Brexit is an abbreviation for “British exit”. In 1973, the United Kingdom joined the European Union (the EU), then known as the EEC (European Economic Community). This allowed the UK to be part of the European Single Market which enables the free movement of goods, capital, services, and labour between all EU members. This article mainly talks about Blockchain and Brexit – its impact and influence in the UK.
On the 23 June 2016, the UK held a referendum where voters were asked only one question – whether the UK should leave or remain in the EU. One day later, the results were announced: a slim majority of British people voted to leave the EU (52% of voters).
The countdown to Brexit began on 29 March 2017, when the UK government invoked the official withdrawal process from the EU, aka Article 50. As a default, the United Kingdom would cease to be a member of the EU on 29 March 2019.
On 22 March 2019, the EU agreed to extend Brexit’s deadline to either 12th April or 22nd May, depending on the outcome of the Withdrawal Agreement vote. This would be voted on by the UK Parliament during the last week of March.
As the U.K. gears up to leave the European Union (EU), for commerce, there remains the unknowns of how trade will be affected, as well as how capital, goods and services can be tracked. A study found that across 200 businesses surveyed, more than half of large and mid-sized companies queried are looking to adopt blockchain in an effort to mitigate operational risks in the wake of Brexit.
About 33 percent of firms said they will use blockchain to combat fraud, while 11 percent will use blockchain to help cut costs and 10 percent see blockchain as useful in supply chain management.
People and immigration
The UK’s changing relationship with the EU access to the will impact the immigration status of employees across both markets, visa checks may become more common.
Blockchain systematically tackles the challenges of digital identity as it was designed to enable sharing of data between multiple parties, without the need for an intermediary.
When applying this to the movement of people, blockchain can enable the sharing of a secure digital passport of qualifications which can be easily accessed by employers to validate a candidate’s credibility and legality to work in any given country.
2. Trade and customs
The UK and EU negotiations will ultimately decide whether the current free trade area will continue, but signs are currently pointing towards the UK leaving the EU Customs Union, necessitating some level of border controls on the UK-EU frontier. This will involve an administrative overhead, which results in increased cost, labour and overall is inefficient.
Blockchain serves as a shared ledger of transactions that can run smart contracts to ensure supply chain integrity and provenance tracking, therefore it has the potential to offer a system of recording customs data that can be shared both securely and transparently while reducing administrative costs and time delays. This essentially could avoid the need for border stops for many products, helping business to deliver operational efficiency and government to maintain a smooth customs and border regime.
The convergence of the Internet of Things, AI and blockchain could provide a means whereby cross border trade could be automatically tracked, tariffs calculated and regulations upheld; enabling any issues or violations to be detected and addressed early
3. Economics and policy
The government and UK businesses now need to think differently about how they boost UK productivity growth and make the UK a magnet to retain and attract business.
Blockchain is already having an impact on many government services across the globe, including transportation, healthcare, cybersecurity and pensions.
Brexit has been a protracted and highly convoluted process.From the findings, the public remain somewhat optimistic about the state of the crypto markets in the midst of Brexit and a slowing global economy.
About 62% believe that Brexit will have a somewhat positive impact on crypto prices. In terms of their investment strategy, around 74% are considering holding cryptocurrency in their portfolio.
The optimists (44%) believe that post-Brexit, Britain could be prompted to take a progressive stance towards cryptocurrency regulation and enable blockchain innovations, which would increase the adoption rate of the technology. Therefore, the blockchain innovations and technologies can be seen as highly acceptable in the future.
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The Blockchain as a Service (BaaS) Market comprises of platform, vendors and service providers. Platform providers are vendors who provide back-end infrastructure and development tools-as-a service to application and solution developers at an individual or enterprise scale.
Service providers are vendors who provide advisory and consulting, custom development, system implementation and integration services, and managed services to end-users. The market size was valued at USD 350.0 Million in 2017 and expected to reach USD 15,455.0 Million by 2023.
With the given market data, Markets offers customizations as per the company’s specific needs. The following customization options are available :
Size of the BaaS Market
The Blockchain as a Service market is expected to grow from USD 623.0 Million in 2018 to USD 15,455.0 Million by 2023, at a Compound Annual Growth Rate (CAGR) of 90.1% during the forecast period. The major growth drivers of the market include the low cost of bandwidth, data storage, and computing, and need to lower risks, complexities, and increase efficiency.
