Bitcoin and its underlying blockchain technology promise considerable transformations to the global economy. And, international trade is one of the areas that will experience the most significant impacts of Bitcoin and blockchain. Those transformations have begun taking shape as Bitcoin adoption increases among merchants and consumers worldwide.
The Impacts of Bitcoin and Blockchain on International Trade
Technological innovation remains essential to enhancing trade operations. Bitcoin and blockchain are the latest innovations that most people say will significantly impact international trade. Here are the main ways Bitcoin and blockchain could revolutionize global commerce.
Reduced Operational Costs
International trade entails the exchange of commodities and services across geographical borders. Countries rely on each other to export or import commodities based on their comparative advantages. However, the operational costs have constantly increased over the years, mainly due to government and institutional influences imposed through capital controls.
Bitcoin and blockchain could help to reduce the costs because it is not subject to government regulations. That enables users to circumvent various government controls, significantly reducing business costs. For instance, Bitcoin transactions do not involve intermediaries, impacting relatively lower fees than bank transfers and credit cards.
The reduced costs also result from the less paperwork involved in Bitcoin transactions and blockchain’s ability to automate various transactional processes.
Increased International Trade
Bitcoin and blockchain facilitate various economic activities, encouraging financial inclusion. It has seen the proliferation of crypto exchange businesses, enabling investors and individuals to seamlessly transact with the rest of the world. Unlike platforms like the ethereum code app, which specializes in distributing government-issued digital currency, most crypto exchanges are decentralized, allowing people to generate income from trading multiple cryptocurrencies.
Bitcoin has inspired an emerging global market of tech-savvy consumers willing to use crypto to pay for goods and services from online and physical stores. That creates lucrative business opportunities to expand into new global markets without disrupting their everyday operations.
Bitcoin and blockchain also drive international trade because of their ability to facilitate the free flow of capital. The blockchain ledger’s transparency and security give Bitcoin credibility as a safe-haven payment method and asset, attracting investors worldwide. Bitcoin’s decentralization enables businesses and individuals to move money and acquire investments worldwide without external intervention.
Enhanced Supply Chain Transparency
Supply chain transparency remains one of the significant challenges to international trade. Several investors have been wary that involving intermediaries in cross-border transactions erode trust. Blockchain could be the best solution to such issues, thanks to its digital public ledger. The blockchain records all Bitcoin transactions and user addresses on a digital public ledger.
The ledger is irreversible and accessible to Bitcoin users only. That enables businesses and individuals to observe transparency and due diligence in all transactions, preventing risks such as fraud. Bitcoin’s blockchain technology fosters trust among organizations, ensuring a secure and standardized trade regardless of the trading parties’ geographical locations.
The blockchain is a robust platform that can also hold various pieces of information besides Bitcoin transactions. Many industry leaders are currently exploring integrating Bitcoin into other processes such as inventory management. Like Bitcoin, blockchain could also enable businesses to enhance transparency in global supply chains.
Automation of Essential Business Processes
The blockchain has tremendous potential to automate various business processes, including coordination and financial intermediation. It brings together suppliers, manufacturers, distributors, and customers, creating a framework for information sharing without delays. Blockchain can facilitate and improve procurement processes through the execution of smart contracts. Blockchain ensures almost instantaneous records updates, with increased resiliency to cyber threats.
Reports show Bitcoin’s blockchain will create over $3 trillion in new trade by 2030. As discussed above, Bitcoin and blockchain have more significant potential to revolutionize international business.