By Megan Doyle
But blockchain technology is in its early stages and still lacks the global standardization needed to promote worldwide adoption. Regardless, its potential is apparent, and widespread interest is growing – suggesting the technology's budding ability to transform financial systems across the globe.
This series offers a detailed exploration of the possibilities – and possible roadblocks – of using blockchain technology in various forms of international trade.
Applications of blockchain are quickly expanding to a wide variety of sectors. Small- and medium-sized enterprises (SMEs) and large enterprises alike are beginning to see it as a technology that may increase the speed and efficiency of all forms of transactions while providing a way to securely track and manage the process. Part 1 offers an overview of the potential uses of blockchain technology in international trade, such as B2B payments and supply chain tracking. Read more on expanding blockchain use, including for B2B payments.
Although it did not get as much initial attention as international payments, blockchain may offer even more potential benefit for trade finance. This article explores how blockchain's "smart contracts," in combination with emerging artificial intelligence capabilities, have the potential to help banks, payment services providers, and technology companies streamline international trade finance. Read more on blockchain and trade finance.
Tracking the movement of money in modern payment processing services can be difficult – which makes fraudulent wire transfers (like when $81 million was stolen from the central bank of Bangladesh in 2016) easier to accomplish. But blockchain offers a complete and immutable record of asset transfers. Can traceable access to the entire sequence of transfers put an end to such fraud in international trade? More on blockchain's potential to reduce fraud in payment processing services.
Full transparency in the supply chain management systems that make international trade possible can be difficult to achieve. But blockchain's built-in distributed ledger technology promotes transparency, helping determine provenance of products. Such transparency can shed light on issues like forced labor and human trafficking, helping companies comply with laws that require full disclosure and ensuring consumers are confident they're receiving products they support. More on blockchain-enabled supply chain management transparency.
New blockchain technologies, though still far from achieving widespread use, are flourishing. Two key examples – the Hyperledger Project and the Interledger Protocol – are working toward creating well-defined industry standards and enabling seamless global communication between payment systems for international trade. Read more on various blockchain technologies' potential for international payments.
A collaboration between blockchain and artificial intelligence has the potential to catalyze international trade growth. But the Intelligent Tech & Trade Initiative (ITTI) predicts a series of roadblocks that could hinder widespread adoption of blockchain technology. This article lays out the barriers that ITTI predicts and the steps the initiative suggests to overcome them. Read more on blockchain and AI in international trade.
Central banks are exploring blockchain technology for applications like national digital currencies and global payment solutions. They emphasize that the technology is still in an early phase, but are getting a head start by identifying potential hurdles and areas where regulations may be needed. Central banks' interest in blockchain may be indicative of the technology's ability to transform financial systems worldwide. Read more on central bank blockchain payment solutions.
Megan Doyle is a business technology writer and researcher based in Wantagh, NY, whose work focuses primarily on financial services technology.