Reshaping the future of international trade using the Bitcoin blockchain

The volume of international trade continues to grow every year. In 2014, the total value of international trade exceeded 18 trillion US dollars. However, the cost of transporting goods is still expensive and the procedures are too complicated, requiring a variety of paperwork. According to the International Air Transport Association, each international air cargo shipment may require more than 30 different paperwork, which increases air freight costs and prolongs transportation time. The same is true for sea freight. Transport documents are also often used as a means of commercial fraud.

Therefore, in order to promote the safe and free growth of international trade, the transportation industry needs to undergo a fundamental paradigm shift and redesign its business processes regarding document management.

Fortunately, the Internet of Things, Bitcoin, and Bitcoin blockchain provide a new way to improve international trade transportation methods. Startups are already trying to create a paperless commercial transportation model that is low-cost, reliable, fast, efficient, and secure.

There are many documents that are used in export transactions. Depending on the destination of the goods and the type of product, specific documents need to be produced. According to ExportGov, these documents include: regular export documents, transport documents, export compliance documents, certificates of origin, other transport certificates for specific goods, other related export documents and temporary shipping documents.

When trading, you must prepare the relevant documents, fill out the required documents accurately, and send them to the various relevant departments. Minor errors, inconsistencies, or omissions can prevent the smooth export of goods, leading to customs delays, unpaid payments, and even possible confiscation of goods by customs officials.

The number and complexity of these documents can be overwhelming. For example, the bill of lading (BOL) is a key document for maritime transport, serving as the basis for handling the rights and obligations of both parties in the transport between the carrier and the shipper. According to maritime law, only when the consignee presents the BOL can the carrier deliver the goods at the destination port.

The shipping industry has been using BOL since the 12th century. It can be seen that BOL is very important, but in reality, the carrier delivers the goods before the consignee presents the BOL. Why does this happen?

According to Al Tamimi & Co, the reason is that the banking and postal services are relatively slow, which takes longer than the transportation itself. Waiting for BOL has caused a lot of trouble for all parties involved in the trade. As a result, the carrier delivers the goods before the consignee presents the BOL, and this has become a default behavior for a long time. It seems to be no problem, but it hides huge risks.

Professor Caslav Pejovic said: "If the carrier delivers the goods before seeing the BOL, it is at its own risk. If the goods are delivered to a party that is not entitled to receive the goods, then the carrier will be liable for breach of contract and the handover of the goods."

Commercial fraud happens all the time. The United Nations Commission on International Trade Law (UNCITRAL) said in a report titled "Preventing Commercial Fraud": "As early as 2002, UNCITRAL has been thinking about the adverse economic impact of fraud on world trade." The report mentioned that BOL may be used as a means of commercial fraud. For example, "forged documents may include forged signatures, false descriptions, and false bank guarantees."

Bitcoin blockchain solves cargo transportation documentation problem

As the industry works to digitize bills of lading and air freight, shipping experts may want to consider using this cutting-edge internet innovation: the Bitcoin blockchain.

The Bitcoin blockchain is a distributed network database that does not require permission. When it was first created, it was used to continuously record and save Bitcoin transaction activities. It has both reliability and availability. Because the Bitcoin network is maintained and operated by computers around the world, there is no single point of failure.

Blockchain can encrypt and protect system files, including shipping documents and assets, and is transparent and tamper-proof.

Given the above characteristics, blockchain can effectively reduce or prevent fraud in international commercial trade. In fact, blockchain-based smart contracts, smart assets and other applications are very useful in the field of international trade. 1. Shipping transactions can be audited; 2. The supply chain of goods can be tracked; 3. Transportation records cannot be tampered with.

Smart contracts are algorithms that are free of human intervention, can be verified, and can automatically execute the terms of an agreement. At present, there are already startups on the market that have developed related applications. For example, the blockchain startup Block Notary developed a proof of existence application. Bitproof.io also announced its SealX application. SealX allows users to generate a digital contract through the blockchain to prevent the contract content from being maliciously modified. Wave has also developed an application that uses blockchain to manage file ownership, reducing the risks of disagreements and forgery.

Bitcoin and blockchain do provide us with innovative ideas, which, combined with IoT technology, can create and develop revolutionary products to better manage the preparation, review, transmission, tracking and storage of shipping documents.

Original article: https://news.bitcoin.com/bitcoin-blockchain-will-shape-future-international-trade/
By Julio Gil-Pulgar
Translator: Bibit
Editor: printemps
Source (translation): Babbitt Information