A PROSPECTIVE STUDY ON FASTER AND MORE SECURE DOCUMENT TRAFFIC FOR INTERNATIONAL TRADE WITH BLOCKCHAIN TECHNOLOGY

A PROSPECTIVE STUDY ON FASTER AND MORE
SECURE DOCUMENT TRAFFIC FOR INTERNATIONAL TRADE
WITH BLOCKCHAIN TECHNOLOGY
By
TEKLER Huseyin
IBW2017539015
Submitted to:
Prof. ZHU Mingxia
Beijing, 2019

Abstract
The administrative costs of processing, transporting, verifying and securing the
documentation are also very high. Traditionally, supply chains were based on the physical
movement of large amounts of paper documents open to fraud, human error and involuntary
delays. Blockchain can help to expand various international trade opportunities, often
avoiding unnecessary processes, while successfully minimizing the high costs associated with
international trade and operations. International trade requires faster, safer and more efficient
management of document approval workflows, which are needed to transport goods across
international borders.
This study attempts to answer the question how to make document traffic in
international trade faster and more secure with blockchain technology. We adopted qualitative
research methodology discription research method. We used SWOT model to to determine the
strengths and weaknesses of the blockchain-based bills of lading and to identify opportunities
and threats arising from the external environment. Finally, according to the findings
blockchain-based document transfer will enable the parties to increase performance, reliability,
responsiveness, flexibility, cost advantage and asset management efficiency in international
trade.
Key Words: Blockchain, International Trade Documents, Blockchain-based Consignment

Table of Contents
1. INTRODUCTION................................................................................................................................4
1.1 Significance of the Study .............................................................................................................. 4
1.2 Objective of the Study................................................................................................................... 5
1.3 Research Method........................................................................................................................... 5
1.4 Structure of Research .................................................................................................................... 5
2. LITERATURE REVIEW.....................................................................................................................6
2.1 Researchers’ View about the Topic............................................................................................... 6
2.2 Derivation of Research Gap and Research Questions................................................................... 8
3. OVERVIEW OF BLOCKCHAIN TECHNOLOGY ..........................................................................8
3.1 Introduction................................................................................................................................... 8
3.2 Blockchain Versus Distributed Ledger Technology (DLT)........................................................ 13
3.3 Types of Blockchains.................................................................................................................. 13
3.3.1 Permissionless Versus Permissioned Blockchains............................................................... 14
3.3.2 Public Versus Private/Consortium Blockchains................................................................... 14
3.4 Public Blockchains...................................................................................................................... 14
3.5 Private Blockchains..................................................................................................................... 15
3.6 Consortium Blockchains ............................................................................................................. 15
3.7 Smart Contract..............................................................................................................................18
4. ANALYSIS OF BLOCK CHAIN AFFECTIVENESS......................................................................19
4.1 Towards Paperless Trade............................................................................................................. 19
4.2 Rotterdam Rules And Uncitral’s Model Law Project ................................................................. 20
4.3 Uniqueness of Electronic Document........................................................................................... 20
4.4 Block Chain-Based Electronic Bill of Lading............................................................................. 21
4.5 Preventing Human Errors............................................................................................................ 23
5. SWOT ANALYSIS ON BLOCK CHAIN.........................................................................................24
5.1 Swot Analysis on Block Chain Based Electronic Bill of lading ................................................. 24
5.1.1 Strengths of Block Chain-based Electronic Bill of Lading .................................................. 24
5.1.2 Weaknesses of Block Chain-based Electronic Bill of Lading.............................................. 25
5.1.3 Opportunities of Block Chain Based Electronic Bill of Lading........................................... 25
5.1.4 Threats of Block Chain Based Electronic Bill of Lading..................................................... 26
5.2 Implementation Constraints ........................................................................................................ 26
5.3 Possible Positive Results............................................................................................................. 27
6. CONCLUSION ..................................................................................................................................28
REFERENCES......................................................................................................................................30
ABBREVIATIONS................................................................................................................................32

