The administration of cross-border trade remains dominated by complex, old-fashioned, hybrid human-computer-paper systems long after disruptive innovations have transformed commerce in many other domains. Interest in blockchain is driven by the desire to cut through the ‘Gordian knot’ of complex, fragmented, anachronistic legacy trade-finance systems now in use. Blockchain advocates believe it is superior to the legacy database technologies currently in use in all important transaction-processing systems and designed to work within hierarchically networked computer systems controlled by large organisations. These advocates appear unaware, however, of the wide range of practical functions performed by different elements of existing trade finance systems, and are thus proposing alternatives that cannot perform all the functions of the systems they propose to replace. This kind of mismatch between real-world business requirements and the theoretical advantages of blockchain alternatives goes a long way to explain the failure of any blockchain projects to achieve widespread success in the market. Incremental efforts to transform trade finance in light of actual stakeholder requirements are both less vulnerable to speculative bubbles and more likely to meet the actual requirements of the many, diverse participants in global trade-finance systems today.
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