The World Trade Organization released a report yesterday arguing that blockchain and distributed ledger technology could be a boon for international trade.
The report, "Blockchain and International Trade: Opportunities, Challenges, and Implications for International Trade Cooperation," looks at the effects of the technology on industries such as custom clearance, logistics, trade finance, and transportation. The WTO found that blockchain has the potential to increase transparency and simplify process automation, clearing away some common trade hurdles. "The removal of barriers due to blockchain could result in more than $1 trillion of new trade in the next decade," the report reads.
Despite this, the report recognizes blockchain as a technology in its infancy, with challenges that must be addressed before widespread adoption. Among the identified issues are limited scalability due to predetermined block sizes, energy consumption, and security issues.
"Blockchain could make international trade smarter, but smart trade requires smart solutions and smart standardization – which can only be developed through cooperation," the report reads. "If we succeed in creating an ecosystem conducive to the wider development of Blockchain, international trade may look radically different in 10 to 15 years."
Earlier this week, Ethereum founder Vitalik Buterin, in an interview with Quartz, addressed the hype around blockchain technology, intimating that blockchain is too specialized a solution to apply to every industry, despite the potential for higher standards of transparency and efficiency. The WTO report concurs, stating:
"While it presents interesting features, Blockchain cannot, however, solve everything, as the current hype surrounding it tends to lead us to believe … Building a blockchain platform is a task that requires careful consideration by and coordination among potential participants, in order to analyse the opportunities and limitations of Blockchain in comparison to other, less ambitious, alternatives…"