4
1. INTRODUCTION
1.1 Significance of the Study
Blockchain technology has the necessary capability to facilitate the workflow of
cross-border trade transactions, especially in the document approval processes. Blockchain
technology is the basic technology behind cryptocurrencies like Bitcoin. The traditional
method used to physically move large amounts of paper documents for transport operations
by supply chains is very vulnerable to fraud, human error and accidental delays.
Advances in information technology allow documents such as bills of ladings to be
processed electronically. The printing of trade documents on paper costs billions of dollars
every year to the shipping and transportation industry. On the other hand, if the original trade
documents fails to arrive at the discharge port on time, the owners demand considerable
amounts and costs of compensations from the purchasers. Thanks to the electronic trade
documents, the use of stationery in trade can be decreased significantly, and undesirable
events such as the fact that the original documents cannot reach the load due to delays in
cargo can be prevented.
As is known, the number and types of documents used in international trade are too
much. For this reason, the bill of lading, which is one of the most important documents in
international trade, will be mostly focused on the study.
The rules for electronic trade documents were first set out by CMI-The Committee
Maritime International in 1990, as Rules for Electronic Bill of Lading. In the following years,
the scope of electronic BL rules was extended with the UCP500 which is the continuation of
UCP600 (2007) and Uniform Customs and Practice for Documentary Credits for Electronic
Presentation which is the extension of the INCOTERM 2010 eUCP. The rights and
responsibilities of the parties in the electronic bills of lading are similar to those of the paper
bill of lading. However, the most significant difference is the procedure that allows the
transfer of negotiation rights of the bill of lading between the seller (owner) and the buyer.
The electronic bill of lading is based on a kind of digital signature system 1
. These
cryptographic codes are produced by the carrier. When the owner of the property changes,
carrier replaces the cryptographic code with the new one. When the carrier gives information
to the owner of the goods about the place and time of delivery of the cargo, the owner must
precisely identify the buyer of the cargo and submit the terms of delivery together with the
key code. Unfortunately, this system does not work properly in practice. Many carriers
complain about the loss of key codes during the digital signature process, and there are doubts
about the security of these private keys and the uniqueness of the resulting electronic
document. In addition, the electronic bill of lading platforms such as @GlobalTrade,
1
Encrypted security codes

5
TradeCard, SeaDocs or Bolero 2
project require membership, the high cost of insurance
transactions, the fact that the cargo owners do not want to put the bill of lading on the main
database due to the confidentiality of the transportation work and the banks are not ready and
familiar with electronic bills, etc. For such reasons, they are not widely accepted.
1.2 Objective of the Study
At this point, there is a need for a new electronic innovation to encourage the preference of
electronic bills of lading. The new bill of lading known as blockchain-based bill of lading
offers many new benefits to the interested parties, although it does not yet have a legal
framework other than the Model Law Project3
prepared by UNCITRAL.
Therefore, the aim of this study is to explain the transformation of trade documents
used as a commodity stock in the present supply chain under the blockchain and to reveal the
strengths and weaknesses of the blockchain based trade documents and the opportunities and
threats they present.
1.3 Research Method
We will adopt qualitative research methodology SWOT model research method.
SWOT includes strengths, weaknesses, threats and opportunities of blockchain-based
electronic bill of lading
1.4 Structure of Research
In the first part of this study, the documents used in international trade are listed and
the general paper flow is explained. Then blockchain technology, smart contract concept and
electronic bill of lading have been explained, followed by a SWOT analysis on blockchain
based electronic bill of lading. In addition, after the SWOT analysis, the applicability and the
impediments to this new technology are explained. The study ends with the evaluation of the
findings.
2
Leading companies which developing projects related to the transfer some document transactions used in
international trade to electronic environment.
3
Michael Sturley, Tomotaka Fujita and G van der Ziel The Rotterdam Rules: The UN Convention on Contracts
for the International Carriage of Goods Wholly or Partly by Sea (Sweet & Maxwell London 2010)

6
2. LITERATURE REVIEW
2.1 Researchers’ View about the Topic
Hackius and Petersen (2017)4
investigated the benefits of blockchain technology on
logistics and supply chain with 152 participants from Germany, America, Switzerland, and
France. 45% of the participants were a consultant, 21% were logistic services provider, 16%
were an academician, 12% were workers from the production sector and 6% were employed
in the retail sector. At the end of the study, 37% of respondents wanted to learn the benefits of
blockchain technology to their businesses and 80% thought that this technology would benefit
the marketing of their services or products.
Mei & Dinwoodie (2005)5
investigated the contribution of electronic bills of lading to
the marketing of logistics services. Due to the lack of blockchain technology at the time,
research has been carried out on the existing electronic bills of lading. As seen in Table 1,
respondents stated that the increase in documentation rate was the highest contribution.
Table 1: The Contribution of Electronic B/L to the Marketing of Logistics Service Providers'
Services
Contribution
Responders
(Percent)
Fast documentation process 78
Better information management 51
Save on postal expenses 47
Improved accuracy 28
Integration between businesses 26
Easy access to data 18
Elimination of demurrage costs 16
Reduction of risks related to transportation 12
Saving in data storage 8
Improved Asset Use 2
Source: Mei & Dinwoodie, 2005: 200
Various proofs of concepts have been developed in the course of the last few years to
streamline and automate letters of credit processes, and blockchain applications in this field
are now moving towards commercial application. In September 2016, Barclays and fin-tech
startup Wave reported having conducted the first live blockchain-based trade finance deal
(Barclays, 2016)6
. The transaction, conducted through a permissioned ledger, guaranteed the
export of almost $100,000 worth of cheese and butter from Irish dairy cooperative Ornua
4
Niels Hackius, Moritz Petersen Blockchain in logistics and supply chain: trick or treat?
5
Zhiliang Mei, John Dinwoodie, (2005) "Electronic shipping documentation in China's international supply
chains", Supply Chain Management: An International Journal, Vol. 10 Issue: 3, pp.198-205,
https://doi.org/10.1108/13598540510606250
6
https://home.barclays › Reports and events › Annual reports

