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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 for Trade Finance

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.

Featured Insights

BofA Interview: Bye for now, China? The $1 trillion tectonic shift in global supply chains TFG heard from BofA on the possibility of SCF’s structural shift to localisation.
TFG announces partnership with Reuters Events flagship Commodity Trading Summit Trade Finance Global (TFG), today announced a media partnership with Reuters Events flagship Commodity Trading Summit, a virtual series of events featuring commodity producers, traders, buyers and investors.
Morning has broken – New signals, standards, and semantics The only way to make Trade Finance standardisation and harmonisation opportunity to realise is to make the needed standards coordination and development resources openly available for the business process and systems developers.

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Videos – Blockchain & DLT for Trade

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Research – Blockchain for Trade Finance

Blockchain, Cryptocurrencies & DLT – 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.

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

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Contents

Access trade, receivables and supply chain finance

We assist companies to access trade and receivables finance through our relationships with 270+ banks, funds and alternative finance houses.
Get started

Latest News

10Sep

BofA Interview: Bye for now, China? The $1 trillion tectonic shift in global supply chains

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TFG heard from BofA on the possibility of SCF’s structural shift to localisation. … Read More →

08Sep

ICC Announces Oswald Kuyler as the DSI’s Managing Director

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ICC – renowned for its global standards that enable trillions of dollars of cross-border transactions each year – has announced… Read More →

02Sep

Euler Hermes Chairman – the worst is yet to come for trade

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Global trade volumes will contract by -15% in 2020, no return to pre-crisis levels before 2022 Global economy to shrink… Read More →

21Aug

Rethinking Credit Risk Management – TFG announces partnership with SCHUMANN Conference 2020

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TFG announced a media partnership with the SCHUMANN Conference 2020, a digital Credit Risk Management event, which will be held… Read More →

19Aug

TFG announces partnership with Reuters Events flagship Commodity Trading Summit

0 Comments

Trade Finance Global (TFG), today announced a media partnership with Reuters Events flagship Commodity Trading Summit, a virtual series of… Read More →

19Aug

TFG announces partnership with Reuters Events flagship Commodity Trading Summit

0 Comments

LONDON, 16th July, 2020. Trade Finance Global (TFG), today announced a media partnership with Reuters Events flagship Commodity Trading Summit,… Read More →

19Aug

TFG supports City and Financial Global at its flagship conference in September

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As part of our strategic partnership with City & Financial Global, TFG are delighted to announce that we are supporting… Read More →

10Aug

Mitsubishi Corporation RtM Japan Goes Live With ECO, Powered By Skuchain’s Blockchain-Based EC3 Platform

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Skuchain, Inc. announced today the launch of the ECO system for precious metals trading, a joint project with Mitsubishi Corporation… Read More →

05Aug

Bolero International comes onboard the Marco Polo Network

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Bolero is now part of the Marco Polo Network to advance digital trade settlement leveraging electronic Bill of Ladings and… Read More →

04Aug

PODCAST: Separating cat pics from invoice scans – The role of AI in trade (S1 E47)

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TFG heard from Arnaud Doly, CEO & Founder, Nabu, on how blockchain and AI can play a key role in… Read More →

30Jul

Morning has broken – New signals, standards, and semantics

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The only way to make Trade Finance standardisation and harmonisation opportunity to realise is to make the needed standards coordination… Read More →

29Jul

Post-pandemic production relocation: an opportunity for CEE countries? – Coface study

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A favourable context Foreign trade and inclusion in supply chains had already increased for Central & Eastern European (CEE) in… Read More →

28Jul

Conpend TRADE AI app goes live on Finastra’s FusionFabric.cloud

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London, UK – July 28 2020 Finastra today announced a new app available on its FusionFabric.cloud open development platform, Conpend TRADE AI. The app… Read More →

27Jul

ING partners with genesis to streamline Credit and Political Risk Insurance in expanding global market

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London – 27 July, 2020 – ING is pleased to announce its partnership with genesis, the Low Code Application Platform for… Read More →

27Jul

SMBC accelerates trade finance digitalisation using blockchain technology

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TOKYO July 21 2020 — Sumitomo Mitsui Banking Corporation (“SMBC”, President and CEO: Makoto Takashima) signed a (1) Letter of… Read More →

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