Blockchain in Trade

The key benefits of blockchain technology in trade finance is that it can reduce processing time, eliminate the use of paper, and save money while ensuring transparency, security, and trust. Removing intermediaries from the process removes the risk of manipulation by the participants in the process.

Here are some major points demonstrating the advantages of blockchain in trade finance:

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  • Efficiency: Blockchain technology makes the trade finance process more efficient by completing the transactions directly between the relevant parties with no intermediary and with digitized information. With blockchain, the parties can operate smart contracts that trigger commercial actions automatically. This allows to dramatically streamline trade finance processes, thereby cutting costs and increasing the transaction speed.

  • Traceability: With blockchain technology, the importers and exporters can track goods and assets and where they are currently residing. Also, related asset information can be received from the previous and pass on to the new owner for possible action. This allows new financing opportunities and can improve the perfection of an interest in the trading of goods. This is considered one of the main benefits of blockchain in trade finance.

  • Transparency: Blockchain, being a distributed ledger technology can record multiple details of the transactions against commercial agreements and can distribute the data to improve further trust. This allows reducing the risk of tampering the records and offers more options for financing trade.

  • Auditability: Utilising Blockchain each trade finance transaction can be recorded sequentially and indefinitely. This provides a lasting audit trail for the life of the traded asset as well as better verification of assets authenticity with a reduction of compliance costs.

  • Security: Each transaction within the trade network is verified using independently verified cryptography. The encryption and cryptographically protected keys securely transmit data between different financial institutions and thus privatize the data.