Transfers in minutes, penny commissions and product tracking. How cryptocurrencies can change international trade

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Blockchain technology and cryptocurrencies are already influencing international trade in Ukraine and around the world.

The complexity and price of international trade force businesses to actively look for new solutions, ways to reduce the cost of transporting goods. And every year, an increasing number of companies pay attention to blockchain and cryptocurrency – two sides of the same technology, capable of revolutionizing the field of trade.

The first experiments of companies with blockchain began back in 2016 – that’s when the first big deal was made – but the pandemic has greatly accelerated this process.

The main problems of international trade

The international trade ecosystem of Ukraine, like any other country, consists of dozens and hundreds of process participants – buyers and sellers, insurers, logisticians and drivers, banks and other intermediaries.

Their constant interaction gives rise to a lot of issues that need to be solved – setting up communication channels, document flows, minimizing losses, optimizing routes. This works on a small scale, but when scaled to a global level, the following issues arise:

• Process participants do not have a common platform for interaction. All organizations have internal communication channels, but negotiate with each other using outdated methods that require documentation;
• Financial transactions are taking place through intermediaries and often take long periods of time. Any international transfer can take up to several days to be confirmed, which affects the speed of trade;
• Tracking of deliveries, especially in the case of goods that require special conditions, cannot be provided even by fairly large companies. This leads to an increase in spoilage costs, the introduction of additional layers of document management;
• Bureaucratization of the process complicates and slows down trade. This applies to contracts, legal documents, certificates, and customs control;
• Lack of transparency at all these levels leads to a decrease in trust, an increased risk of fraud, and thus to even greater unnecessary costs.

How blockchain and cryptocurrencies can solve these problems

The use of blockchain can solve the following problems of international trade:

• Technology of decentralized information storage solves the single data source problem. It ensures their immutability – protects against falsifications, retroactive entries, does not require backup;
• All trade participants – from the driver to the customs officer and the auditor – have equal access to information about the transaction. They can interact with each other in real time within the same system;
• Blockchain raises transparency of all processes. All parties can study the history of transactions at any time, which increases the level of trust, reduces the risks of fraud and allows you to quickly find the source of the error;
• Cryptocurrency makes it possible to make any transfers between countries in a matter of minutes. There is no need to wait for days for confirmation of the agreement from the bank. At the same time, the commission for transactions of any volume will be the same and will amount to pennies;
• The electronic data register eliminates the need to maintain paper document circulation, and the technology of smart contracts makes it possible to fine-tune processes, up to the automatic transfer of funds at the time of signing the supply document;
• Smart contracts also provide timely payments to employees and suppliers, payment of taxes in automatic mode, speed up receipt of certificates and customs clearance;
• Blockchain makes it possible to track deliveries, store the history of each product and reject them according to the specified conditions.

For example, during the transportation of the 2020 Covid-19 vaccine, sensors monitored the temperature and, in the event of its increase, made a record in the blockchain about the deterioration of a specific dose of the drug.

Louis Dreyfus, which controls about 10% of the global volume of agricultural trade, can be cited as an example of successful implementation of blockchain and cryptocurrencies in business. In Ukraine, the company owns elevators in three regions and exports corn, wheat, soybeans and other crops.

Louis Dreyfus considered blockchain technology at the level of an idea, but the pandemic made its adjustments. In 2020, the corporation introduced electronic document management and invested in a blockchain initiative Covantis. Its purpose is to make international trade operations simple and efficient.

Later, the company launched a blockchain-based supply chain, making it completely transparent. Today, more than 30 enterprises from around the world work on its platform, including the American Cargill, the Chinese COFCO and the Swiss Glencore Agricole.

Cryptocurrency technology has all the tools to completely change international trade – to optimize it and significantly reduce costs. But in practice, today its integration into business processes faces problems.

How cryptocurrency is used in trade in Ukraine

In 2016, Barclays Bank conducted the world’s first transaction using blockchain. He bought a batch of butter and cheese for $100,000, spending only four hours to check the documents instead of one week.

In 2017, the world’s first real estate purchase using a smart contract for Ethereum took place in Ukraine.

Since then, mass adoption of cryptocurrencies has begun in the country. According to TripleAtoday 15.7% of Ukrainian citizens – which is about 6.5 million people – own crypto-assets.

In the ranking of the Global Crypto Index from Chainalysis according to the level of adoption of cryptocurrencies, the country took third place in 2022 and fifth place in 2023. And the number of donations to non-profit foundations through the crypt exceeded $100 million.

In June 2022, Ukraine joined the European Blockchain System as the first step towards integration into the international blockchain network. This system was created for the use of technology at the international level: payments, verification of driver’s licenses, documents and registration of tourists.

All this influenced the development of the cryptocurrency services sector. For example, as early as August 2022, the Stylus and TechnoEzh hardware store chains integrated cryptocurrency payments. In April 2023, the Ukrainian retailer of Foxtrot equipment as well started taking cryptocurrencies as payment for goods.

At the same time, it became possible to make payments both online and in offline stores – with the help of 130+ assets. Access to crypto users has become possible thanks to local Bitcoin exchange WhiteBIT.

Two months before, Whitepay from WhiteBIT announced about entering the European market. The service started installing POS terminals at points of sale and integrating the online payment system in various online markets.

Today, despite all the difficulties associated with the war and the lack of regulation, cryptocurrency companies of Ukraine are trying to respond to the demands of society. They offer their customers new opportunities, launch new functions and services.

Cryptocurrency has a great impact on domestic and international trade in Ukraine – it simplifies cross-border payments, helps companies and people invest in foreign projects, and send money to relief funds.

The state also favors the technology and helps its integration – it launches public services on the blockchain, regulatory sandboxexplores the potential of CBDC (national currency on the blockchain).

But, unfortunately, this process is largely slowed down due to the lack of a ready legal framework. Despite the initiatives, enthusiasm of citizens and developers, cryptocurrencies are not legalized in Ukraine. This closes many doors and requires businesses to spend resources on problems that could be solved by the law.

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