The current world is a very interconnected place. Countries trade with other countries, selling them the surplus of goods they produce and buying goods they don’t have in sufficient quantities. International trade encourages countries to specialize in producing only those goods and services which they can produce with the most efficiency at the lowest cost. It also makes it harder for domestic monopolies to thrive, because they face competition from foreign companies. Almost all economists agree that international trading is beneficial for all participants. But still, some countries are restricted from trading for various reasons. In this article we’ll try to understand the restrictions that many countries face, and how they can overcome them, using blockchain solutions.
More trading routes, and even more trading countries
Many centuries ago, there were many established trading routes, such as the Chinese Silk Road or the Indian Ocean trade routes. These routes couldn’t be changed, because they were the optimal way to deliver goods across countries. Today, everything changed. The globalization broke the old rules and created new ways to trade. The Internet allowed the smallest of companies and even individuals to trade with each other. For example, we can buy clothes in the UK, living in Poland, and they can be delivered in less than a day. Amazon and similar enterprises allow their merchants to ship goods anywhere on the globe.
The global trade is growing every year. In 2018, world merchandise exported a total of 19 trillion dollars, up 10% from the previous year. The value of commercial trade rose nearly as much, up 8% from the previous year. No wonder that the usual meaning of a trade route becomes outdated - vessels go in all directions across all seas, cargo aircrafts fly across the globe, and trains drag freight rails everywhere on land and even under the sea. Of course, there are some general trade routes used for the convenience of counting the volume of shipping, such as Asia-North America, but there’s no certain road where you can find long caravans going in both directions.
Even in this context, there are some countries excluded from international trading, because they are considered not worthy to trade with. For example, North Korea is cut off, because they have tense relationships with the United States, and President Trump threatened to stop US trade with any country that would deal with the rogue nation. The same can be said about many other countries - Iran, Cuba, Venezuela, all of them are blocked from doing normal business due to political agendas. Some of them rely on a larger neighbor - as Venezuela is on Cuba - and some of them handle the situation on their own - the oil exports from Iran has recently reached its all-time high.
Still, it is highly problematic for these countries to trade anything - because they can't use dollars, which can be instantly blocked by the US government any time they deem it necessary. So what options are they left with?
Blockchain escrow solutions for business
Some people may think that blockchain and cryptocurrencies aren’t for large trades, but they’re wrong. Decentralized escrow solutions like Escaroo, Setescrow, and Lockscrow are specifically designed for the needs of large businesses of any scale. If you want to sell something, but you want to be sure that your money won’t be blocked along the way or that the other party will really pay, you simply put the funds in an escrow account to send the goods with confidence. It works the same way when sending a small guitar pick via Amazon, and it works with millions of barrels of crude oil in international trade.
Which service is the most suitable in both situations? If we judge in other categories, for example, decentralization, Escaroo comes as the more decentralized option than its counterparts. It keeps the funds of every user separate, not in one centralized pool like with other services, such as Setescrow and Lockscrow. For each deal, a new smart contract is created, and funds get locked there until the buyer receives the goods or services they pay for. It’s the most convenient solution for any type of trade: nobody has access to these funds, not even the Escaroo platform itself, which only creates the smart contracts for its users. Every transaction happens directly between the two parties.
Blockchain technologies ensure the unprecedented level of security, which allows sending any amounts of money during the deal, even millions of dollars. Nobody can block or freeze the funds and the identity of both parties are kept secret; to any outside observer they would appear like any ordinary blockchain address. Thus, no one can be accused of violating the trading sanctions. This can improve the trading climate across the globe.
Trade and politics always go hand in hand. Trading means prosperity for nations, and strong countries try to suppress the trades of weaker countries as an act of punishment. For example, the US has been doing this for decades. But not all of these weaker countries are ready to change their policies in response to such restrictions because it’s an obvious manipulation. Most of them continue to keep on their chosen way and ignore these restrictions, which are even more pointless considering the fact that they also damage the country that imposes them.
In this case, blockchain escrow services for trading are one of the solutions that may come in handy. We know many countries that rely on exporting resources, such as Venezuela, which is cut off from any trade with other countries via sanctions. Blockchain technologies can give us a pass to such a world where freedom and trust mean more than any political agenda. Blockchain simply adds to the greater good!
The author is not associated with any of the projects mentioned.