Optimizing International Trade: 5 Key Benefits of Distributed Ledger Technology (DLT)

There are a lot of things that Distributed Ledger Technology (DLT) like blockchain and DAG platforms can improve, and international trade is likely at the top of the list. Let’s remember that international trade is like a dynamic and global marketplace where nations interact, buying and selling products from each other. This mutual trade enables countries to access diverse offerings and expand their economies, but it comes with its own issues.

Currently, international trade faces several challenges that could be addressed through DLT solutions. Despite the regulations and guidelines in place, one major concern for independent parties is the lack of transparency and trust due to fragmented data and manual record-keeping systems. This often leads to delays, disputes, and increased costs. So, let's check how we can solve that now.

Enhanced transparency and traceability —or improving the supply chain

DLT platforms like Obyte enable a transparent and immutable record of transactions, making it easier to track the movement of goods along the supply chain. Every participant in the network can access and verify the data, reducing the likelihood of fraudulent activities and increasing trust between trading partners.

Businesses could optimize their inventory levels, monitor production processes, and identify potential bottlenecks this way. This improved visibility can lead to more efficient operations and cost savings for international trade participants. For example, a clothing company could track the movement of raw materials from suppliers to manufacturers, and then to retailers, in real time.

This enhanced transparency streamlines logistics, reduces delays, and prevents counterfeit goods from entering the chain. As a result, the clothing company would experience a reduction in transportation costs, a decrease in inventory management expenses, and a decline in the number of counterfeit products. That leads to substantial overall cost savings.

Indeed, according to CoinTelegraph Consulting and Insolar, businesses can save up to 0.8% in traditional costs by implementing DLT solutions. It may sound like a small figure, but, given the size of the industry, that would translate to over $450 billion only in Western Europe.

Instant cross-border payments

As we may know, traditional money could be difficult to use for international transactions. These kinds of payments could be cumbersome, slow, and expensive. At the same time, settlement times could take several days, and negative changes in the economy worldwide (like banking issues, supply chain turbulence, or political sanctions) could seriously limit international trade.

Luckily, those issues could be eliminated by using digital assets, any kind of it. Bitcoin, Ether, GBYTE, or stablecoins —all of them are instant, easy, and cheap (some more than others). Businesses and individuals can even create their own assets and transfer them with only a digital app.

Not to mention intermediaries: most cryptocurrencies usually eliminate most of them, like banks or other financial institutions. Some crypto platforms, e.g. Obyte, eliminate all of them, including miners. This means censorship-resistant and way cheaper payments available 24/7, without complex requirements. The latter feature also applies to customized tokens that could be used internally by companies, as a representation of a less liquid asset (like reserves of gold, bonds, stocks, etc.)

In this regard, Obyte offers the possibility to create customized tokens with or without coding, in just a few minutes. By using the Obyte wallet and the Asset Registry online, you can define your own token's properties. That includes name, symbol, total supply, and decimals. This simplicity empowers individuals and businesses to participate in the token economy without technical barriers or high costs.

Cutting red tape

All countries are different, and all of them have their own rules. That gives us a lot of bureaucracy (red tape) as a result. DLT tools could help with that too. Smart contracts can automatically execute certain actions when predefined conditions are met, streamlining customs clearance and payment procedures.

Besides, the transparency of a public distributed ledger could facilitate the creation and digitization of documents. Several companies and/or parties could be involved in the same file without the need for duplication, and seeing all the changes in real-time. Only people with clearance would have access, and it wouldn’t be possible to modify without permission.

DLT can also help streamline compliance by providing a secure platform where participants can share verified and encrypted data in real time. This shared ledger ensures that all relevant parties have access to accurate and up-to-date information, reducing the risk of non-compliance and potential penalties.

Higher security online

Distributed ledger systems like Obyte have the potential to greatly enhance security in international trade processes. One of the key strengths of DLT is its decentralized nature, which means that data is stored and verified across multiple nodes in the network, reducing the risk of a single point of failure and making it highly resistant to cyber-attacks. With all participants having access to the same transparent and immutable ledger, the chances of fraudulent activities, such as counterfeiting or double-spending, are minimized.

These solutions also ensure data integrity through cryptographic techniques, making it virtually impossible for unauthorized parties to tamper with or alter information. This enhanced trust and transparency improve the traceability of goods, enabling real-time monitoring and verification of transactions.

As a result, businesses can mitigate risks related to unauthorized access, data breaches, and unscrupulous practices, ultimately fostering a more secure and reliable international trade ecosystem. In addition, the use of smart contracts automates the execution of agreed-upon terms, reducing the need for intermediaries and further enhancing security by removing potential points of vulnerability.

Decentralized (and Cheaper) Trade Finance

The term “Trade Finance” comprises financial tools and offerings utilized by businesses to streamline global trade and commercial activities. It enables importers and exporters to conduct transactions efficiently and securely, but not without high costs. Numerous third parties are involved in these processes: banks, insurers, export credit agencies, and more. All of them have their own fees to mediate between parties (exporter and importer) and avoid fraud.

Trade financing is crucial for facilitating international transactions (or trusting strangers), but it can be burdensome and expensive, especially for small and medium-sized enterprises (SMEs). DLT can facilitate the creation of decentralized trade finance platforms that connect buyers and sellers. One of those platforms is the new ArbStore.

ArbStore for International Trade

Combined with powerful smart contracts in Obyte, the ArbStore lets users solve potential disputes independently and without high fees. All that the parties need to do is connect with each other through the Obyte wallet. Then, they can select an expert arbiter from the ArbStore to solve any future dispute that may arise (or not). One of the parties offers a contract with arbitration to the other and deposits the previously agreed amount on it. This kind of contract will lock the funds until the conditions are met, but, in case of dispute, the offended party can call the selected arbiter.

They’re (human) professionals registered on the platform with their real names and available to solve certain types of disputes in exchange for a fee. That’s usually between 2% and 5%, and often dramatically less expensive and with fewer intermediaries than traditional methods.

Indeed, according to Aceris Law LLC, “For a relatively simple [international] arbitration requiring 1,500 hours of legal work, for instance, if billed at the rate of USD 300/hour, legal fees would equal USD 450,000 per arbitration.” Some companies offer the service including a filing fee between $2,000 and $6,000, besides a high percentage to properly manage the case. Therefore, the ArbStore has arisen as an effective, cheaper, and decentralized option to improve international trade and its potentially high costs.

By utilizing an easy and secure mobile app, users can connect, transact, and engage expert arbitrators with ease. Embracing the ArbStore can lead to smoother trade processes, reduced expenses, and enhanced trust in international trade. Are you ready to join? Check the ArbStore website!