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Blockchain for Trade Finance

Blockchain for Trade Finance | ICC, TFG and WTO Guide

Trade Finance Global / Blockchain for Trade Finance

Blockchain, DLT and Trade Finance – Your TFG Guide

Welcome to our blockchain hub, a comprehensive guide by Trade Finance Global on the use of distributed ledger technologies (DLT) and blockchain within international trade, trade finance, and shipping. Consortia, networks and technologies have emerged in attempts to digitize trade, yet to date, their applications have been relatively unsuccessful and disjointed. We investigate some of the key opportunities and challenges the in the current ecosystem, as well as an in depth look at what needs to happen for the industry to evolve. Just as TCP/IP, HTML, and HTTP provide shared and open standards and protocols that enabled the Internet to become what it is, so too can blockchain and related technologies create a flatter, smarter, more connected, and overall better world for global trade and commerce.

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Video: Reality Check – Blockchain & DLT for Global Trade, An Interview with Deepesh Patel and Emmanuelle Ganne

Infographics, Charts & Diagrams


Projects by Banks

Projects by Bank
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Key Graphs

Key benefits of Distributed Ledger Technology (Source: TFG, ICC and WTO Blockchain for Trade Survey, October 2019. Responses from corporates, banks, consultancies and vendors, n = 202)
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Technological challenges around Distributed Ledger Technology (Source: TFG, ICC and WTO Blockchain for Trade Survey, October 2019. Responses from corporates, banks, consultancies and vendors, n = 202)
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Legal Challenges around Distributed Ledger Technology (Source: ICC, TFG and WTO Blockchain for Trade Survey, October 2019. Responses from corporates, banks, consultancies and vendors, n = 202)
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Perceptions of widespread DLT adoption between different types of firms, as well as the key challenges by firm type (Source: ICC, TFG and WTO Blockchain for Trade Survey, October 2019. Responses from corporates, banks, consultancies and vendors, n = 202, lines indicate standard deviation)
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Perceptions of widespread DLT adoption between different types of firms, as well as the key challenges by firm type (Source: ICC, TFG and WTO Blockchain for Trade Survey, October 2019. Responses from corporates, banks, consultancies and vendors, n = 202, lines indicate standard deviation)
PDF | JPEG

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Video: WTO Panel Session

 

Key Consortia and Network Articles

28Mar

TFG launches interactive periodic table of DLT and Blockchain trade finance projects

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TFG have created an interactive periodic table of projects, consortia, networks and companies in blockchain and DLT for trade finance... Read More →
05Feb

Trade Growth Prospects in the Asia Pacific: Overview from Bank of America

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We caught up with Peter Jameson, Head of Trade and Supply Chain, Asia Pacific in Bank of America. We discussed... Read More →
03Feb

Banking on change in 2020. ICC Banking Commission lays out bumpy year ahead

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As the most authoritative voice in the trade finance industry, ICC Banking Commission, maintains a permanent dialogue with regulators and... Read More →
30Jan

International Trade Centre: Trade Finance in Emerging and Developing Markets, Interview with Ian Sayers

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2019 has been a fairly promising year of growth for some emerging and developing markets, but with continued regulatory scrutiny,... Read More →
29Jan

The Asian Trade Finance Renaissance of 2020 – Accenture’s Outlook

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With the growth of major players such as Ant Financial in Asia in 2019, TFG asked Accenture’s European Banking Lead,... Read More →
22Jan

PODCAST: TradeIX and Pole Star Deep Dive: DLT in the Maritime and Shipping Space (S1 E34)

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Today we're delighted to be joined by Simon Ring at Pole Star and Nick Barnes at TradeIX and the Marco... Read More →
02Jan

The Thriving Future of Impact Investing

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With the development of financial technology and energetic Blockchain innovation this year, the market for Impact Investing has been experiencing... Read More →
31Dec

Taking Stock of 2019 – A Round-Up of 8 Themes in Trade Finance

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Events such as Brexit, the US-China trade war, political unrest between China and Hong Kong dominated the headlines in 2019,... Read More →
31Dec

Key Trade Finance Trends of 2019 – Asking the Experts

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Trade Finance Global, in partnership with Finastra, sat down with 6 global experts in trade to get a low down... Read More →
29Dec

Blockchain to enable frictionless global trading, DC EP to realize the de-dollarization

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Trade Finance Global spoke to Wenhui LIANG at the WTO Global Trade and Blockchain Forum, on the nature of the... Read More →

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Blockchain & DLT: A Reality Check?

