Cryptocurrency & Tech Writer.
Global GDP rose by 2.2% in 2019, the slowest since the financial crisis of 2008 - 2009. Despite the impact of Covid-19, the global economy is expected to expand by 2.4% in 2020.
The World Trade Organization (WTO) believes that new technology can help to reduce trade global trade costs, allowing for increased global economic growth.
If we can successfully reduce global trading costs, we can expect global trade to grow by 31-34% over 15 years. In 2017, over 160 WTO member countries came together to sign the Trade Facilitation Agreement (TFA), which plans to reduce trade costs by an average of 14.3% and boost global trade by up to $1 trillion per year, with the biggest gains in the poorest countries.
Blockchain technology can play a huge part in boosting the global economy due it's many applications which include:
Through collaborations between blockchain companies and traditional enterprises, we can expect to see an increase in efficiency, reduction of costs, and reduction of barriers to entry.
Notable examples include OmiseGo, who plan to provide financial services to millions of unbanked people worldwide.
Another example is VeChain who helped DNV GL, an internationally accredited assurance company, to develop a blockchain-enabled infection risk management solution in the midst of the Covid-19 outbreak.
Blockchain technology can also help companies to exchange data and value through blockchain networks, which can be linked to off-chain networks via Oracles.
Blockchain-based data exchanges can bring much-needed transparency and speed to the global economy. However, this wouldn't be without its challenges. Data exchanged via the network needs to be validated, which is no problem for blockchain technology.
The problem lies with regulations. European countries in particular re very strict when it comes to data privacy, for example when you buy a domain name in Europe your personal details are hidden by default.
Whereas if you buy a domain name in the USA, domain privacy is an additional feature you pay for. Another example is the annoying GDPR Cookie Popups you have probably seen 100 times today.
This is all due to the strict data privacy regulations in Europe, regulations that could make it different for companies to exchange data.
However, I believe these are problems we can overcome.
Blockchain technology has garnered interest from traditional businesses, with adoption increasing year after year. For these companies to succeed in a blockchain-enabled global marketplace, they’ll need a decentralized governance model.
This will help these organizations to gain trust on a global scale. By using blockchain technology they can easily set up a decentralized custodian of trust with no third-party interference.
IBM identified three types of organizations, based on the roles each one plays within a blockchain network:
Reference (PDF File): Advancing Global Trade with Blockchain (Page 4: Dawn is Coming: Blockchain as a Profitable Investment)
These organizations share a common objective, which is to drive innovation by creating services and apps that improve the value of the network whilst putting consumers in control of their data.
Services that could be offered include payment remittance or document validation. Whilst all three organization types prioritize blockchain for billing and settlement and payments, they intend to use the blockchain for different purposes depending on their role.
These organizations acknowledge that network roles heavily influence the distribution of all revenue generated on blockchain platforms. Builders are expected to take a majority of that revenue for the costs incurred due to their setup work.
The reason for this is that networks are mainly monetized based on the value and volume of the transactions generated on these networks.
Networks usually charge a small fee on a huge volume of transactions which can bring in billions of dollars in revenue. Payment processors are a great example of this.
To nurture a growing, global marketplace, it’s important to focus on interoperability across the different systems that process transactions.
Decentralized blockchains can work with organizations to increase global economic growth.
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