A report published by the World Trade Organization (WTO), on November 27, 2018, claims that blockchain technology could potentially add $3 trillion to international trade and finance by 2030. However, it also mentioned that blockchain should not be considered a panacea, and a careful cost versus benefit estimate is required during its application.
Application of Blockchain Across Various Sectors
Titled “Blockchain and International Trade: Opportunities, Challenges, and Implications for International Trade Cooperation,” the report studies the fields of application of blockchain technology, along with the obstacles that must be taken care of before its deployment across the industries.
Some of the industries where DLT could make the operations efficient include finance, supply chain management, intellectual property, logistics, insurance, and government administration, among others.
The report also differentiates the types of blockchains, which can be public (accessible by everyone), private (accessible by single authority), or managed by a consortium of companies. Further, it highlights the difference between a permissionless (Bitcoin), and permissioned blockchain.
Although blockchain technology is being tested by an array of institutions including banks, warehouses, and fintech startups, the report notes that a number of regulatory and technical issues must be addressed before the emerging technology can be used on a wider scale.
Peculiarly enough, the report opines that a complete paradigm shift of the financial landscape is unlikely with the blockchain. It also takes a subtle jab at the pseudonymous founder or founders of blockchain technology, Satoshi Nakamoto, stating that ironically the technology might strengthen those financial institutions which the anonymous creator wanted to render obsolete.
New Opportunities for MSMEs from Developing Countries
One of the key findings of the report deals with the new opportunities that the emerging technology can bring to the micro, small and medium-sized enterprises from developing nations. The study reads in part:
“Blockchain could be a powerful tool to facilitate MSMEs’ participation in international trade, by facilitating access to trade finance, facilitating trade procedures, and reducing trade costs. It could help to lower barriers to entry, making it easier for small companies and producers to participate in international trade.”
Lastly, the WTO study notes the entry of large-scale financial institutions in the world of blockchain technology.
Citing an example, the report stated how SWIFT launched a proof-of-concept application in January 2017 to test whether DLT could be used to streamline their bank account reconciliation process.
Results announced in March 2018 stated that blockchain technology delivered the expected business functionalities, including real-time handling, transaction status updates, full audit trails, visibility of expected and available balances, and real-time simplified account entries confirmation.