Although they don’t hold the same disruptive promise of radical decentralization as do their permissionless counterparts, private blockchains that governments and corporations run are still capable of transforming entire sectors of the world economy. Global trade has long been viewed as one of the most conspicuous areas for instrumental application of distributed ledger technology (DLT), with both trade finance and supply chains relying on antiquated, unreliable systems of record keeping and trust management.
The recent news that Hong Kong’s financial regulator and a conglomerate of banks are poised to roll out a blockchain trade finance platform next month is yet another instance of incumbent actors summoning DLT to address the international trade’s woes — if not one of the most ambitious to date. While some reports estimate the whole trade finance market at $9 trillion, a survey by the Asian Development Bank suggests there is an additional $1.5 trillion of unmet demand for such services worldwide. Closing this gap will require sweeping changes in the ways global supply chains operate, but the potential payoffs are huge.
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