If the UK passes the Electronic Trade Document Bill this year, digital documents will be legally recognizable, which will be critical for global trade. So, can blockchain help enable a safe and quick transition to a digitally compliant trading world?
Reduced Fraud and Enhanced Security
Blockchain technology can help prevent the circulation of fake documents and custom-related certificates when used in the customs and export control industry. It also safeguards data from theft, hacking, or fraud, which are all problems that players in the import-export sector are struggling with.
This technology relies on functions such as hashes and time-stamping to guarantee data integrity. Blockchain features a decentralized storage system that hackers can’t access, making it tamper-proof.
Sensitive Substances or Materials Traceability during Shipping
Blockchain applications can boost the traceability of dangerous and regulated items. These include medical supplies, nuclear materials, and multifunctional chemicals during transportation and shipping.
Today, reinforcing export regulations around sensitive materials is an international pact under the UN Security Council Resolution 1540. Here, more security layers are acquired by creating digital identities and security keys. This means that blockchain technologies can recognize data breaches, detect diversion, and limit unapproved access. These capabilities increase trust between different agents in high-profile security fields such as customs.
Faster Processing and Verification
Verifying document authenticity is a core challenge affiliated with export and import applications faced by insurance companies, financing institutions, and export and customs authorities. Currently, the system doesn’t permit fast distribution to all the parties required to process finance proposals, insurance applications, or assess multilateral trade transactions.
Some individuals think that digitalizing the system will accelerate the processing of transactions, which can unlock $1.2 trillion more in exports. The information on the ledger is distributable, unlike conventional IT systems, meaning it’s stored over the entire network and not in a single server or location.
Every transaction is connected to previous transactions in a chain to ease data decentralization and give users real-time access to the information. As a result, processing transactions and paperwork become faster. Blockchain-enabled transactions can feature smart contracts and transparency properties, reducing illegal activities.
The Rift between Implementation and Policy
While many individuals and organizations welcome the electronic trade policy, they are yet to understand how it will work. Many governments have adopted digital trade systems customized for conferences organized by the United Nations Commission on International Trade Law (UNCITRAL). Still, many believe each country will want to develop unique strategies, making the current ones incompatible.
Most opine that blockchain is crucial in developing a robust and secure digital documentation system. Multiple countries can access and use this system, and it also comes with essential features for maintaining data integrity, safeguarding information against theft and fraud, and guaranteeing cybersecurity.
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