By: Tajinder Marwaha, Express Trade Capital
As the trade finance industry faces challenges related to logistics and fraud, blockchain technology may help in creating transparency and assurance of delivery while still providing confidentiality for trade parties. Blockchain can support cross border trade transactions that otherwise would be difficult due to costs and the documentation process.
90% of the world relies on trade finance and the incorporation of blockchain would speed the delivery of funds and reduce the usage of paper. The trade finance industry still operates in a very old-fashioned manner, which entails manual inputting documents and physical letters of credit to ensure that payments will be received. Blockchain may streamline such manualcomplexity by enabling companies to securely and digitally confirm where products were originated, its transaction details, and other requisite information. Indeed, through blockchain, payments can be processed through a tokenized form depending upon the delivery or receipt of goods. Focusing on just contracts, parties can create their own rules that would ensure automatic payments and eliminate the possibility of missed, or repeated shipments. Incorporating blockchain technology will create greater trust for trade parties that may well result in an increase in global trade.