The services segment is expected to hold the larger market share during the forecast period. The demand for consulting and implementation services is expected to surge, due to the growing need for Blockchain as a Service solutions across organizations.
Major Growth Areas
Major BaaS business applications include supply chain management, payments, identity management, smart contracts, and Governance, Risk, and Compliance (GRC) management. The adoption of Blockchain as a Service offering for the identity management business application is expected to increase significantly in the coming years.
The unavailability of equivalent systems for securing the identity of digital entities and online authentication of personal identities are expected to increase the adoption of the blockchain technology. The integration of the blockchain technology provides a solution to mitigate the need for central authority and trusted third parties.
The Banking, Financial Services, and Insurance (BFSI) industry is estimated to hold the largest share of the Blockchain as a Service Market in 2018. Organizations in this industry are leveraging the benefits of decentralization, immutability, efficiency, cost-effectiveness, and security, which are expected to increase the adoption of the blockchain technology across the BFSI industry. The manufacturing industry is expected to grow at the highest CAGR during the forecast period.
Small and Medium-sized Enterprises (SMEs) are rapidly adopting Blockchain as a Service tools and services, owing to their ability to transform the nature of transactions. The demand for these tools is increasing due to its secure and cost-effective features. Moreover, Blockchain-as-a-Service offers reliable solutions for sharing information and ensures reduced risks and complexities of cross-organizational transactions. These factors are expected to enhance the growth of Blockchain as a Service offerings among the SMEs
Challenges before the Baas Market
The Blockchain as a Service Market faces challenges such as the lack of standards and best practices, and low awareness and understanding of Blockchain as a Service tools and services. Factor such as uncertain regulatory and compliance environment is expected to limit the market growth.
A blockchain is a digitized, decentralized, public ledger used to record transactions or keep track of distributed data. One review describes blockchain as a type of database of information, not limited to transactions, but also focuses on information that brings business value. Since the data or ledger is secured, not owned by any individual, each individual in the chain has the privilege to keep track of data and follow the transactions. By using Blockchain in Chemical Industries, companies may improve their ability to innovate and produce interesting solutions for their customers.
Loopholes in Traditional Shipping processes
It observed that the chemical industry has been engrossed in fighting low margins, increased stiff competition, and commoditization of product and price pressure across the globe. Driven by innovative technology advancements, many chemical companies have begun to rethink on their growth strategies, trying to move away from a cost-cutting model and move towards an agile, competent and aggressive business model.
Role of Blockchain in Chemical Industry
A blockchain-based system would allow the e-commerce sites to significantly cut down on inventory, as transactions are simultaneously processed and verified. E-commerce companies could function more as a facilitator than an intermediate. This also eliminates another potential issue of fraud and counterfeit products.
Below are listed some ways by which blockchain apps can optimize shipping processes:
Inundate business threats
Multiple chemical segments are constantly threatened by counterfeiting. Due to the increasing complexity in chemical supply chains, tracking products and shipments becomes more and more important. Companies invest in contemporary logistics solutions to deal with transportation, location services, regulations, hazards, packing requirements, security, customer engagement and more. Even with extensive planning, companies could not avoid losing millions of dollars due to mismanaged transportation, fraud and managing multiple systems throughout the supply chain. Few companies have completed its first round of testing on blockchains logistics capabilities. Perhaps “smart contract” would be the biggest dollar saver, where details such as regulations, hazard control, and any other requirements can be programmed directly into the system. This significantly cuts down on order processing and if carried out correctly, should ensure better government compliance.
2. Facilitate mergers and acquisition.
As chemical companies are spun off in a stream of merger and acquisitions, many still carry the brand recognition. These new organizations will compete as part of an ecosystem rather than a single business with broad coverage. So how does blockchain fit in? Blockchain technology provides a nimble commerce platform in which these next-generation chemical companies can compete. These trades will also be done without the need for a third party and will be pure B2B transactions, thereby reducing costs and potentially changing the game for many players in the industry.
3. Establish ownership
Blockchain can be used to prove ownership when procuring or disposing of an asset. It can also help to track the history of an asset and related maintenance activities. Blockchain can also be used to track chemical container movements and ensure asset safety. Blockchain thus becomes the source of base information for each organization. This way, no matter what happened to an asset as it moved through the supply chain, all stakeholders and systems would know its status.
