On Nov. 27, 2018, the World Trade Organization (WTO) released a report on Blockchain Technology’s effect on International Trade. The report expects Blockchain Technology to add almost $3 Trillion value addition to the International Trade.
The report’s ‘Blockchain and International Trade: Opportunities, Challenges, and Implications for International Trade Cooperation’ talks about Blockchain Technology related implications, challenges, applications on the international trade and suggests a thorough analysis before launching it into the various trade sectors. The report covers the effect of Blockchain Technology on international trade industries such as finance, customs clearance, logistics, and transportation.
As per the study by WTO, we can expect a major cutting of the trade costs, on the virtue of Blockchain Technology’s transparent, process automation nature. Owing to this quality, aspects such as financial intermediation, exchange rate costs, coordination etc should show a major improvement at a very low trade cost.
‘The removal of barriers due to Blockchain could result in more than $1 Trillion of a new trade in the next decade’ – As per World Trade Organization (WTO) report.
Other good effects of Blockchain Technology can be seen on intellectual property rights across multiple jurisdictions. It is expected that the Blockchain Technology shall offer more transparency and higher levels of efficiency and therefore aid the government procurement process in a matter such as combating frauds, money laundering, and smoothly managing public contracts. Improvements in supply chains, tracking of shipments, maintaining authenticity are the other positive effects as per the report. Owing to the greater efficiency, transparency, and cost-cutting, Blockchain Technology could prove to be highly beneficial for micro, small and medium scale companies too.
On the other hand, though, researchers behind the WTO report warn us about the limited scalability of Blockchains owing to the predetermined size of the blocks, the energy usage, and the safety issues that surround this technology. These factors must be factored in before fully plunging into the Blockchain Technology, the report suggests.
When compared to the traditional databases, Blockchains are found to be quite resilient, given this technology is based on decentralized and distributed structure, and it uses cryptographic techniques. Yet still, it is not entirely immune from the conventional safety issues.
There is an emphasis on developing a multi-stakeholder approach. Blockchain Technology needs frameworks that use the interoperability of networks and give clear legal status for Blockchain transaction across the jurisdiction.
‘Blockchain could make international trade smarter, but smart trade requires smart standardization- and smart standardization can only happen through cooperation. If we succeed in creating an ecosystem conducive to the wider development of Blockchain, international trade could well look radically different in 10 to 15 years.’ – As per World Trade Organization (WTO) report.
According to Vitalik Buterin, co-founder of Ethereum, the Blockchain Technology does not suit every industry and thus in some cases leads to a ‘wasted time.’ As per the co-founder of Ethereum, there are many companies that are trying to create a high standard with the usage of Blockchain Technology, but this technology is not applicable to every industry type.