- The World Trade Organization (WTO) has released a report estimating that blockchain technology will add $3 trillion to the global trade market
- The application of blockchain was recommended in intellectual property, logistics, and trade
- There was also the suggestion of creating a legal and business ecosystem around blockchain to increase efficiency
According to a report by The World Trade Organization (WTO), blockchain technology will bring in an estimated $3 trillion to global trade by the year 2030.
The report, titled “Blockchain and International Trade: Opportunities, Challenges, and Implications for International Trade Cooperation” went beyond the potential trade amount and explored the use of blockchain in various industries, and more importantly, what needs to be done before it is implemented in new industries.
Its application in trade finance, customs clearance, logistics, and transportation were also looked at.
The cost of global trade in the future is to be reduced due to the use of blockchain. This is because blockchain helps by easing the processes of facilitating automation, financial intermediation, exchange rate costs and coordination.
According to the report, “The removal of barriers due to blockchain could result in more than $ 1 trillion of new trade in the next decade.”
Its influence will also be felt in the area of logistics. The use of blockchain will help in shipment tracking and determining the origins and authenticity of shipments.
Blockhain is already being used in the logistics sector by a number of firms such as SAMSUNG.
Also, according to the report, there will be an immense benefit in the use of blockchain for intellectual property by easing the procurement process and fighting fraud.
While the potential benefits of blockchain application were touched on, attention was also given to the challenges ahead.
One of such challenges to the application of blockchain in global trade is the predefined size of blocks which can limit its scalability. Along with this, blockchain’s significant energy consumption is also a factor as well as security issues.
All these will have to be addressed before the global application can take place.
“Blockchains are highly resilient compared to traditional databases due to their decentralized and distributed nature and the use of cryptographic techniques, they are not completely immune from traditional security challenges,” the report said.
To combat these challenges, the report says that creating an ecosystem, definite frameworks and a defined legal status for blockchain transactions across various jurisdictions is key.
“If we succeed in creating an ecosystem conducive to the wider development of blockchain, international trade could well look radically different in ten to 15 years,” The study concluded.