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

Navigating the green transition UNCTAD's 2023 Maritime Report on decarbonisation and trade facilitation Navigating the green transition: UNCTAD’s 2023 Maritime Report Currently responsible for 3% of global greenhouse gas emissions, maritime transport must decarbonise whilst facing extensive costs and adverse economic operating environments, as well as increasing geopolitical risks.
Revolutionising trade documentation: Secro's game-changing solution for eBLs VIDEO | Revolutionising trade documentation: Secro’s game-changing solution for eBLs For centuries, trade documentation has been a time-intensive and resource-demanding process, involving a multitude of stakeholders and a deluge of paperwork. Central to this process is the bill of lading, the most critical document in international trade. 
TFG to host comprehensive Tradecast on UK’s Electronic Trade Documents Act (ETDA) Trade Finance Global (TFG), in collaboration with UK Export Finance and the Department for Business & Trade, is set to host a tradecast on 13th September 2023, one week before the Electronic Trade Documents Act (ETDA) comes into force. 

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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

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Latest news

02Oct

Navigating the green transition: UNCTAD’s 2023 Maritime Report

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Currently responsible for 3% of global greenhouse gas emissions, maritime transport must decarbonise whilst facing extensive costs and adverse economic… Read More →

26Sep

CargoX and Enigio collaborate with Lloyds Bank and ICC C4DTI to create blockchain interoperability for electronic trade documents

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Both CargoX and Enigio, who operate as independent providers of electronic trade document solutions, have jointly engineered and successfully demonstrated… Read More →

26Sep

VIDEO | Revolutionising trade documentation: Secro’s game-changing solution for eBLs

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For centuries, trade documentation has been a time-intensive and resource-demanding process, involving a multitude of stakeholders and a deluge of… Read More →

19Sep

Citi unveils new digital asset capabilities for institutional clients

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At Sibos, Citi Treasury and Trade Solutions (TTS) has unveiled the initiation and testing stage of Citi Token Services, an… Read More →

13Sep

TFG to host comprehensive Tradecast on UK’s Electronic Trade Documents Act (ETDA)

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Trade Finance Global (TFG), in collaboration with UK Export Finance and the Department for Business & Trade, is set to… Read More →

05Sep

Launch: FIT Alliance brings 5 industry leaders together to move eBL digitalisation forward

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The FIT Alliance, formed of BIMCO, DCSA, FIATA, ICC, and Swift, has initiated the “Electronic Bill of Lading Declaration” to… Read More →

30Aug

Industry collaboration is a catalyst for truly digital trade

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From payments, credit and lending, to trade and supply chain finance, the entire financial services industry is being disrupted. Regulatory… Read More →

20Jul

Review: Tradetech predictions for 2023

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Back in January, Trade Finance Global (TFG) reached out to trade finance experts to pick their brains about what to… Read More →

13Jul

ITFA DNI Initiative Day: A crucible for the digital transformation of trade finance

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The International Trade and Forfaiting Association’s (ITFA) Digital Negotiable Instruments (DNI) Initiative Day, hosted in London on 12 July 2023,… Read More →

14Jun

Consortium successfully executes first cross border quantum-secure digital trade transaction

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An international consortium comprised of industry and technical experts, backed by government bodies, businesses, and various organisations, has successfully completed… Read More →

09Jun

The fashion industry’s silk road: Moving towards transparency

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Today’s fashion industry is in need of its very own digital silk road that can revolutionise its global trade with… Read More →

09Jun

Unlocking economic growth: The role of trade finance discussed at ASSOCHAM summit

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At the 4th National Summit Trade Finance for Inclusive Growth organised by ASSOCHAM, the state of global trade finance was… Read More →

26May

Electronic bills of lading: Are we there yet?

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To successfully digitalise Bills of Lading, the three necessary foundations are law, standards and technology. Without their proper application, any… Read More →

11May

A look through the (Single Trade) Window: UK customs perspective

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The Single Trade Window (STW) is a technology concept proposed within the 2025 UK Border Strategy, published by the Cabinet… Read More →

21Apr

Four commodity risks for the rest of 2023

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As the commodity trading industry looks back on Q1 of 2023, it is evident that the first three months of… 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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