Trade financing rarely makes major securities. But behind the scenes, it underlies more than 30 billions of dollars in annual world trade. However, the systems that feed that it remains in paper, slow and exclusive.
Small and medium -sized enterprises (SMEs) are always systematically refused by funding due to a fragmented infrastructure and therefore face obstacles when they participate in world trade. In his latest report, Cointelegraph Research analyzes an increasing number of institutions and governments asking if the blockchain can offer a more effective model. A notable project in this regard is the XDC network.
To find out more about how XDC uses the blockchain to scan commercial documents, download the full report here
The global difference in trade financing: a problem of 2.5 billions of dollars
Despite technological progress in other industries, trade funding is still dominated by manual processes. In 2022, only about 2% of all lading invoices were issued electronically. Most cross -border exchanges always involve letters, faxes and wet hell signatures.
This ineffectiveness feeds a lake to finance global trade, estimated at 2.5 billions of dollars. The gap refers to the understerable funding request to companies also requested. This hinders their ability to respect orders, expand operations or participate in world supply chains. This gap most significantly affects SMEs on emerging markets.
The obstacles to digitization are not simply technical, but also legal. Until recently, electronic tickets for the notes of LADGUG or PROMOISE did not have the legal status of their paper counterparts. It starts to change, at least in certain places. The G7 countries align with the law of the CNUDCI model on transferable electronic recordings (MLETR), which aims to give equal digital documents.
Consequently, a consortium of industry players plans to go towards a 100% Bills of Leding digital adoption by 2030. However, policy needs technology to support it, and this is where hybrid blockchain platforms such as XDC are making their mark.
Which makes the XDC approach different
The XDC network is a public blockchain built for business use cases such as trade financing. Its hybrid architecture allows integration with private systems while providing public transparency if necessary. It also complies with ISO 20022, which makes it compatible with the messaging standards used by world banks.
XDC is already used in pilots across Asia, Latin America and Africa. It supports more than 2,000 transactions per second with quasi-zero costs. In addition, the network is interoperable with more than 125 blockchains via the Layerzero protocol.
Its positioning is clear: do not disrupt trade financing, but to modernize your back-end with a programmable infrastructure. The objective of XDC is to allow the issue of digital assets, automation and access to capital without obliging institutions to abandon familiar workflows.
To find out more about how XDC uses the blockchain to scan commercial documents, download the full report here
From invoices to digital assets
Platforms such as Tradefi.network allow companies to represent traditional commercial documents, such as invoices, lading invoices or letters of credit, as digital tokens on XDC.
This has two key advantages. First of all, it allows automation and verification in real time. Second, he opens the door to non -banking capital to enter the market. Tokenized commercial instruments can be sold to global investors and provide liquidity to SMEs that could otherwise be overlooked by traditional lenders such as banks.
Some of these concepts have already been tested in the real world. In Latin America, SMEs have obtained funding via tokenized invoices on XDC. In Asia, an electronic ladgage ticket recorded on the network has been used as a guarantee for a loan. This has helped reduce the disbursement time from two weeks to less than three hours.
Trade financing has slowly recashed
It is always uncertain of the blockchain as part of the permanent luminaire in the financing of trade. Legal harmonization remains unequal between the courts. Data confidentiality, conformity and interoperability with inherited systems are still underway. However, efforts such as those by XDC suggest that the accent is made of speculative use cases to more targeted functional applications. Rather than replacing the system, these technologies slowly start to adapt, especially in places where existing tools fail.
To find out more about how XDC uses the blockchain to scan commercial documents, download the full report here
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