likely that many of these issues will be addressed and resolved.
As more organizations begin to adopt blockchain technology, the overall cost of using the system is likely to decrease. This makes blockchain a more viable option for those looking to streamline their international business operations.
Ultimately, blockchain technology has the potential to change the way goods are traded around the world. With its ability to streamline processes and reduce costs, blockchain has the potential to make international trade more efficient and transparent.