Traditional transactions depend on a complex infrastructure of banks, exchanges, brokers, and regulators. Websites like Bitcoin Loophole serve the best UI and trading tools suitable for novices and professional bitcoin traders. Blockchain technology offers an alternative in which each party can interact directly with one another, freeing them from these restrictions.
Such a simplified network of relationships would simplify business processes and increase transparency and trust amongst all parties involved. Technology may also play a role in establishing a global tax system among governments.
Blockchain technology is already beginning to revolutionize business chain management across industries that require the ability to track physical goods from origin to destination. It includes traditional sectors, such as food and retail, like Walmart, and online companies, like Amazon.
Blockchain can help reduce unnecessary friction and costs in international trade by expediting customs clearance. Transparency is also enhanced between companies and their customers due to using these technologies. This post explores the evolving role of blockchain technology in global trade and how people may eventually use it to establish a global tax system to align financial responsibilities across governments better.
Blockchain Technology and Global Trade
Although business chains have always been complex, they have grown exponentially more so with the advent of e-commerce. To track goods as they move through a complex network of partners before reaching consumers, businesses have relied on antiquated technology that was never designed to handle the demands of today’s marketplace. The complexities of global commerce necessitate using an open, efficient, and transparent system.
Blockchain technology could enable a simpler model that seamlessly integrates information from each partner in the chain, thereby improving efficiency and reducing costs throughout the value chain. As a result, it would allow for more competitive pricing to consumers as well as more significant profit for businesses.
Costs associated with managing inventory grow exponentially but often need to differentiate between individual customers and companies; affecting profitability across multiple transactions also negates any potential benefit gained through increased efficiency. In addition, global value chain management includes regular internal and external audits by third parties. Blockchain is a potential solution to some of the inefficiencies that arise from the current model, including error-prone documentation processes and high administrative costs.
A simplified network of relationships would simplify business processes and increase transparency and trust among all parties involved. Moreover, blockchain technology has the potential to help establish a global tax system among governments. While blockchain isn’t a replacement for current tax management systems, it can be used as part of a global tax framework to streamline compliance and to report across jurisdictions. It also eliminates the need for constant re-verification or reconciliation of records between government agencies. It is especially helpful in developing countries where corruption is particularly rampant. Let’s explore the potential reasons why blockchain is facilitating global trade.
1. Blockchain reduces efficiencies:
Blockchain can help increase efficiency and reduce costs by streamlining the verification process of documents such as bills of lading and certificates of origin. The time and cost saved on paperwork can also be applied to more productive uses within the company – for example, a trucker will have more time to focus on his driving.
Blockchain technology solves these inefficiencies by creating a secure distributed public ledger system that reduces dependence on costly intermediaries. To perform a transaction, confirming the authenticity of documents and saving time, companies must first enter information into a blockchain and receive digital signatures.
The use of blockchain also allows auditors to see every single transaction in real-time on a single unified source, eliminating the need to check multiple records as they become available. In addition, in the case of customs or excise procedures, parties will be able to obtain information electronically instead of having to travel across borders and submit paperwork physically.
2. Blockchain reduces overhead costs:
Blockchain helps automate specific processes within a company, such as payments and accounting, that can save money but contribute little to the bottom line for most companies. Walmart is one example of a company implementing blockchain technology regarding global trade. This partnership aims to reduce the time it takes for food products to reach consumers, which can be as long as 30 days.
Blockchain is already beginning to revolutionize business chain management across industries that require the ability to track physical goods from origin to destination. It includes traditional sectors such as food and retail, like Walmart, and online companies such as Amazon. For example, blockchain can help reduce unnecessary friction and costs in international trade by expediting customs clearance.
3. Blockchain levels the playing field for everyone:
One of blockchain’s most significant potential benefits is that it enables everyone to have an equal chance at participating in the process, regardless of their size. It is accomplished through a distributed ledger that can record all transactions made by each party and even specify their respective digital signatures. Blockchain is also transparent, meaning that all parties can see exactly where and when people in the system update information.
4. Blockchain facilitates ease of compliance:
Blockchain’s ability to provide auditable records for governments makes it a powerful tool for increasing global tax compliance. In addition, the structure behind blockchain technology provides a method for reconciling governmental data between multiple branches and jurisdictions, making this system particularly helpful in developing countries where corruption is prevalent.