7
(formerly the Irish Dairy Board) to Seychelles. According to Barclays, the letter of the credit
transaction process, which usually takes between seven and 10 days from issuing to approval,
could be reduced to less than four hours. The letter of credit itself was issued through the
SWIFT (Society for Worldwide Interbank Financial Telecommunication) system and the
funds were released in a traditional manner.
In August 2016, Bank of America, HSBC and the Infocomm Development Authority
of Singapore (IDA) announced that they had built a blockchain application based on the
Hyperledger Fabric to improve the letter of the credit transaction process. The application
mirrors a traditional letter of credit transaction by sharing information between exporters,
importers and their respective banks on a permissioned distributed ledger (see Figure 4). A
series of digital smart contracts allow them to execute the deal automatically (HSBC, 2016)7
.
And in May 2018, HSBC completed what it claims is the world’s first commercially viable
trade finance transaction using Blockchain, arguably opening the door to the commercial use
of the technology for trade finance operations (Weinland, 2018) 8
. The letter of credit
transaction for US group Cargill for a shipment of soya beans from Argentina to Malaysia
was conducted on the Voltron blockchain platform for letters of credit built by a group of
banks on the Corda platform developed by the R39
consortium.
Figure 1: Example of Letter of Credit Process10
7
kisaltt.com/hsbc-annual-report-pdf
8
https://www.hsbc.com/media/media-releases/2018/hsbc-trade-blockchain-transaction-press-release
9
R3 (R3 LLC) is a distributed ledger technology company. It leads a consortium of more than 200 firms in
research and development of distributed ledger usage in the financial system and other areas of commerce.
10
The specific features of blockchain platforms (e.g. types of payments) depend on the characteristics chosen by
participants.
Deliver
LC
Present
documents
Present documents
Document control,
payment at maturity
Issuance of LC
9.
Documents
and
claim
for
payment
2.
Request
for
LC
5. Shippment
1. Sales Contract
Importer
Present documents
Importer’s
Bank
Exporter’s
Bank
Exporter Importer
Present documents
Exporter
Importer’s
Bank
Exporter’s
Bank
Permissioned distributed ledger
Hashed/encrypted documents Smart
contracts to automate payments
Traditional Model Blockchain Model

8
2.2 Derivation of Research Gap and Research Questions
Facilitating international trade has been a topic that has been on the agenda for years.
And, efforts have been made to facilitate trade with both bilateral agreements and sometimes
regional agreements. The security and flow of documents has always been one of the popular
problems in world trade. Many studies have also been done to prevent the security problems
of documents used in international trade and fraud attempts on those documents. With the
steps taken in this regard, it was possible to draw up a number of documents such as bill of
lading electronically. However, since these electronic platforms are connected to an institution
or organization, they have not gained trust in the eyes of the parties who use these documents.
Therefore, the electronic bill of lading has not received the expected attention. But thanks to
the developments in communication technologies, it has become possible to process the
documents used in foreign trade by a system which is completely independent, not under the
control of anybody or any organisation. This study focuses on how blockchain technology can
be used to facilitate foreign trade documents flow and security, especially the bill of lading.
From this perspective, this research seeking answers for questions like; In what
context can Blockchain facilitate the flow of foreign trade documents and make it safer? What
kind of facilities does a blockchain-based bill of lading offer us? And, what are the obstacles
to such a system?
3. OVERVIEW OF BLOCKCHAIN TECHNOLOGY
3.1 Introduction
A blockchain is a digital record of transactions – or ledger – that is decentralized,
distributed (records are shared with all participants) and secured using a blend of proven
cryptographic technologies. A blockchain is managed by computers or servers – called nodes
– on a peer-to-peer basis without the need for the intermediaries who traditionally authenticate
transactions. Data added to the blockchain are shared with all participants in the network and
are verified and validated by anyone with the appropriate permissions on the basis of the
consensus protocol11
of the blockchain.
11
Consensus protocols ensure a common, unambiguous ordering of transactions and blocks, and guarantee the
integrity and consistency of the blockchain across geographically distributed nodes.

