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 digitise 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, and take 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 today, 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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Following the launch of TFG / WTO / ICC’s publication “Blockchain & DLT in trade: A reality check” in November 2019 at the WTO Global Blockchain Forum, this updated research study provides an overview and updated periodic table.

The study outlines the main projects, categories into Supply Chain Finance, Trade Finance, Know Your Customer (KYC), Insurance, DLT Digitiisayion of Trade Documents, Shipping & Logistics / Supply Chain, Other Initiatives and Marketplaces. The authors also mapped out 19 standardization initiatives, split by sector or process, general trade, private sector-led and regional / national initiatives, as well as the international standards bodies.

Video – WTO & TFG Launches ‘Blockchain & DLT for Trade: Where do we stand?’

Research – Blockchain for Trade Finance

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Videos – Blockchain & DLT for Trade

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Featured Insights

Stablecoins a Critical upgrade to trade finance infrastructure Stablecoins: a critical upgrade to trade finance infrastructure Stablecoins are a class of cryptocurrency that seeks to provide stability for its users by maintaining its value by pegging it to that of a reserve asset, usually one of the current significant fiat currencies such as the dollar. 
Open sesame trade finance in the metaverse Open sesame: trade finance in the metaverse The metaverse could spell a watershed moment in human economic history. It will reinforce the concept of global human culture, set rules for worldwide continuous automated trading 24/7, and forever alter our understanding of trade markets.
WTO and WEF launch new joint TradeTech report featured image WTO and WEF launch new joint Tradetech report On April 12, 2022, the World Trade Organization (WTO) and the World Economic Forum (WEF) formally launched their latest joint publication The Promise of TradeTech: Policy approaches to harness trade digitalization.

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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.
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Latest News

09May

Stablecoins: a critical upgrade to trade finance infrastructure

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Stablecoins are a class of cryptocurrency that seeks to provide stability for its users by maintaining its value by pegging… Read More →

05May

Open sesame: trade finance in the metaverse

0 Comments

The metaverse could spell a watershed moment in human economic history. It will reinforce the concept of global human culture,… Read More →

13Apr

WTO and WEF launch new joint Tradetech report

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On April 12, 2022, the World Trade Organization (WTO) and the World Economic Forum (WEF) formally launched their latest joint… Read More →

04Apr

WTO and WCO on the role of technology in cross-border trade

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WTO and WCO on the role of technology in cross-border trade, TFG’s Marcus Lankford investigates key findings….. Read More →

04Apr

Interview: TheCityUK CEO on COVID-19, Brexit, the future of the UK

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Deepesh Patel (DP), Editor, Trade Finance Global had the pleasure of interviewing Miles Celic, Chief Executive Officer of TheCityUK, to… Read More →

22Mar

Standards for digital trade exist, lack of awareness is the problem

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The latest WTO-ICC DSI toolkit can help companies and government agencies adopt available standards to accelerate the digitalisation of trade… Read More →

16Mar

Reckitt and The Coca-Cola Company partner with Diginex on greater supply chain transparency

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Diginex, a digital financial services and blockchain company, has launched a new supply chain platform in partnership with The Coca-Cola… Read More →

15Mar

Trade Finance Global announces new media partnership with ICC United Kingdom for ICC Digital Trade Conference

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Trade Finance Global (TFG) is delighted to announce that it will serve as a media partner for ICC United Kingdom’s… Read More →

03Mar

Rouble on the run: Russians scramble to dump cash for crypto as sanctions bite

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When the rouble plummets, where do Russians put their money? TFG’s Marcus Lankford investigates… … Read More →

24Feb

Towards the supply chain of the future: Why digital trade finance is the missing link

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In this article, Ed Lam and Pamela Mar offer a roadmap to a digital future for supply chains and trade… Read More →

23Feb

The secret sauce: Maximising bank-fintech collaboration opportunities in trade finance

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In this article, ITFA’s Andre Casterman reveals the secret ingredients of fintech success… Read More →

23Feb

Surecomp partners with Enigio for sustainable and cost-efficient end-to-end digitisation of trade

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Surecomp, a Canada-based trade finance solutions provider, has today announced that it has partnered with Enigio, a Stockholm-based provider of… Read More →

18Feb

After two decades of steady growth, are we at a breakthrough moment for factoring in Asia?

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Twenty years ago Asia had a 12% share of the global factoring market. Today that share is 25%.

In this article,… Read More →

15Feb

Helping SMEs build resilience through trade digitalisation

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In this article, Emmanuelle Ganne, senior analyst at the World Trade Organization (WTO), looks at how digitalisation can help SMEs… Read More →

14Feb

Why blockchain holds the key to bridging the trade finance gap

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In this article, Alisa DiCaprio, head of trade and supply chain at R3, talks about the potential of blockchain to… Read More →

About the Author

Deepesh Patel is Editorial Director at Trade Finance Global (TFG). In this role, Deepesh leads efforts in developing TFG’s brand, relationships and strategic direction in key markets, including the UK, US, Singapore, Dubai and Hong Kong.

Deepesh regularly chairs and speaks at international industry events with the WTO, BCR, Excred, TXF, The Economist and Reuters, as well as industry associations including ICC, FCI, ITFA and BAFT.

Deepesh is the host of the ‘Trade Finance Talks’ podcast and ‘Trade Finance Talks TV’. He is co-author of ‘Blockchain for Trade: A Reality Check’ with the ICC and the WTO, alongside other industry research.

In addition to his work at TFG, Deepesh is a Strategic Advisor for WOA, and works closely with ITFA. He also sits on the Fintech Working Group of the Standardised Trust.

Prior to TFG, Deepesh worked at Travelex where he was responsible for the cards business and the Travelex Money app in Europe, NAM, UK and Brazil. Deepesh is Chair of Governors and co-opted LA Governor of the Wyvern Federation, which has responsibility for 5 primary schools in South London.

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