Research that was conducted by both Bain & Company and the World Economic Forum in a joint effort has suggested that, by using blockchain technology, global business could generate an extra USD 1 trillion in global trade finance that otherwise wouldn’t be possible.
According to figures provided by an Asian Development Bank calculation, the global trade finance gap is sitting at approximately USD 1.5 trillion, and estimates have it growing to somewhere in the region of USD 2.4 trillion by the year 2025.
Limited access to funds
The reason for this rise is reportedly down to limited access to credit and loans for small and medium-sized enterprises who are looking for ways to expand their businesses.
The gap made by the missing funding can be bridged to the tune of USD 1 trillion by blockchain technology being “used more broadly” according to the report.
This is accomplished by distributed networks sharing business records and information across various financial platforms, bringing transparency to the fore and enhancing businesses credibility in the eyes of lenders.
The research claims that such a system “would help mitigate credit risk, lower fees and remove barriers to trade.”
“If implemented, the main beneficiaries are set to be SMEs and emerging markets, which suffer most from a lack of access to credit and have ample room to grow trade.”
A blockchain-based trade finance system would greatly benefit Asian economies according to the research, as they make up seven percent, or USD 105 billion, of the current trade finance gap, with around 75 percent of document-based transactions globally across supply chains.
Benefits of blockchain technology
A report such as this one provided by the World Economic Forum and Bain & Company only serves to highlight the benefits that blockchain technology can bring to the broader economy on a global level.
There’s been a lot of speculation recently about cryptocurrencies and what the future may hold for them, but the future for blockchain technology looks to be a whole lot brighter at the moment.
Only recently it was revealed that China is currently leading the way in blockchain-based patents that have been submitted, with some of the biggest companies in the country being heavily involved.
Lover of all things crypto, blockchain and AI, professional tech scribe & part of the editorial team at Crypto Disrupt.