The trade industry has experienced a revolution. The nascent technology of blockchain changes the way in which we do business. This technology looks to enhance the speed, to reduce costs and to add transparency to an otherwise opaque process. It’s disruption at its finest, and it’s actually happening.
The blockchain is being used as the underlying mechanism in various arenas of trade and commerce right now such as financial services, supply chain, healthcare and many more sectors. So, what exactly is this next big thing? How will it affect international trade? Is it possible that blockchain technology will transform international trade as well?
For most people, the blockchain is an unfamiliar concept. But it could be the technology that revolutionizes international trade and sends it into the digital age. Blockchain is a decentralized public ledger that records transactions across many computers so that the register cannot be altered retroactively without the alteration of all subsequent blocks and the consensus of the network.
Transactions are secure and anonymous with cryptography and there is no single point of vulnerability for attacks so even if a hacker would somehow gain access to this network, they would have a very hard time disrupting it enough to get away with something. There is a lot more to blockchain than can be put into this one paragraph but this should give you a basic idea of what it is.
The blockchain is often associated with cryptocurrencies and the hype around Bitcoin. However, there are many more use cases that are attracting attention across industries. One of the most popular use cases currently is international trade.
Last September, in the journal Review of International Organizations William Schrader stated electronic systems such as blockchain technology hold potential for international trade solutions. The established systems haven’t transformed international trade in a way that would correspond to their intended benefits according to him. The article goes on to talk about problems with the current trade system and what blockchain technology proffers as the solution.
Blockchain technology is an encrypted shared ledger designed to store and transfer data. Since information can be stored in blocks and referenced throughout, there is no need for centralized revision or control of transaction data. This means that data is 100% trustworthy, with an accurate audit trail.
Blockchain can significantly impact international trade. Introducing Blockchain technology would close major holes of existing shipping and logistics industry. Bitcoin is fast becoming a viable blockchain platform to fulfill international trades.
Blockchain is not a technology that is going anywhere. This form of transparency and communication has become integral to the way we interact with one another.
Blockchain is built on a foundation of core principles, including immutability and trust. Specifically, the structure of a blockchain means that once a transaction is entered on the ledger, it cannot be changed and users are collectively in charge of maintaining the ledger, which adds security and transparency. In our comparison with other technologies behind DLTs in this paper, we’ll focus on the blockchain part of DLT.
Blockchain is a decentralized distributed ledger. It’s a disruptive technology that makes it easier to verify information, keep records up-to-date and trace data across systems.
In cryptography, a hash function is a function which takes an input (or ‘message’) and returns a fixed-size string of bytes. This string is called the ‘hash value’, ‘message digest’, ‘digital fingerprint’, ‘digest’ or ‘checksum’.
The hash function is the mathematical formula used to create a unique signature that cannot be reversed in order to validate the data. Transactions are public, traceable and permanently stored on a network distributed ledger. People can see the movement of cryptocurrency, but personal identities are hidden.
Blockchain technology is decentralized and has no single point of failure. This means that all parties have access to the entire history of every transaction at anytime. No single individual, group or organisation can take down the network or corrupt it.
The new system provides data integrity, control and transparency for the millions of people who need to verify the authenticity and reliability of information without the help of a central authority. The blockchain technology enables for the distribution of digital information while preventing it from being replicated.
The core characteristics of blockchain technology make it highly robust. This enables it to offer significantly more value than existing solutions based on centralized databases. The distributed ledger technology is ideal for applications that require reliability and trust, while being independent of central authorities.
As time goes on, we’ll start to see even more applications of blockchain technology. It’s a disruptive, powerful force, and it’s bound to play a huge role in the future of payments. Anti-establishment in nature, the technology fits right in with the growing populist movement.
Blockchain technology is likely to be adopted on a larger scale in the years to come. Banks and other financial institutions are eager to embrace this new system, which should make transacting easier, faster, and more secure than ever before.
In fact, according to some industry insiders, blockchain technology may have a greater impact on the future of payments than any other advancement in recent years. But there are still obstacles to overcome before blockchain becomes mainstream.
For example, many governments have yet to determine whether or not blockchain will be regulated by their existing legal systems. It’s unclear how long that process will take, but many industry leaders are optimistic about the future.
Before you begin browsing around blockchain.info and other sites, it’s important to know that most people are still trying to wrap their head around this new technology. But, even so, there are many high hopes for blockchain, including improving the efficiency of supply chains, reducing the risk of identity theft and hacking, and better serving the underbanked in third world countries.
On top of all that, blockchain is an open-source technology that is highly secure and subject to minimal tampering. There will likely be a lot more progress made in the realm of blockchain in the future, as financial institutions and governments begin to take steps towards incorporating it into their operations.
One can almost imagine a world where people manage their balances in cryptocurrency, rather than national currencies. We still have a long ways to go before that vision becomes reality, but it’s coming.