Research, commissioned by BTL Group, suggested 87 percent of respondents – almost 9 in 10 – felt blockchains could transform how companies do things and offer solutions when it comes to the privacy and security of data. The survey of 279 technical specialists also suggested data privacy was the highest priority among people working in IT at the moment, with 29 percent of them naming it as their top concern. In addition, nearly two-thirds of them are trialing or using blockchain technology. Out of those who have not yet worked with the blockchain technology, almost half – 47 percent – said they would do so within the next two years.

Early applications of blockchain for international transactions are focusing on digitizing trade documents, such as bills of lading, letters of credit and customs documentation. The idea is to put traditionally paper-based forms into “smart contracts” that are automated and tracked using a blockchain. “This is something that a lot of banks have piloted and trade organizations, such as the WTO, are looking at this very closely,” says Rebecca Liao, vice president of business development and strategy at Skuchain, a Mountain View, California startup that helps enterprise supply chains use blockchain. With blockchain, digital contracts can be stored in transparent, shared databases and protected from deletion, tampering, and revision.

In addition to facilitating secure international trade transactions, blockchain also has the potential to be used for financing. “The second big bucket of what is being done in international trade is trade finance, where capital is involved,” says Liao.

While the financial sector has initially focused on developing blockchain solutions for processing and validating transactions, another potential application is for securely tracking the title to goods anywhere within a supply chain. “The way that suppliers currently finance their supply chain operations is they take a receivable to a bank and ask for payment up front,” explains Liao. “The bank will issue them that payment at a discount based on that seller’s cost of capital. But with the blockchain, instead of financing off of receivables, we can finance off of inventory.”

Blockchain could re-shape trade finance because it enables all parties in a transaction to know exactly where the goods are in the supply chain, and who owns them. “In addition, you have a payment guarantee from the buyer that is transparent for all the parties to see on a distributed ledger,” Liao says.

Moreover, the combination of an iron-clad payment guarantee and the ability to precisely track a shipment means that financing can shift from the seller’s cost of capital to the buyer’s cost. As a result, financing fees can be reduced from what can be even double-digit interest rates to under 1 percent. “This is how trade finance can be implemented as a capital opportunity,” adds Liao, “not just as a way to save costs because we are reducing paperwork and processes.”

The Need for Industry Standards

While blockchain has the potential to transform the structure of global commerce, it is still in its infancy. Liao says a lack of international standards is the most significant impediment to widespread adoption of this new technology.

“It’s all well and good to know that the technology works,” she says, “but until a data letter of credit is accepted as an official instrument, or a bank is willing to issue it as an official instrument, it really can’t be used in a real-world context. Until an organization with authority in this area sets a standard, you’re not going to see real implementations of this technology with live data and live money transactions.”

The blockchain revolution has started, but it won’t happen overnight. Day One is one of the early adopters of blockchain technology with a majority of our work being combined with artificial intelligence to build systems that are more fool-proof than those that are made with previously popular technologies. Make a change for blockchain before blockchain forces you to change. Contact us for more information.