If the latest reports prove true, the Blockchain technology has the potential, in financial terms solid to the global trade industry.
The world economic forum (World Economic Forum, WEF) issued an optimistic Outlook for the global economy, driven by the impacts and adaptations of Blockchain technology in the next 10 years.
According to the organization’s Blockchain could support the global trade by 2028, with $ 1 trillion. The report „Trade Tech – A New Age for Trade and Supply Chain Finance“ examines the impact of the Distributed Ledger technologies (DLT) on global trade Finance.
A large part of the trade Finance industry is based on outdated systems and it is suggested that this sector could be overhauled from the ground up through the Implementation and use of Blockchain systems.
A huge stumbling block in this System is the trade financing gap, and this sector is restricted, literally, by the Lack of financial opportunities, to facilitate trade around the globe.
The company Bains and Company, which has jointly with the WEF has prepared the report, suggests that this trade Finance gap could swell to 2025, up to 2.4 trillion US dollars, if the industry should adjust. In the same breath, the consultancy, says that Blockchain technology could be the answer:
„A major obstacle is an expansion of the trade and the opportunity to make it more efficient and safer, in a way: in particular, paper-intensive, manual processes.“
Digital Revolution
pen-and-paper hinder the global trade industry, and a change away from the slow and cost-intensive systems could save you a lot of time and money.
Conventional trading requires a lot of paper work for the communications between customs brokers, freight forwarders, logistics service providers and government authorities.
As the report the WEF could overcome the change to a digital processing system, the since decades existing processes:
„paper-based, manual processes, some of which centuries ago were introduced, leading to complexity and delays, which can bring errors and risks, and are a reliable, Real-time information collection and tracking in a way that is worthy for credible financing decisions need to be made.“
It is easy to see that Blockchain technology could optimize these processes for all parties involved. Since so many parties are involved in global trade processes, it can be difficult information to track and verify, especially if this Information will be disseminated on printed paper cards.
Here are the advantages of DLT come into play. By allowing information to be shared securely with all participants of the network can be accessed by all parties involved in a specific trade to real-time information about the process.
the Blockchain technology gives everyone the necessary permission to access these data, regardless of whether it comes to waiting for a financial confirmation, or to keep track of the physical Position of the traded goods.
Certified parties to initiate the authorization of transactions on such Smart Contracts, like Ethereum Protocol. As a result, it needs no third party needs to verify that contractual conditions have been met.
In addition, a single shared database reduces monetary and time costs incurred for the maintenance of manual systems.
It happened already,
It is encouraging that so many companies are already in the process of Blockchain technology to be applied in order to optimize your processes.
were shipped In may of 2018, finished with HSBC, according to a information, the first trade Finance business via Blockchain; a letter of credit for trade was secured, in the case of the soya beans from Argentina to Malaysia.
In August, IBM introduced the shipping and logistics group Maersk a enables the first global Blockchain-shipping solution.
The information for the shared Ledger (the“Ledger) came from Called TradeLens, a platform, the real-time data for any of the shipments in a supply chain tracks. The project aims to reduce the time between the delivery of material and production in the United States by 40 percent.
In June, Walmart entered into a partnership with IBM to develop a Blockchain-powered System for tracking and tracing of food along its global supply chain. The platform mainly aims to enable the company to deal with questions about the recall of food. This could help to identify outbreaks and to reduce risk for Consumer harm.
The Central Bank of China, the People’s Bank of China, introduced in September a new trade and Finance – Blockchain-a platform for Blockchain-powered operations to test for a cross-border trade ecosystem.
2018 – resolutions
Should the WEF report as correct, it could well be that the global financial trading industry will be overtaken by Blockchain-based platforms.
Spiros Margaris, a venture capitalist, told Cointelegraph that in the report, the predictions made are overly ambitious.
In fact, Margaris suggests that the impact could be much greater if the Blockchain technology is being developed further:
„I think that the influence of the Blockchain will be bigger than what has been estimated to be the WEF, if we can solve some of blockchains technical problems, what we – and I’m sure you will manage. I like the quote from Bill Gates: ‚We overestimate always the changes that will happen in the next two years and underestimate the changes in the next ten. You can not be in inaction, to be lulled to sleep.'“
At the end of the day, it is inevitable that the global trading system is moving away from its archaic processes. The step away from paper-based documentation is a big step in the right direction.
