International trade is all about breaking boundaries and going beyond the horizon. As big as it sounds, even the tech giants cannot march towards international trade single-handedly. That is why the involvement of the third party has become a fatal requirement to bridge the cultural barriers, understand and comply with the regulatory changes, and to promote a seamless trade. However, with multiple actors taking part in the play, keeping track of all the actors is easier said than done. At times these third parties may not be trustworthy. With no visibility, organizations cannot just turn a blind eye and go on! This has been a significant dilemma in international trade for generations. Enter blockchain technology in international trade—a fair play to all the players, eliminates middle man involvement, faster transactions all while establishing transparency throughout the network.
Blockchain or decentralized ledger technology (DLT) is a democratized system where data is accessible to anyone and everyone. The datasets stored in the blockchain are processed through mathematical ‘consensus protocol,’ and cryptographic means using keys, which leaves no room for unlawful actions. These tightly sealed crypto keys are of two types—public key and private key. The data in the public key is distributed to everyone, while the data in the private key is available only for authorized people. Due to the screening of contacts, private key is deemed to be more secure than public key.
Blockchain Technology’s Prowess in International Trade
Clear vision and Real-time Insights
Every single data entry in the blockchain technology is continuously updated on a real-time basis providing a heightened level of visibility. The data stored in DLT is time-stamped; even a single alteration is instantly recorded. This comes handy in the case of international trade. To illustrate this briefly, let’s take a cargo that is misdirected to London instead of Japan. Using blockchain, the higher officials can detect it quickly and take action to redirect it to Japan. This way, blockchain technology not only saves time, but you will also be rewarded with a satisfied customer who gets their goods on time. Also, you no longer need to go through a horde of files to know your customer’s whereabouts.
Transparent, irreversible and traceable Transactions
As blockchain technology is a decentralized ledger, the data stored in it cannot be altered or modified without the knowledge of others. This is quite useful in case of transactions; every single transaction in the blockchain technology is transparent, irreversible, and traceable. Through blockchain impact on international trade, the buyer and the seller can engage easily; even the agreement is directly written into the lines of code. This way, blockchain promoted tamper proofed data establishing mutual trust between the buyer and the seller wherever they are in the entire universe.
Digital Currency- Paperless Transaction
Of all the disruptions blockchain technology caused, it gave a new meaning to the existence of digital currency. It is said that if this duo ever combined forces, then the entire trade process will be downright digitized and automated. A strong debate opposing this amalgamation is going on for ages; organizations are still waiting for the green light for this union. This is the paramount reason why the price of digital currencies never remains stable. However, if this fusion works, banks will cease to exist, the transactions will directly occur between the buyer and the seller, a true digital vision.
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