World Trade Organization (WTO) Report: Blockchain has $3 Trillion Economic Value Potential by 2030
A new report, “Blockchain and International Trade: Opportunities, Challenges, and Implications for International Trade Cooperation” was published by the World Trade Organization on November 27th. The report provides plenty of information about blockchain technology, but one of the most notable claims is that the economic value-add of blockchain globally is expected to reach $3 trillion by 2030.
Even though blockchain technology is already entering multiple sectors around the world, the WTO is responsible for using this report to find any challenges that need to be considered beforehand. It reviews the potential benefits and problems to various industries, specifically including customs clearance, logistics, trade finance, and transportation.
Based on the estimations in the study, blockchain stands to reduce trade cost substantially with the improved transparency and the automation of various processes. The report notes, “The removal of barriers due to blockchain could result in more than $1 trillion of new trade in the next decade.”
Blockchain’s organizational benefits also help with the implementation of intellectual rights through many jurisdictions. The transparency provides accountability to anyone that participates on the blockchain, effectively eliminating the potential for fraud and maintaining public contracts.
Supply chains seem to be the ones that stand to gain the most from blockchain technology, considering how many companies are already implementing the distributed ledger technology to track shipments. Furthermore, this record can offer support to smaller companies as well.
Before the blockchain can be used locally and internationally, one of the concerns that the organization has is the limited scalability, since the block sizes are predetermined. They also use a lot of energy to maintain and there’s a risk of lowered security, which poses an even bigger threat to the information on the ledger.
“[Although] blockchains are highly resilient compared to traditional databases due to their decentralized and distributed nature and the use of cryptographic techniques, they are not completely immune from traditional security challenges.”
When preparing a blockchain for cross-border trade, the report notes that there should be a multi-stakeholder approach. This kind of ledger need framework that will be clear in the legality of blockchain transactions globally. The report concludes,
“Blockchain could make international trade smarter, but smart trade requires smart standardization — and smart 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 ten to 15 years.”
Vitalik Buterin, the co-founder of Ethereum, voiced a similar opinion about these concerns, noting that the wrong application of the technology will result in “wasted time” for some industries. While blockchain provides many benefits to industries where the transparent ledger is necessary, this is not true of every single industry.