– You recently published a book entitled “Can Blockchain Revolutionize International Trade?” How could blockchain change the world?
I believe that blockchain can have a global impact that is as transformative as the Internet. It could be to transactions what the Internet was to communication. The Internet created a World Wide Web; blockchain could create a Global Asset Web because it allows people to exchange assets on a global scale, on a peer-to-peer basis, in real-time, in a highly secure environment and with the guarantee that the information that has been added to the ledger has not been tampered with. Blockchain creates trust and transparency. It gives people with no particular trust in each other the possibility to collaborate and transact with one another without having to rely on trusted intermediaries.
These characteristics are particularly interesting in the case of international trade. The invention of the container was a real game-changer, but since then not much has changed. Goods as still transported in the same way they were some 50 years ago. The process remains very labour and paper-intensive. Shipping a container from Mombasa to Rotterdam involves around 100 people who often work in a silo, 200 documents, with many data elements entered numerous times, and generates a pile of paper that is about 25cm high. The immutable and decentralized nature of blockchain and its high level of security make it a particularly interesting tool to break silos and remove frictions from international trade. In my view, blockchain could be as much of a game-changer for international trade as was the container. However, technology is only a tool. In order to really make a difference we also to make sure that we put in place a regulatory environment that is conducive to the development of this technology.
– Due to what reasons blockchain can be trusted?
Blockchain generates trust because of its immutable and highly secure environment. Once the information has been added to the blockchain, it is very difficult to alter it, and since blocks are linked to each other, it is easy to trace transactions. But “very difficult” does not mean “impossible” and I think this is a point that is important to underline. There is no such thing as perfect immutability and all blockchains, even the most secure ones, can still be subject to so-called 51 percent attacks which can lead to an alteration of the information contained in the blockchain. It is also important to note that blockchain does not completely replace trust. You still need to trust the algorithm that is used to validate transactions (and the person that has developed it), and you need to trust that the information that has been added to the ledger is correct. Garbage in, garbage out. Off-chain verification processes that guarantee that the asserted claims have been met off-chain are still required. Blockchain is a very interesting tool, but it is not a panacea.
– How would, i.e., banking be disintermediated with blockchain and it’ll facilitate in reducing fee?
Blockchains allows people to interact directly on a peer-to-peer basis, which is what disintermediation is about. I can transact with you directly without having to go through my bank because blockchain gives me the guarantee that you have enough to pay me and that this amount has not already been spent – otherwise, why would I trust that you will pay me? This is particularly interesting in the case of cross-border payments, which usually take several days to be processed and are subject to high banking fees.
It is also interesting for those who do not have access to the banking system, the so-called “unbanked”. There have been a lot of talks about the potential of blockchain to “bank the unbanked”, but I think one should be “cautiously optimistic” in that respect. While blockchain can open new opportunities, it will do nothing for those who do not have access to the Internet. It can’t “bank the non-connected unbanked”. And those are many.
Interestingly, because of its promise of greater efficiency, faster settlements at lower costs, lower risk of fraud, auditable traceability and rising pressure from digital innovators, blockchain is also being explored with great interest by most financial institutions. The irony is that this technology is now being championed by those that Satoshi Nakamoto, the “father” of blockchain, wanted to make superfluous, as a way to improve their operations. So blockchain opens new opportunities and can help move towards more disintermediation, but I don’t think it will lead to full disintermediation – I don’t think full disintermediation is actually desirable. What is important is that this technology offers complementary tools and gives us, citizens, a broader range of products to choose from.
– Could you name international organizations which could benefit from blockchain technology?
Blockchain can impact all aspects of our life, just like the Internet transformed all facets of our lives, from the way we communicate and interact with one another to the way we work. I believe that blockchain is a technology that can impact virtually all areas covered by international organizations, from health to humanitarian aid and international trade. This is why it is important for all international organizations and for their Members to closely follow developments in their field of activity and to think about the opportunities that the technology opens, how these could be leveraged, but also how potential risks can be mitigated.
– Why do people need to pay attention to Blockchain technology?
Because of its transformative impact, because blockchain is much more than cryptocurrencies because it could impact every facet of our lives, because the technology is still evolving and that we have a chance to influence the way it will transform our world, and because this technology is there to stay. Yes, there has been a hype around blockchain – like with any new technology – but when the hype is over, blockchain won’t be over. On the contrary. This is when we will start to see a growing number of focused and successful projects. So we all need to get ready now.
– What inspired you to write “Can Blockchain Revolutionize International Trade?”
There is a lot of misunderstanding around blockchain. Many still associate this technology with Bitcoin, and Bitcoin only. I realized that few non-tech people understand the potential that this technology can have beyond cryptocurrencies. This is why I decided to write this book. Few people around me understood the gigantic potential that this technology can have on international trade and how much is already happening on the private sector side. My idea was to write a book to educate trade experts about the technology itself, its potential, but also to discuss various challenges that in my view need to be addressed urgently if we want this technology to have a truly transformative impact on international trade, including interoperability, regulatory and governance issues.