Illustration photo. Samuel Aranda/Getty Images.
The use of blockchain in various sectors of global trade could add about $3 trillion to the global economy by 2030. This, according to a new study published by the World Trade Organization on Tuesday.
The study looks into possible uses of blockchain in international trade, and considers the pros and cons of a decentralized trade system. It looks into fields such as finance, customs, logistics, and transportation. According to the report, the use of blockchain could cut trade costs significantly, and lead to new trade deals that are estimated at $1 trillion.
Another field in which blockchain appears to have significant potential is intellectual property. The WTO report says that the use of blockchain could help secure intellectual property rights in places where enforcement is weak. Another mentioned positive factor of blockchain use in trade is the trust factor. Making the supply chain transparent helps all parties involved develop trust in the process. In addition, the lower costs of blockchain deployment could open up new opportunities for smaller businesses and startups.
But the WTO report looks into the downsides as well. High energy consumption, security issues (stemming from a large number of recent hacks), and scalability issues that are derived from the predetermined size of the blocks are the standout cons.
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The study ends with a cautiously optimistic tone, saying that "blockchain could make international trade smarter," but adds that this requires standardization, "and standardization can only happen through cooperation. If we succeed in creating an ecosystem conducive to the wider development of blockchain, international trade could well look radically different in 10 to 15 years."
But there’s also an underlined warning: "Blockchain is not suited to all situations, nor is it a panacea for all problems… While pertinent in many situations, the use of blockchain may create barriers if it is used for transactions that do not require high levels of reliability."