Blockchain in Chemical Industries can radicalize shipping protocols and make the industry processes foolproof and streamlined. A chemical company’s investment in a blockchain app will be a game-changer that has the potential to propel you way ahead of peers and competition, and put you in the running for the top spot!
Blockchain technology has found its big utility in trade and finance and there have been a substantial increase in the number of trials. However many pilots and trials have failed also. There is an increased awareness among parties and certain well-known names have come up in this blockchain in trade & finance.
As on date, the trade finance has bottlenecks and factors such as–
Manual contract documentation The bank manually reviews the financial agreement provided by the importer and sends financials to the correspondent bank
Invoice factoring Exporters use invoices to achieve short-term financing from multiple banks, adding additional risk in the event the delivery of goods fails
Delayed deliveries The shipment of goods is delayed due to multiple checks by intermediaries and numerous communication points
Manual review The export bank must manually conduct AML checks using the financials provided by the import bank
Platforms Since each party across countries operates on different platforms, miscommunication is common and the propensity for fraud is high
Duplicative bills Bills of lading are financed multiple times due to the inability of banks to verify their authenticity
Multiple versions As financials are sent from one entity to another, significant version control challenges exist as changes are made
Delayed payment Multiple intermediaries must verify that funds have been delivered to the importer as agreed prior to the disbursement of payments to the exporting bank.
Advantages of Blockchain technology
In view of the factors listed above, it has been found the blockchain in trade finance brings about following added advantages-
Review and appraisal in real lime
Financial documents linked and accessible through Blockchain are reviewed and approved in real time, reducing the time it takes to initiate shipment.All bills and invoices are easily accessible on the blockchain giving real time transparent viewing
Removal of intermediaries
Banks facilitating trade finance through Blockchain do not require a trusted intermediary to assume risk, eliminating the need for correspondent banks financial institutions and banks which are in trade and finances through blockchain do not require intermediaries resulting in faster transactions
Elimination of double spending
Bills of lading are tracked through Blockchain and are thus eliminating the problem for double spending All invoices and bills which are being tracked through blockchain remove the requirement of double spending.
Simpler contract execution
In view of contract terms being established and met the final status is there on the blockchain in real-time. This results in a reduction of time. As contract terms are met, status is updated on Blockchain in real time, reducing the time and headcount required to monitor the delivery of goods
Authentication of ownership
The blockchain provides the clarity of the location and ownership of the items as it is well established.The title available within Blockchain provides this transparency .
Settlement and fee reduction
As there is the removal of intermediaries there is substantial reduction in fee. All contract terms executed through Smart Contract remove the need for correspondent banks and added transaction feesRegulators are provided with a real-time view of essential documents to assist in enforcement and AML activities
It is hereby seen that with the introduction of blockchain the business clarity and hurdles have been removed, there is authentication of ownership, simpler contract execution, review and appraisal in real time etc
A blockchain cryptocurrency is a digital or virtual currency and does not physically exist. It is a type of digital currency that uses cryptography for chaining together digital signatures of asset transfers to create and manage the currency.
It is used either as a means of payment for which there are several advantages (e.g. privacy) and disadvantages (cost and lack of universality) or as an investment for which there are attractions (e.g. the chance to make quick profits) and problems (e.g. risk and fraud).
The distinguishing feature of cryptocurrencies is their decentralized control as opposed to centralized electronic money and central banking systems by means of what is known as a ‘blockchain’ which is a public transaction database, functioning as a distributed ledger. Cryptocurrency is a hardly regulated space that survives on a collective user consensus of value. Whether the future will be Bitcoin, some amongst the existing cryptocurrency, or the one yet to come in existence, the reality is that the turbulent way of the crypto market is on the prompt track for a potentially wide transformation for innovation on a global scale.
In many countries, politicians have also expressed concerns about the cryptocurrency craze, and have warned about the dangers of initial coin offerings (ICOs), where rather than a start-up company issuing debt or raising equity capital, they sell tokens. Some, such as China and Korea, have banned ICOs, but Switzerland is heading in the other directions, and has ambitions to become “the crypto-nation”, according to economics minister Johann Schneider-Ammann. Of the 10 biggest proposed ICOs, four have used the country as a base, according to PwC, although the Swiss are looking into just how they should approach regulation in this area.
