On Oct 12, the United Kingdom’s House of Lords approved a bill that could potentially use blockchain technology to store trading documents.
According to the government’s press release, the Electronic Trade Document Bill has the following goals:
- The Bill will make digital documentation legally recognized, reduce admin costs and make it easier for British firms to buy and sell internationally
- Processing times for electronic documents cut to 20 seconds and carbon emissions reduced by at least ten percent
The bill is expected to boost UK’s 1.4 Trillion Pound international trade and reduce the estimated 28.5 billion trade documents it uses. Due to current laws, all business-to-business documents are required to be printed on paper.
Introducing the new bill will allow businesses to have flexibility and options on how they conduct their transactions.
The following commonly used documents for the trade or transport of goods are expected to be digitized:
- bill of exchange
- promissory note
- bill of lading
- ship’s delivery order
- warehouse receipt
- mate’s receipt
- marine insurance policy
- cargo insurance certificate
This development is in line with the UK government’s goal of becoming a crypto hub.
Why use Blockchain Technology for Storage?
Most people know about cryptocurrencies like Bitcoin but are not familiar with the blockchain technology behind it.
Blockchain allows the storage of data in a secure and hard-to-tamper manner. The information recorded in a block is almost impossible to alter, making it a permanent record. The blocks are then connected in a chain, wherein the newest block contains all the data from the previous ones. This makes it easy to retrieve the provenance or history of anything.
Security is further guaranteed because of the distributed ledger. All blocks are validated by multiple computers or nodes within the network. It will take a lot of computing power to hack several computers at the same time.
Benefits of the Bill
The UK’s adoption of digitizing paper transactions will bring a lot of benefits. This will greatly contribute to the country’s goal of reducing carbon emissions to net zero by 2050. This will contribute to the global effort to stop climate change.
The International Chamber of Commerce estimates that digitization will increase the international transactions of small and medium businesses by 13%.
Digitization is a step in the right direction, but securing it with blockchain technology, if selected, is taking it a step further.
