How blockchain technology will change the world trade?

In November 2018 E. Ganne released the study ‘Can blockchain revolutionize international trade?’ Next week, the WTO representative will read a report at a conference at the Blockchain Centre Vilnius on January 23 on the future of new technologies after the bursting of the cryptocurrency bubble and application opportunities in international trade.

According to her, blockchain technologies have a future and the race for their practical use and application has already begun. Having worked in the WTO director general’s office and advised on strategic trade policy questions, she emphasises when talking about her book that blockchain technologies can greatly transform international trade.

Here is the full interview with the expert.

Last November you published a book on the effects of blockchain on international trade. What are the main findings of the book, and what has changed since its publication?

My book entitled “Can blockchain revolutionize international trade?” was published in November 2018, a couple of months ago. What I show in the book is that blockchain technology has the potential to significantly impact international trade.

In order to help fight fraud, blockchain could make it easier to track products along a supply chain by tracking tainted products or proving their origin or authenticity.

It could also facilitate trade by making it possible for stakeholders along the supply chain to work together in a transparent, coordinated and secure manner. International trade transactions are complex; they involve multiple actors who do not always trust each other, and to a large extent still work in silos. Blockchain has the potential to break these silos.

Another area where it could have a significant impact is trade finance. Traditional trade finance remains highly paper- and labour-intensive. Various platforms have emerged which leverage the technology to digitalize processes, which in turn reduces the time and cost needed to process trade finance processes.

By making it possible to break the various silos that currently exist between the many parties involved in cross-border trade transactions, blockchain could bring trade globalization to another level.

The internet digitalized communication and made it possible to coordinate various production stages remotely, thereby fueling the emergence of global value chains. Blockchain has the potential to impact transactions; it could be to transactions what the internet was to communication. Blockchain is often referred to as the Internet of value. In my view, it is, above all: “the Internet of transactions”.

The blockchain ecosystem is evolving quite rapidly. New projects are emerging every day.

– How could blockchain technology be better used in world trade? Where are we at the moment and what is the WTO doing to facilitate it?

Blockchain technology is already being used commercially, such as trade finance as well as tracking products along the supply chain. In other areas, people are still testing it. This is particularly true when it comes to border procedures—a crucial part of international trade.

Blockchain will only succeed in facilitating and digitalizing international trade if all steps of an international trade transaction are digitalized; from trade finance, to transportation and logistics, to border procedures. What we need is “chain thinking”. We need to work on all fronts and ensure the various actors involved in international trade work together.​ This is what we have been trying to do at the WTO. To start a dialogue and build synergies, I organised a workshop at my publication’s November 2018 launch. This workshop brought together representatives from the private and government sectors as well as representatives of various international organisations who work on Blockchain. It was the first Blockchain event that brought all these actors together, and we intend to continue this dialogue and are discussing follow-up actions.

– What are the main challenges to blockchain technology after the ICO bubble?

The ICO bubble is part of the hype surrounding blockchain. We are, as global research and advisory firm Gartner said, in a phase of “irrational exuberance”, which is typical of the hype cycle of emerging technologies. We should soon enter into a second phase characterized by larger, more focused investments and the emergence of successful models.

We are starting to see this in the field of international trade. Over the last few months various projects have moved from proof-of-concept and pilot phases to commercial implementation. It is the case, for example, in the area of trade finance with platforms like We.trade, Voltron, Marco Polo and others that already process live operations.

But a number of challenges remain for the technology to work to its full potential, including interoperability issues and developing a conducive regulatory framework that allows the technology to thrive. When it comes to regulation, it is critical to find the right balance. Regulating too early or over-regulating would be counterproductive, but some advances are needed to clarify the legal status of certain blockchain transactions, recognize the validity of e-documents, and more. On this front, greater coordination between the private sector and regulators, but also between regulators at a supranational level, would be welcome.

– What should we look for in 2019 in blockchain developments?

The world of Blockchain is still very much the Wild West when it comes to governance issues. Everyone is rushing into it without much coordination. If we want blockchain to work to its full potential it is critical, in my view, that we coordinate action and strive to develop collective solutions to current challenges.

– How is Lithuania looking in Europe and the world in the context of Blockchain?

Europe and Lithuania are very active when it comes to blockchain, and this is a very good thing. It is still too early to tell what the future will look like, but one thing is certain: this technology is here to stay. Those who start early will have a comparative advantage. The race is on so it is important that European countries seize the opportunity.

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The conference will take place in the Blockchain Centre Vilnius office, on Upės 23. Please pay attention that due to the limited seats available, prior registration is necessary. Registration for participants is open until 2.00 pm on Tuesday January 22. Please, press here to register.

Read more about the conference here.

The centre’s anniversary annual conference, which will be broadcasted live on their events Facebook page.