Popular Cryptocurrencies

Bitcoin – The inaugral cryptocurrency, bitcoin has a $100bn market cap, and by far the most commonly used crypto.

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Ethereum – A public blockchain with smart contract functionality, the EVM is a simple and viable mechanism for trade finance.

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Monero – The anonymous crypto. With privacy being it’s USP, Monero is one of the most confidential cryptos in the market.

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Dash – The younger sibling of Bitcoin, Dash is an improved crypto with Masternodes, privateSend and InstandSend.

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Ripple – Comprised of XRP and RipppleNet, we see the future of payments being Ripple. It doesn’t use blockchain for concensus and cannot be mined.

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Litecoin – A near replica of Bitcoin, Litecoin has a faster processing speed and coin limit. The 6th largest by market cap, it’s one to watch.

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Blockchain for Trade Finance Podcasts

Similarities DLT Challenges

Latest Blockchain News

31Mar

WHITEPAPER: Asia’s digital trade landscape heading into a new decade

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As the APAC region solidifies its global trade leadership, banks gain an opportunity to serve new finance needs as long... Read More →
31Mar

PODCAST: APAC Trade and Supply Chain Finance Market Commentary (S1 E38)

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TFG heard from Finastra and Cognizant discussing trade and supply chain trends in Asia for 2020. Accounting for half of... Read More →
28Mar

TFG launches interactive periodic table of DLT and Blockchain trade finance projects

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TFG have created an interactive periodic table of projects, consortia, networks and companies in blockchain and DLT for trade finance... Read More →
25Mar

Tokenization: Solving Trade Finance Problems or Purely Conceptual?

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Tokenization is a concept with the potential to solve many trade financing problems that exist for business. TFG heard from... Read More →
13Mar

Going paperless: Improving Letters of Credit for trade finance

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The Letters of Credit (LC) process is perhaps one of the more recognisable elements of trade finance that needs innovation.... Read More →
09Mar

Itinerary of a Central Bank Digital Currency in Switzerland

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TFG heard from crpyto expert Oliviere Depiere on the future of money in its cryptographic and legal dimension fully backed... Read More →
01Mar

Digitalization of Trade Finance services for SMEs in the CEE region

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TFG spoke to Olena Gryniuk at SME Banking Club to explore these in relation to CEE.... Read More →
01Mar

Can the blockchain revolution address port congestion in Africa?

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TFG spoke to Global Trade Solutions CEO on the potential for DLT to help alleviate issues around port congestion in... Read More →

An A to Z of Blockchain, Cryptocurrencies and Trade Finance

Other DLT in Trade Whitepapers

Frequently Asked Questions

What is Blockchain?

A blockchain is essentially a decentralised, distributed ledger that permanently records transactions. ‘Decentralised’ means that no single individual or group has excess control over the exchanges. ‘Distributed’ means that the ledger is sent out to many computers. In other words, it’s made public and thus is completely transparent. Whilst everyone can view the blockchain, nobody can amend it.

The term ‘blockchain’ is derived from the way the technology works. Each ‘block’ contains encoded data of groups of valid transactions. These transactions are linked to previous blocks to form a ‘chain’, hence we get the name ‘blockchain’.

It’s not necessary to understand the complexities of how the technology works to understand what it does. Blockchain technology provides a way to transact directly via a peer-to-peer network securely. This means that you can use the blockchain to transact without any middlemen.

