What are the reasons behind the increasing standardization of blockchain?
Global trade is much larger than what can be managed by the financial system and traditional models. The website BitQT will assist traders in their bitcoin journey with the best trading tools, fast payouts, and phenomenal customer support Standardization in blockchain can lead to a more integrated, efficient, transparent value chain relationship in the future.
One reason behind increasing the standardization of blockchain is to avoid the possibility that international organizations would have to deal with one another. However, it presents some inherent governance issues and requires prioritization of certain aspects over others due to varying interest levels within different nations.
Another reason for standardizing blockchain technology is that it’s more secure and not reliant on centralized authority without regulation or oversight from a centralized body such as an ICB/ASCII board. The significant challenges to blockchain standardization are the need for private organizations to agree upon a common framework and the cumbersome nature of existing international organizations. Some examples of these challenges are:
Governmental regulation (i.e., GDPR, ISO standards for privacy)
Due to this difficulty, blockchain will likely be seen as a replacement for existing standards rather than as a supplement or asset included in the web of soft assets that are part of the supply chain ecosystem.
In the future, Blockchain technology can be one of many assets integrated into the value chain (such as SEDEX, RFID, and IoT devices). Therefore, the supply chain industry’s move to standardize blockchain has several possible benefits that could enhance the global trading industry.
What are the benefits of blockchain standardization?
Standardization of blockchain technology presents a unique opportunity for the financial and tech industries to take advantage of additional revenue opportunities and optimize profitability. For example, a bank can use blockchain technology in trade finance, such as smart contracts, loan origination, etc. It provides a clear advantage over traditional trade finance models because it removes uncertainty from the process due to automation. In addition, blockchain technology can add specific identity verifications and allow for real-time tracking and execution of transparent contracts for all parties involved in the transaction.
Blockchain will allow real-time tracking of goods in the supply chain and more efficient remittance payments. For example, when a farmer sells corn to a food processing company, the farmer can be paid immediately, safely, and securely without risking fraud or delayed payment. The result is that financial service users will require less capital because unnecessary intermediaries will not tie up funds.
The rapid growth of blockchain standardization
With the rapid growth in shipping costs over the past few decades, a standardized blockchain system could lower shipping costs by reducing complexity and allowing for faster transactions. For example, when a shipment of 20 container goods travels from China to the European Union, it could be shipped with one electronic invoice. It saves time, money, and resources vital for regulatory compliance, which can cost billions of dollars per year.
One key aspect of blockchain technology for value chain management is track-and-trace capabilities, specifically in the freight sector. The freight logistics focus will be tracking consignments for their entire journey through the supply chain. Supply chain managers can verify each step of the transit using IoT and smart contracts. The advantages of blockchain technology will bring a high level of efficiency, security, and transparency within the freight logistics sector.
One significant possibility for blockchain technology is to allow for value-based trade settlement. The legal system is already in place, arguing that blockchain will provide “information about all parties involved in a transaction (processed on a public ledger) and making updates to that ledger visible to all parties,” which means it could be seen as a source of legal evidence in court systems.
As demands for services and products change, new supply chain models will emerge. Because of this, blockchain must be standardized. In addition, the standardization of blockchain technology will allow for streamlined integration and interconnection of networks and institutions within the supply chain industry.
Blockchain can be a foundational technology that is the backbone for many upcoming technologies. For example, IoT devices have the potential to become more than data collectors but also sensors that provide “actionable insights.” With the standardization of blockchain technology, the supply chain industry can take advantage of this new technological paradigm shift.
How will blockchain standardization help the government?
The government could take advantage of blockchain technology by having a decentralized way to register contracts, documents, and transactions without the need for a central authority or third party. As a result, it would eliminate fraud, reduce reliance on intermediaries and minimize the potential for human error in the process. Some platforms that are currently working towards implementing these standards are:
The International Bank Services (IBS) standard has provisions to “ensure that every organization that transacts in international trade is involved with an ENUM-compliant IBS.” In addition, the standard strives to facilitate cross-border commercial transactions by preventing fraudulent practices and ensuring the integrity of data transfers between countries. Therefore, it is anticipated that this global blockchain platform will have several benefits across various industries.
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