With Britain voting to exit the EU and the apparent rise of some nationalist parties elsewhere in Europe, it feels like the age of globalism has come to halt.
On the surface, it seems like the international community is turning more and more inward. But there’s one area where globalism continues to expand rapidly, and if anything, is only accelerating: the flow of digital data and information.
In fact, according to a recent report from McKinsey & Company, “digital flows—which were practically nonexistent just 15 years ago—now exert a larger impact on GDP growth than the centuries-old trade in goods.”
The flow of information is not bound by borders or nationalist policies, and nowhere is this truer than with the decentralized, peer-to-peer digital ledger technology of blockchains.
While most famous for being the back-end technology powering cryptocurrencies like Bitcoin, interest in blockchain technology is now blossoming across multiple industries, and the potential applications are both surprising and full of potential for conducting international business.
Here are some of the key ways blockchain technology may make conducting international business easier and more efficient, driving the global economy into a new age:
Compliance
One of the toughest aspects of managing cross-border transactions is ensuring compliance with various regulatory frameworks, each with their own set of unique rules. Many times, companies may not even know when they’re in violation of local regulations.
There will also be complex tax codes to unravel, which can be difficult enough when conducting business between states, let along countries. This can all add up to lengthy and costly waiting periods for transactions to go through, as well as wasted resources when the deal ultimately becomes too complex to finalize.
Blockchain technology is not burdened by government oversight and doesn’t require third-parties to manage any aspect of the transaction. As a peer-to-peer technology, the transfer of assets — whether currency or something else entirely — can travel across borders seamlessly. And while the record is public to ensure no one’s committing fraud, user data is autonomous.
Blockchains may offer businesses a way to greatly reduce cost while ensuring secure transactions that aren’t hindered by complex and carrying regulatory frameworks.
Financial inclusion
The growth of blockchain technology may herald a new era of small-business growth, where even sole proprietors are enabled to create international businesses, even if they’re running it all by themselves out of their living room.
The authors of a recent article on Quartz argue that with blockchain tech, “We can build a true sharing economy where the creators of value actually share in the wealth these new platforms create.”
Any type of creator, whether a musician living in Uganda or an app developer in Manhattan, becomes eligible to receive direct compensation for the assets they build. The playing field becomes even, whether you’re a small business or a huge one.
The financial inclusion potentially created by the peer-to-peer system the blockchain uses may also build a more stable economy: As more people are able to participate in a global economy without the burden of bureaucracy, wealth and opportunity could become more evenly distributed without the need to wait for cultural or political structures to shift.
It’s not just for startups anymore
Blockchain technology was viewed as a sort of novel experiment.
Today, some of the biggest companies in the world accept Bitcoin, and companies like IBM, FedEx and even Walmart are utilizing the technology for various purposes.
Oh, and Dubai wants every single government service that can run on blockchain technology to be on blockchain technology by 2020.
Why would Dubai be so interested in becoming a blockchain hub? Because it relies on international trade. Writing for Seeking Alpha, John Mason writes that Dubai, “sees itself as the hub of worldwide trade, a position that can build networks throughout the world,” and “Globalization rests upon the back of the spread of information.”
Perhaps nowhere else is the flow of information more important than when conducting financial business transactions. The fact that big-name companies and major incumbents are starting to embrace this technology opens up the playing field for building networks where information flows freely and securely.
This kind of freedom of data flow is unprecedented in global business. Will it revolutionize and transform the global economy as we know it? That remains to be seen, but we do know it will play a major role in the future of global business, one way or another.
There is a window open for businesses to evaluate how they do things across borders. It might necessarily mean be time to go all in on blockchain, but as McKinsey & Company recommends, “This is a moment for companies to rethink their organizational structures, products, assets, and competitors.”
If nothing else, it’s a good time for some reflection and analysis to determine whether new platforms like blockchains will provide the solutions businesses need to continue playing and winning in the international market.
