Blockchain Trade Finance

Blockchain | TFG Ultimate Guide to DLT

Trade Finance Global / Blockchain Trade Finance

Blockchain, DLT and Trade Finance – Your TFG Guide

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.

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Video: Reality Check – Blockchain & DLT for Global Trade, An Interview with Deepesh Patel and Emmanuelle Ganne

Infographics, Charts & Diagrams

Periodic Table

Periodic Table of Blockchain and DLT Projects in Trade, including a ‘stage’ that the projects and companies are at. Correct as at 1 November 2019.
Source: Research by ICC, TFG, WTO
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Projects by Banks

Projects by Bank
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Key Graphs

Key benefits of Distributed Ledger Technology (Source: TFG, ICC and WTO Blockchain for Trade Survey, October 2019. Responses from corporates, banks, consultancies and vendors, n = 202)
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Technological challenges around Distributed Ledger Technology (Source: TFG, ICC and WTO Blockchain for Trade Survey, October 2019. Responses from corporates, banks, consultancies and vendors, n = 202)
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Legal Challenges around Distributed Ledger Technology (Source: ICC, TFG and WTO Blockchain for Trade Survey, October 2019. Responses from corporates, banks, consultancies and vendors, n = 202)
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Perceptions of widespread DLT adoption between different types of firms, as well as the key challenges by firm type (Source: ICC, TFG and WTO Blockchain for Trade Survey, October 2019. Responses from corporates, banks, consultancies and vendors, n = 202, lines indicate standard deviation)
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Perceptions of widespread DLT adoption between different types of firms, as well as the key challenges by firm type (Source: ICC, TFG and WTO Blockchain for Trade Survey, October 2019. Responses from corporates, banks, consultancies and vendors, n = 202, lines indicate standard deviation)
PDF | JPEG

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Video: WTO Panel Session

 

Key Consortia and Network Articles

02Jan

The Thriving Future of Impact Investing

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With the development of financial technology and energetic Blockchain innovation this year, the market for Impact Investing has been experiencing... Read More →
31Dec

Taking Stock of 2019 – A Round-Up of 8 Themes in Trade Finance

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Events such as Brexit, the US-China trade war, political unrest between China and Hong Kong dominated the headlines in 2019,... Read More →
31Dec

Key Trade Finance Trends of 2019 – Asking the Experts

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Trade Finance Global, in partnership with Finastra, sat down with 6 global experts in trade to get a low down... Read More →
29Dec

Blockchain to enable frictionless global trading, DC EP to realize the de-dollarization

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Trade Finance Global spoke to Wenhui LIANG at the WTO Global Trade and Blockchain Forum, on the nature of the... Read More →
02Dec

RELEASED: ICC, TFG and WTO Study – Blockchain & DLT in Trade: A Reality Check

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Geneva, 2nd December 2019. Today, at the WTO's 'Global Trade and Blockchain Forum', ICC, TFG and WTO released a white... Read More →
02Dec

An exciting time for DLT in Trade

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Looking forward it is clear to tell that this is an exciting time for DLT in the trade industry; a... Read More →
02Dec

DLT Trade Finance Projects

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Trade finance is crucial for trading activities. According to WTO estimates, up to 80 per cent of trade is financed... Read More →
02Dec

DLT based Trade Insurance Initiatives

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When dealing with the uncertainty of the shipping industry, insurance is a must. To help simplify and digitize the insurance... Read More →
02Dec

DLT Based Supply Chain Digitization Projects

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The loose notion of a supply chain is as old as trade itself. To help modernize the concept and provide... Read More →
02Dec

DLT Projects by Trade Products

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Letter of Credit Trade finance as a whole had been struggling to traverse the divide into the digital age until... Read More →

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Blockchain & DLT: A Reality Check?

Popular Cryptocurrencies

Bitcoin – The inaugral cryptocurrency, bitcoin has a $100bn market cap, and by far the most commonly used crypto.

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Ethereum – A public blockchain with smart contract functionality, the EVM is a simple and viable mechanism for trade finance.

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Monero – The anonymous crypto. With privacy being it’s USP, Monero is one of the most confidential cryptos in the market.

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Dash – The younger sibling of Bitcoin, Dash is an improved crypto with Masternodes, privateSend and InstandSend.

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Ripple – Comprised of XRP and RipppleNet, we see the future of payments being Ripple. It doesn’t use blockchain for concensus and cannot be mined.

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Litecoin – A near replica of Bitcoin, Litecoin has a faster processing speed and coin limit. The 6th largest by market cap, it’s one to watch.

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Get in touch with our Blockchain trade finance experts. Enquire now.

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Blockchain for Trade Finance Podcasts

Similarities DLT Challenges

Latest Blockchain News

16Jan

VIDEO: ECB’s Yves Mersch’s Reality Check: Digital versus Crypto Currencies

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Currency is part and parcel of monetary policy, and a public mandate of the European Central Bank (ECB). TFG’s Editor,... Read More →
16Jan

BCR’s Michael Bickers: Will Supply Chain Finance Overtake Traditional Factoring in 2020?

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Michael Bickers, MD, BCR Publishing walked us through the trends in supply chain and receivables finance in 2019, arguably one... Read More →
14Jan

Will e-invoicing rise in 2020?

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TFG heard from Charles Bryan, Secretary General of EESPA. The global market is forecast to encompass 550 billion invoices annually.... Read More →
14Jan

BCG’s Bold Prediction for 2020: Will global trade slow down?

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We heard from BCG’s Sukand Ramachandran on the consequences of trade wars and Brexit for global trade, and what this... Read More →
13Jan

Top worries of 2019: AML, KYC and Basel III. ITFA’s lowdown on 2019, and thoughts for 2020

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TFG's Nikhil Patel sat down with ITFA Chairman, Sean Edwards, discussing the highs (and lows) of 2019, from a trade,... Read More →
10Jan

Through the Looking Glass: Trade Credit Insurance in 2020 (Berne Union)

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TFG spoke to Berne Union's Secretary General Vinco David about the state of credit insurance following 2019's uncertainty, and what... Read More →
09Jan

Expert Interview – Will ‘network of networks’ kick off in 2020? Finastra’s 2020 predictions in Tradetech – Iain MacLennan, Finastra

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Shop Talk: TFG spoke to VP Trade & Supply Chain Finance ahead of 2020, to catch up on what kept... Read More →
06Jan

‘Alexa, get me Trade Finance’ – Tradetech Predictions for 2020

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As we enter into a new decade, TFG spoke to trade experts to give their bets and views for 2020... Read More →

An A to Z of Blockchain, Cryptocurrencies and Trade Finance

Other DLT in Trade Whitepapers

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.

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

Is it Still Worth Investing in Cryptocurrencies?

Many investors believe that the cryptocurrency market is in the midst of a speculative bubble that is destined to pop. This may be at least partially correct as there can be little doubt that cryptocurrency prices have been extremely volatile.

The last spike in price came in 2017 when prices rose exponentially. Since then, the market has been in decline. However, there may be a further price spike in the future as the technology moves forward. Many banks are beginning to adopt blockchain technology and more and more retailers are beginning to accept cryptocurrency payments. These facts bode well for the future of cryptocurrencies.

Ultimately, this is a hotly debated topic and whether it’s still worth investing is a matter of opinion. The future of the cryptocurrency market remains uncertain.

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