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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Blockchain DLT

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 digitisation of trade documents, shipping and logistics, supply chain, marketplaces, and other initiatives.

We also map 19 standardisation initiatives, split by sector or process, general trade, private sector-led and regional or national initiatives, as well as the international standards bodies.

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

Research – blockchain for trade finance

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Featured insights

Shockwaves from the FTX collapse may impact trade digitalisation efforts 2 Too big to fail: shockwaves from the FTX collapse may impact trade digitalisation efforts The notoriously volatile cryptocurrency market suffered another serious blow earlier this month as FTX, once one of the largest cryptocurrency exchanges in the world, met its rapid end. 
Digitising trade and supply chain processes TFG contributes to ICC Academy’s new CDTS course  VIDEO | Digitising trade and supply chain processes: TFG contributes to ICC Academy’s new CDTS course  With the trade ecosystem increasingly shifting towards technological advancements, and a market saturated with options in which to digitise trade processes, it can be difficult to cut through the noise.
The African payments landscape: COVID-19, interoperability, SMEs The African payments landscape: COVID-19, interoperability, SMEs Trade Finance Global’s (TFG) Annie Kovacevic spoke with Mpho Sadiki, head of realtime payments at BankservAfrica, to learn more about what’s in store for the continent. 

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Blockchain, cryptocurrencies, and DLT – frequently asked questions

What is blockchain?

A blockchain is 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 – everyone can view the blockchain but 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 that are cryptographically 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 its practical applications for international trade and trade finance.

Blockchain technology provides a way to transact directly via a peer-to-peer network securely meaning that counterparties 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’ that is verified by the nodes on the network. The exact method used for this verification (i.e. proof-of-work or proof-of-stake) will differ based on the specific consensus mechanism the network use.

Step 3: If the nodes 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?

Infographic on Blockchain

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 has several possible use cases for a variety of 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?

Blockchain is NOT the same as cryptocurrencies.

Blockchain is a infrastructure technology, on which developers can build other applications.

Many people think that blockchain and cryptocurrencies are the same since the two terms come up in the same sentence quite often as cryptocurrencies are the most widely known application that is built using blockchain technology.

This is similar to how popular websites – like Facebook or Trade Finance Global – are built on a collection of internet infrastructure technologies like HTTP, TCP/IP, and HTML.

Facebook, like many other websites, is built using HTTP in much the same way that cryptocurrencies, like many other applications, are built using blockchain.

To say that the internet is Facebook is as incorrect as saying that blockchain is cryptocurrency.

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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

21Nov

TFG Weekly Trade Briefing, 21st November 2022

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Your Monday coffee briefing from TFG – PODCAST | Float or sink: BIMCO discusses eBL adoption, standards, interoperability… Read More →

17Nov

Law Commission launches call for information on decentralised autonomous organisations

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The Law Commission of England and Wales has launched a research inquiry asking users and other experts for information about… Read More →

16Nov

Too big to fail: shockwaves from the FTX collapse may impact trade digitalisation efforts

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The notoriously volatile cryptocurrency market suffered another serious blow earlier this month as FTX, once one of the largest cryptocurrency… Read More →

16Nov

Banking behemoths launch CBDC system pilot

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On November 15 a group of major banks including Citigroup, HSBC, BNY Mellon, Wells Fargo and the Federal Reserve Bank… Read More →

09Nov

VIDEO | Digitising trade and supply chain processes: TFG contributes to ICC Academy’s new CDTS course 

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With the trade ecosystem increasingly shifting towards technological advancements, and a market saturated with options in which to digitise trade… Read More →

02Nov

The African payments landscape: COVID-19, interoperability, SMEs

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Trade Finance Global’s (TFG) Annie Kovacevic spoke with Mpho Sadiki, head of realtime payments at BankservAfrica, to learn more about… Read More →

31Oct

TFG Weekly Trade Briefing, 31st October 2022

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Your Monday coffee briefing from TFG – VIDEO | ICC’s Vincent O’Brien on trade in the UAE 
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28Oct

Double redundant—Standard Chartered discusses supply chain duplication and deep-tier financing

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To learn more about the changing nature of global supply chains, Trade Finance Global (TFG) spoke with Standard Chartered Bank’s… Read More →

24Oct

Blockchain, ESG, and data standards driving changes in the trade finance banking sector

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Trade Finance Global spoke with Hari Janakiraman head of industry and innovation, transaction banking, from Australia and New Zealand Banking… Read More →

20Oct

Blockchain in bridging trade finance with climate commitment of the shipping industry

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Global shipping is one of the most challenging sectors to decarbonise. The International Maritime Organization (IMO) has set out an… Read More →

13Oct

BREAKING: UK introduces electronic trade documents bill into parliament

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On 12 October, the UK officially introduced The Electronic Trade Documents Bill into parliament, the next step in a long… Read More →

10Oct

Capgemini on why banks must improve payment services to support SMEs

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Capgemini’s 2022 World Payments Report finds that 89% of small and medium businesses (SMEs) are considering switching to challenger banks… Read More →

08Oct

Foreword: Time’s Ticking for Tech

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Change can come at any point and can be catalysed by any manner of things. Trade has proven no exception… Read More →

21Sep

Ameriabank on international trade, sustainability, digitisation in Armenia

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Trade Finance Global (TFG) sat down with Ameriabank to discuss how shifts in the global trading ecosystem have affected the… Read More →

21Sep

Procure to pay in a global economy: how businesses can acknowledge FX in their processes

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At what point can a business acknowledge foreign exchange (FX) in their procure to pay (P2P) process, and at what… 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, ICISA 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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