Once this is done, could the use of Blockchain technology for the processing and exchange of data with the relevant parties to the economic benefits outlined in this very informative report, can significantly increase.
explains How Margaris, are decentralized systems, the intermediaries or any Central Bauthority – off, which may have potential benefits for the global trade and investment sectors and, in addition:
„I think that Blockchains will have to do the largest impact and influence on the future with ‚confidence‘. This is the most important Element in any Deal or transaction. Therefore, block chains, is the largest power that the technology allows us to trust our counterpart, and to be sure that the messages are real, or the election not manipulated – to name just a few examples.“
WEF shares his opinion
Michele Orzan, digital Director (Europe) of the WEF, spoke with Cointelegraph about the impact that could have this report in the coming years, and about the attitude of your organization towards crypto-currencies and Blockchain technology.
It is very encouraging that the WEF is trying to „discourage oppressive“ regulations against crypto and the Blockchain. It’s been almost 10 years since Bitcoin was created, and according to Orzan confusion between the Blockchain and crypto, there are still currencies:
„Kryptos are today for the Blockchain, what were the Emails for the Internet in the‘ 90s. The turbulence of speculative newcomers in the crypto world in the past year contributed to this mess. Governments are made up of officials representing often the average population, with all their Fears, moods, ideas, and Beliefs. For this reason, we see a confusing mess in the industry and, in particular, in the case of crypto-currencies. It is clearly wrong, if some countries welcome crypto-currencies, and even to introduce, while others ban them. „
As Orzan suggests, will be of benefit to both Blockchain and crypto currency developments of better-thought-out legislation. He refers to the Organisation for economic co-operation and development (OECD), which could act as an important player of such a guide.
can play While other organizations and governments have an active role to promote adaptations to this relatively new phenomena, it is interesting to see the position of the WEF in order to promote Investments in crypto and Blockchain.
The organization pursues in its activities and policy proposals, a multi-stakeholder approach, and the Blockchain provides the opportunity to improve methods of Government, in a broad range of private and state functions.
According to the Orzan the technology could have far-reaching impact on various spheres of the global economy:
„After the WEF has analyzed both the current Blockchain industry, as well as possible development scenarios thoroughly, look at it this technology as a potential Revolution for a number of industries and social institutions.“
Orzan is also of the view that government services, with most of the Blockchain technology could benefit, followed by public and civil initiatives, the solutions for the important problems throughout the world supply.
environmental problems are a special topic and Orzan believes that Blockchain-technologies may have enormous impact:
„The WEF has recently published the report ‘Building Block(chain)s for a Better Planet’, in the different contexts are described in which this technology to address environmental problems can be used. To improve since I myself heavily involved in politics and the environment in definitely every opportunity to explore, quickly and proactively Blockchain applications that can help the conditions of our planet and use its resources. „
It remains to be seen, will strike, in what part of the world, the Blockchain technology in the next few years, really. In view of the growing worldwide interest this is difficult to predict, however, Orzan suggests that it will happen in America and Europe:
„I personally expect that the Northern European countries in the introduction of decentralized applications are going to be a leader, as they stand in relation to transparency and integrity at the top of most world rankings. In the report of the European chamber of Commerce ‘Best European Countries for Business in 2018,‘ [„The best European countries for business“] in addition, the same countries at the top of the rankings, such as those where there is a large interest in the benefits of Blockchain applications for the transparency of government processes has been registered.“
It is definitely encouraging to see that organisations such as the WEF pursue a positive Narrative for the adaptation and development of Blockchain technology.
The annual Meeting of the world economic forum in Davos, Switzerland, is an eagerly awaited event for the global business and financial world. This year’s Event was dominated by demands for crypto-regulations, as financial institutions want more clarity before pursuing any definitive plans to get started in the crypto-markets.
Nine months later, the fresh comments of the WEF promises good prospects for more positive developments for the crypto-sphere in the next few years.