The services of Blockchain technology can be used in trade finance. The block chain rests on a digitalised, decentralised and distributed ledger model at the core. As per its nature it is secure and more robust than the centralised, proprietary models. We use these models in the trade ecosystem. This technology is used to create a record of transactions that is viable as well as decentralised.
It allows us to substitute a single master database. It keeps the record of all transactions from the starting point of a transaction and this record is immutable. This gives different financial institutions a chance to review all the steps of the transaction to prevent fraud.
With this model we can easily establish and prove your identity than some other systems. With this technology we can make the transfer of trade assets direct and easy.
Now I will represent some Blockchain technology concepts:
1. Blockchain is different from Bitcoin– A large number of people believe that blockchain and bitcoin are the same. But the fact is that it is basic technology of bitcoin. They are related with each other but they are not the same.
Bitcoin is an unregulated digital currency that was introduced in 2008 by Satoshi Nakamoto. At that time there was no government or the bank involved to keep track of this transaction. The solution to this was blockchain. With this the process of facilitating the use of bitcoin could be recorded securely. But there is always a confusion between blockchain and bitcoin
because both the concepts came at the same time.
2. All the data stored on blockchain is public– The given statement is partially true. Some of them are public and open also. But some others are private and they can be accessed by some specific users only. The type of blockchain needed will be determined by the use case. There are three basic types of it:
(a) Public Blockchains– Here there is a network of blockchain and the user can become its member. This means that when the downloading of software is finished then they can utilise the data. This block chain is a decentralised one. Bitcoin is an example of this.
(b) Private Blockchains– Here only one organisation gives permission to write, send and receive data. These are used within the organisation and only a few users can access it to perform the transactions. Its rules can be changed by the organisation and it has the power to decline transactions according to the established rules.
(c) Consortium Blockchains– It is a hybrid model of public and a private Blockchains in which low-trust is offered to the public and high-trust is offered to private types. Here the number of users are limited for participating in the consensus process.
3. There is only a single Blockchain– The Blockchain is a term which describes a ledger technology. It does not specify a product or solution. Its solution has common denominators like getting underpinned by cryptography and consensus mechanism included in it. Generally we have seen this Blockchain technology in digital marketing and ecommerce sector.
4. Blockchain is a buzzword, nothing more– The initial Blockchain is a real technology that is available today also. But now its testing is done with proof of concepts in several industries and regions all over the world. Also you have to keep in mind that this is still early days for this kind of technology. Many Blockchain providers, like R3 and IBM released version 1 of the solutions in 2017.