How Blockchain Can Transform International Trade
When it comes to the world economy, International Trade plays a vital role. It facilitates cross border commerce, strengthening economic relations among the participating countries. So what can Blockchain contribute in this domain? Where does it fit when it comes to international trade? To know this, we need to know the very nature of Blockchain.
What Is Blockchain?
Blockchain is a decentralized system of data storage, transmission, and security. As a concept, it has revolutionized the way data is viewed. Used predominantly in cryptocurrency transactions, blockchain employs encryption and multi-device network model to prevent data breach/hacking.Every data is stored in millions of devices across the globe, making it impossible for hackers to tamper with them.
How Can It Better Facilitate Better International Trade?
International Trade is one of the fundamental pillars of the world economy. Experts all over the world always try to implement the latest innovations and technologies to improve trade practices. Take a look at how Blockchain can effectively revolutionize international trade:
Enhance Government Procurement
Blockchain can assist governments in managing public contracts and fight frauds. Public contracts are an integral part of government policies, and for sure, it requires high-end security system engaged in data protection.Blockchain with its advanced encryption model can make this happen. The public contracts will remain untampered till completion, and central authorities can easily rely on this new system of data security.
Building Trust And Transparency In Supply Chain
Blockchain can promote transparency and traceability in the international supply chain. It will also prevent counterfeiting, hence establishing public trust. Like start-ups, governments can also trace the source of the traded products in order to prove its authenticity, thus ensuring ethical claims and healthy trade practices.As an aftermath of certain scandals plaguing the food industry in recent years, many retail companies faced sudden setbacks. To prevent the same happening on a global scale, governments should turn to Blockchain technology for advanced verification and security platforms. Every blockchain application development company stores data interactions in blocks in a chain-like fashion (hence the name Blockchain). As a result, the cryptography prevents fraudsters from altering any previous entry.
Reduction In Trade Costs
Besides increasing transparency in trade practices, Blockchain can also increase payment automation, thus reducing costs on a significant scale. A number of processes like verification, networking, coordination, transportation, logistics, etc can be freed from hefty expenses, thus increasing overall efficiency.As per studies conducted by the World Economic Forum, it was established that the reduction in costs brought about by Blockchain can result in a US$ 1 trillion worth of new trade in the coming years. So you see, how Blockchain can improve global trade processes, and hence the world economy as a whole.
MSME Participation In International Trade
Blockchain can help Micro, Small and Medium-sized Enterprises (MSMEs) to participate in global trade by facilitating access to trade finance.It can effectively pull down the barriers that restrict small businesses from participating in global trade practices. With multi-device network model and encryption system, Blockchain can prevent hackers from tampering with these firms’ confidential data, thus increasing production and reliability.
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