Blockchain is a secure and transparent technology that can lend itself well to international trade. Blockchain operates on a distributed ledger; instead of central record keeping, everyone has access to and viewership of the ledger. It makes hacking more difficult and builds trust among participants as its fully transparent.
International supply chains are complex. They involve multiple actors in different jurisdictions, with various aspects like customs administration, trade finance, and logistics. The complexity of international trade is what creates administratives hurdles and burdens. Blockchain can make trade simpler, quicker, and more secure.
Blockchain makes it easier to track a product from source to end-user. For example, you can track food from a farm in one country to a supermarket in another. That level of security means that if there is a contamination outbreak, it will be easier to track and contain.
International trade typically involves a lot of documentation. A blockchain can streamline the documentation process and digitize it. It will speed up processing times and reduce the potential for double-spending. The documentation will also be digitally verifiable and enforceable legally, which can reduce fraud; nobody can manipulate information without all parties getting notified. The entire history of transactions is also accessible by all members, adding a layer of oversight on the blockchain.
Blockchain also has the ability to create digital assets or smart contracts. The goods need verification and certification along the supply chain, so the feature enables participants to enhance trading processes. Smart contracts can reduce delays and automate manual processes, thereby reducing inefficiencies.
Blockchain also makes transactions quicker and cheaper. There are fewer intermediaries in a blockchain; it can be peer-to-peer, which reduces the speed and cost of a transaction. There is also no limit on transactions, which can be beneficial to substantive international trade.
The historical record and transparency of the ledger in a blockchain also make it an efficient KYC and compliance tool. Users will have real-time monitoring views of transactions by any member. Regulatory agencies can have permission to view the blockchain, which can improve AML and auditing.
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