It is not a commonly known fact that global trade is losing a whopping $600 billion each year because of the so-called maritime fraud. This specific type of fraud occurs when cargoes with goods end up not on the ships, that are supposed to transport them to the ports of call, but elsewhere, resulting in thousands of broken transactions and breach of trust between contract parties. Perhaps even more shockingly, this figure represents just a fraction of fraud in the global trade industry, meaning that the actual losses are bigger by orders of magnitude.
An alliance of charities, tech experts and companies aims to put an end to these gross violations with the help of the blockchain technology. IBM has partnered up with Hyperledger, an open-source blockchain project, to deliver traceability to global trade. In fact, IBM was a mastermind behind Hyperledger since 2015, when its leading engineers joined the initiative and led its development. Today, other companies, like Intel and London Stock Exchange, are investing in the effort as well, report replyua.net
Arvind Krishna, senior VP at IBM who supervises the company’s participation in the project, says the disrupting effect of blockchain is similar to that of the Internet in the 1990s. He says that as a public decentralized digital ledger, blockchain can bring back trust to global trade transactions, leading to revolutionary improvements in government procurement services, healthcare and shipping to name a few. It enables to track every product at any stage of a transaction and makes it easy to certify the origins of that product. Moreover, the information on the blockchain is incorruptible, meaning that no party can change it once it is added to the network.
There are other ways in which blockchain can benefit global trade, too. For instance, it can cut down costs, which parties to a transaction spend on intermediaries to ensure that the deal goes through. Blockchain can also open up an opportunity for small local businesses and farmers to join the supply chains by selling their produce directly via blockchain.
Krishna noted that it would be fair to compare blockchain adoption with the Internet. In terms of that comparison, the world is now in 1994, blockchain-wise. Things could change really quickly, he added, within the next five years or perhaps even less.