How Does Blockchain Work?

Transactions are recorded to a blockchain through 5 important steps:

Step 1: Two parties initiate a transaction by agreeing to exchange something of value. In most cases, this will be a cryptocurrency token or other asset.

Step 2: This pending transaction joins others and creates a ‘block’ which is then sent out to ‘miners’. Miners are computers on the blockchain network that evaluate transactions to earn a reward. This reward is usually new cryptocurrency tokens or a part of the transaction fee. They validate the transaction by solving complex mathematical problems using computer power.

Step 3: If miners reach consensus to validate the transaction, it’s verified and added to the blockchain.

Step 4: A timestamp is added to this transaction block using a cryptographic receipt. As each block has a reference to the hash of the previous block, there is an unalterable chain of records.

Step 5: The transaction is complete and the unit of value is transferred to the receiving party.

Infographic: How does Blockchain work?

Source: By Shivratan rajvi [CC BY-SA 4.0  (https://creativecommons.org/licenses/by-sa/4.0)], from Wikimedia Commons

What is Blockchain Used For?

Blockchain technology was originally designed as the foundation upon which cryptocurrencies could be built. Since then, and it’s use cases have expanded hugely as the technology has evolved. The invention of Ethereum’s Smart Contracts made it easier for developers to build applications for many different industries, including:

  • Cybersecurity
  • Travel
  • Banking
  • Trade finance
  • Cloud storage
  • Legal
  • Insurance
  • Healthcare

The reason that blockchain has so many use cases is that it provides a reliable, secure and transparent network. This makes it useful for any business that could benefit from a way to transfer data securely, quickly and transparently.

Are Cryptocurrencies and Blockchain the Same Thing?

Contrary to popular belief, blockchain and cryptocurrencies aren’t one in the same. Many people think that this is the case as the two terms come up in the same sentence quite often – they’re closely linked.

Cryptocurrencies are digital currencies – they’re units of value that take the form of tokens. The blockchain is the digital ledger that stores a record of all cryptocurrency transactions. Blockchain is also used in other applications outside of cryptocurrencies.

What are Cryptocurrencies Used For?

There are several use cases for cryptocurrencies, including:

Cross-border payments:

Sending fiat currencies internationally often comes with excessive fees for international transfers. It’s also a lengthy and time-consuming process to complete through regular banks. Cryptocurrencies allow you to send money across international borders directly. The exchange is completed almost instantly and with minimal fees.

Anonymous transactions:

Cryptocurrencies offer higher levels of anonymity than fiat currencies. This makes them ideal as a medium of exchange for transactions where a high level of anonymity is preferred.

As an investment vehicle:

The cryptocurrency market is hugely volatile, but it has seen massive growth over the last decade. It’s an accessible market for beginner investors who are willing to invest in high-risk, high-reward assets.

What are the Most Common Cryptocurrencies?

Bitcoin is the most popular cryptocurrency. As it was the inaugural cryptocurrency, it benefited from a first-mover advantage which has allowed it to remain the leading cryptocurrency by market capitalisation.

According to CoinMarketCap, the top 5 cryptocurrencies by market capitalisation as of July 2018 are:

  1. Bitcoin
  2. Ethereum
  3. XRP
  4. Bitcoin Cash
  5. EOS

Is it Still Worth Investing in Cryptocurrencies?

Many investors believe that the cryptocurrency market is in the midst of a speculative bubble that is destined to pop. This may be at least partially correct as there can be little doubt that cryptocurrency prices have been extremely volatile.

The last spike in price came in 2017 when prices rose exponentially. Since then, the market has been in decline. However, there may be a further price spike in the future as the technology moves forward. Many banks are beginning to adopt blockchain technology and more and more retailers are beginning to accept cryptocurrency payments. These facts bode well for the future of cryptocurrencies.

Ultimately, this is a hotly debated topic and whether it’s still worth investing is a matter of opinion. The future of the cryptocurrency market remains uncertain.

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