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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Videos – blockchain for trade

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Featured insights

Is DLT the new foundation for interoperable transactions in banking Is DLT the new foundation for interoperable transactions in banking? DLT offers the financial services industry a new piece of infrastructure to push the boundaries of Open Banking. But it doesn’t come without its challenges. TFG heard from tradetech expert André Casterman on future use cases for blockchain in assets, trade and transaction banking.
Trade and receivables finance, in football terms PODCAST | Trade and receivables finance, in football terms With an estimated 3.5 billion fans around the world, it’s no wonder the finance behind football piques interest, even in the world of trade and receivables finance.
Marco Polo Network trade finance goes into administration 5.2 million euro feb 2023 Marco Polo Network runs insolvent with €5.2m debts A court ruling on 22 February heard that the Marco Polo Network has debts of more than €5.2 million (£4.6 million).

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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

21Mar

EY and IOE&IT tradetech report highlights digital solutions in international trade

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Tuesday morning, the Institute of Export & International Trade (IoE&IT) and Ernst & Young (EY) released their report, “TradeTech: A… Read More →

14Mar

Commodity trade finance in the new normal: The way forward

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After COVID-19, the commodity trade finance industry experienced a period of great recovery. Trade finance covers a broad range of… Read More →

06Mar

Is DLT the new foundation for interoperable transactions in banking?

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DLT offers the financial services industry a new piece of infrastructure to push the boundaries of Open Banking. But it… Read More →

28Feb

PODCAST | Trade and receivables finance, in football terms

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With an estimated 3.5 billion fans around the world, it’s no wonder the finance behind football piques interest, even in… Read More →

23Feb

Marco Polo Network runs insolvent with €5.2m debts

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A court ruling on 22 February heard that the Marco Polo Network has debts of more than €5.2 million (£4.6… Read More →

16Feb

Hong Kong issues HK$800m of tokenised green bonds

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The government of Hong Kong has announced the successful sale of the world’s first tokenised green bonds worth roughly HK$800… Read More →

13Feb

Dani Cotti: 6 lessons from the tradetech industry

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2022 was a year of seismic and rapid changes for international trade and trade finance. War in Europe, COVID-19, and… Read More →

02Feb

EIB goes live with first-ever digital blockchain sterling bond

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The European Investment Bank (EIB) said on Tuesday it had launched its first sterling-denominated digital bond on a private blockchain,… Read More →

30Jan

Blockchain trade finance: Contour and Tata Power forge new partnership

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Tata Power, an integrated power company in India, has partnered with Contour, a digital trade finance network based out of… Read More →

26Jan

Surecomp’s RIVO and WAVE BL partner to bolster digital trade finance solutions

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Surecomp today announced that it is partnering with WAVE BL, a blockchain-based digital platform, to further enhance digital trade finance… Read More →

24Jan

Digitalising trade: CargoX sees growth in electronic bill of lading usage

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CargoX, a document transfer solutions provider, today reported an increase in the number of users of the CargoX platform to… Read More →

05Jan

Tradetech predictions for 2023

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Iain MacLennan, VP of product management and trade at Finastra, and Patrik Zekkar, CEO of Enigio, Patrick DeVilbiss, head of… Read More →

04Jan

Global trade finance – reasons to be hopeful in 2023

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In TFG’s conversations with industry experts, we have learned quite a lot about trade volumes and commodities, trade technology, and… Read More →

21Dec

PODCAST | ‘22 in 22 minutes

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There is little doubt that 2022 has been an unprecedented year and for better or for worse, there has been… Read More →

20Dec

Tradetech and deep tier financing: How emerging technology can help supply chains meet ESG standards

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Alex Gray, head of trade finance at The London Institute of Banking & Finance, explains why the staff at trade… 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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