The mainstream attention and hype has largely been associated with these cryptocurrencies. To date there are over two thousand various related cryptocurrencies invented and currently listed. However, this is just the tip of the iceberg, and as promised, this report aims to distinguish the extremely volatile cryptocurrency market to the technology of distributed ledgers and blockchain which underpins most of these digital currencies. Cryptocurrencies are just one way of using blockchain technology.
The volatility in the cryptocurrency industry has created a loose impression on the blockchain technology. Therefore, they also assume that blockchain technology is as well unusable. However, this is not the reality. They perceive that the negativities will be seen in smart governance and smart contracts, which is not true either.
People are to be educated about the true potential of blockchain technology. They need to know that this technology is full of opportunities and that open-sourcing of finance using the trustless technology is going to be more useful than they can imagine.
Blockchain makes sense for business. While there are many who call Bitcoin and other cryptocurrencies dangerous or even frivolous investments, the technology behind them – blockchain is even more reliable than the technology and processes behind tradition bank transactions.
Payment ecosystems are evolving at an accelerating pace to embrace new transaction processing methods and technologies. Let us understand how we can use blockchain use in simplifying payments.
The payment verticals of retail banking, merchant retail, transaction banking, billers, and digital banking that have traditionally operated in isolation are evolving toward a consolidated, real-time, any-to-any ecosystem.
Payment ecosystems square measure evolving toward a period of time, any-to-any payments experience for consumers; blockchain is a fundamentally disruptive technology that will play a role in the evolution toward real time.
Blockchain has the flexibility to modernize a payment’s elementary imperative of transferring price between multiple parties, securely and with minimal operational or technical friction. Modernizing the fundamental imperative delivers substantial benefits in the future use of computing for banks, businesses and governments.
Recent rapid growth of peer-to-peer market exchanges for lending (Zopa, Lending Club and Funding Circle, etc.), accommodation (AirBnB) and taxi services (Uber) has demonstrated the potential of peer-to-peer architectures. Blockchain has the potential to accelerate and change such models in each new and existing markets.
The areas of application for blockchain stretch so much on the far side pure payments. Across the banking system, uses include post-trade settlement, asset management, securities, and trade finance. Beyond banking, blockchain interest includes insurance, government, identity management, and accounting services. Not only is this likely to generate new opportunities for payment providers, but also new entrants with disruptive business models, as new market areas become more practically addressable.
Blockchain technologies are immature and their ability to support the challenging non-functional requirements of payment services has yet to be proven.
Current blockchain proof-of-work algorithms require seven seconds on average to gain consensus; further technical maturity is required in this area to support consensus in under 25 milliseconds. Recent advancements leveraging a proof-of-stake approach hold promise to improve consensus performance. Technical advancements are being made toward maturity; technical maturity has accelerated over the past year, fuelled by increasing blockchain investments worldwide that exceed $1.5 billion.
Different types of uses in payment system:
Value Transfer: The use case for transferring funds between parties is the major focus. Blockchain 2.0 technologies could be applied to a variety of different payment sceneries.
In single currency domestic payment the impact could be to reduce or remove the need for central counterparty and the delays in setting transaction net or gross in real-time. Transfers in multiple currencies between countries cross border payments.
Trade Finance: The use case for trade finance covers a single common record of the liabilities and obligations of parties in trade finance. Possible users of blockchain 2.0 include: invoice fraud prevention, process efficiency, service improvement.
Reference Data: Enable the rapid, auditable and secure updating of records by any authorized participant and sharing the change across the network of users. Potential areas where these technologies could be used to streamline the update process and simplify integration into existing payments processing include hot card files, sanctions lists, routing records etc.
As real-time, open-source and trusted platforms that securely transmit data and value, they can help banks not only reduce the cost of processing payments, but also create new products and services that can generate important new revenue streams.
The biggest key to turning the potential of blockchain’s use in simplifying payments into reality is a collaborative effort among banks to create the network necessary to support global payments. Blockchain technology itself works—there’s no debate about that. Now it’s time for banks to seem at the larger image and work along and with non-banks—to facilitate outline the backbone which will underpin a universally accepted, ubiquitous global payment system which will remodel however banks execute transactions.