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Blockchain Technology To Transform International Trade
In a time when almost everything is turning digital, international trade still relies heavily on paper documentation. As international trade continues its expansion, the burden of this paper work also mounts.
According to International Air Transport Association (IATA), “Each international airfreight shipment can require more than 30 different paper documents – increasing the cost of airfreight and lengthening transport times.”
Not only airfreight shipment, but also sea cargo transportation is complex and requires multiplicity of paper work. Besides, transportation documents are used to commit commercial fraud, says Julio Gil-Pular in an article on Bitcoin.com.
Blockchain technology can greatly help to overcome the redundant paper work and also to prevent the occurrence of fraudulent activities. Blockchain is a decentralized public ledger that underpins bitcoin. Its most important feature is that it cannot be manipulated and offers promise for secure transactions. The technology has potential applications much beyond the digital currency – it can track the exchange of anything that carries value such as stocks, bonds, securities and much more.
Coming to international trade, blockchain could help to ensure that shipping transactions are auditable; chains of custody of goods can be verified; transportation records cannot be altered and malicious entities cannot dispute the authenticity of records.
Gil-Pulgar says that smart contracts, smart assets, and other applications using blockchain attributes can also help to minimize international commercial fraud. Smart contracts are computer algorithms that can verify, execute and enforce the terms of a business agreement, without the need to rely on human intervention. A smart asset is an asset whose ownership is controlled by means of smart contracts.
Proof of Existence is important in the context of international shipping. It can be used to demonstrate document ownership without disclosing the information it contains, and to provide proof that a document was authored at a particular time.
Some startups have already started introducing relevant apps to this space. Gil-Pulgar points out that Block Notary has brought a Proof of Existence app, which provides users with the services of a digital notary. Bitproof.io is advertising its SealX app that allows users to seal a digital contract, using the blockchain to make it, among other things, immutable (the content of the contract cannot be maliciously altered).