9
Previous Transaction Next Transaction
12
Figure 2: Blockchain
Source: Takahashi, 2016: 203
As shown in Fig. 2, each block is recorded by adding to the last block in the current
chain and following each other. A blockchain includes all transactions performed between
stakeholders. And every new transaction is encrypted and added to the chain with the
approval of all participants.
Typical steps involved in blockchain transactions:
Step 1:
The sender submits or requests a transaction. A blockchain/DLT13
transaction can
involve any type of asset – digital (e.g. cryptocurrency, digital painting), tangible (e.g. a
transfer of property or funds, or an exchange of documents such as a customs declaration or
certificates of origin), or intangible (e.g. provision of a service) which is exchanged between
participants in the network. It can involve documents, contracts, cryptocurrencies or any other
type of asset.
12
Merkle root is the hash of all the hashes of all the transactions that are part of a block in a blockchain network.
13
Distributed ledger technology (DLT) is a digital system for recording the transaction of assets in which the
transactions and their details are recorded in multiple places at the same time.
Combined Hash
Value of
Transaction
Hash Value
Merkle Root12
Block 1st
Transaction
Combined Hash
Value of
Transaction
Hash Value
Merkle Root14
Blok 2nd
Transaction
Combined Hash
Value of
Transaction
Hash Value
Merkle Root14
Blok 3rd
Transaction

10
Figure 3 Typical Steps Involved in a Blockchain Transaction
Source: WTO
When a transaction is submitted, various processes take place to guarantee the security
of the transaction;
First, the sender generates a key pair, including a public key and a private key. These
keys are mathematically related. The public key is made available to the receiver.
The sender then hashes14
the data to be sent, i.e. converts it into a new digital string of
a predefined and fixed length using a mathematical function – a hash. Hashing ensures data
integrity and prevents forgery. The resulting hash value is encrypted using the sender’s
private key15
. The encrypted hash forms the digital signature of the data, i.e. the digital
fingerprint of an electronic record. It guarantees that the message was created and sent by the
claimed sender and was not altered in transit. The sender cannot deny having sent the message.
The sender then transmits the digital signature together with the plaintext data to
participants in the peer-to-peer network – the receivers.
If the sender does not wish other participants in the network to see the message itself,
i.e. the plaintext data contained in the documents submitted, (s)he can choose to encrypt the
message.
Step 2:
14
A hash is a function that converts an input of letters and numbers into an encrypted output of a fixed length.
A hash is created using an algorithm, and is essential to blockchainmanagement in cryptocurrency.
15
The private key consists of alphanumerical characters that gives a user access and control over their funds to
their corresponding cryptocurrency address.
and linked to the
previous block in a
permanent and
unalterable way.
Validating nodes take the
transaction from the transaction
pool and combine it with other
transactions in a block. Block
validated based on the consensus
protocol of the blockchain.
The transaction data T
are broadcast to the
peer-to-peer network.
Transaction submitted or
requested
➜ Can involve documents,
contracts, cryptocurrenty,
etc.
➜ The data are “hashed” and
encrypted.
➜ Possibility to encrypt
documents.
T

11
Once the digital signature has been generated and the message has been hashed and
encrypted, they are transmitted to participants in the peer-to-peer network – the receivers, also
called nodes – and added to an unvalidated transaction pool.
Step 3: Validation
The validation process differs depending on the type of DLT and the consensus
protocol specific to the blockchain or DLT.
Receivers – in the case of permission blockchains, authorized nodes – validate the
transaction using the sender’s public key to decrypt the transaction. A successful decryption
confirms that the transaction originates from the claimed sender. The receiver can then verify
the integrity of the data by comparing the decrypted hash value sent by the sender with the
hash value that (s)he computed when applying the same hash algorithm on the plain data
transmitted by the sender. If both hash values coincide, the receiver has the guarantee that the
data were not altered in transit. The transaction can then thus be validated.
The chain is then updated via the consensus protocol. Consensus protocols ensure a
common, unambiguous ordering of transactions and blocks, and guarantee the integrity and
consistency of the blockchain across geographically distributed nodes.
In the case of blockchain technology, validated transactions are first combined with
other transactions to create a block that is then validated based on the consensus protocol of
the blockchain. If validated, the new block is linked to the chain as the true state of the ledger.
Each block contains several transactions. A block is composed of a block header and of
records of transactions. The block header contains the following elements:
The block number
The current time-stamp that captures the date and time to ensure a record of the
chronological sequence.
The hash of the previous block – also referred to as a hash pointer – to link the blocks
together.
The hash of what is called the Merkle Root, which allows easy comparison and
verification of large data sets of transactions without the need to include the complete set of
data of every transaction in the block header, thereby making the size of blocks more
manageable.
Step 4:
Once a block is validated or, in the case of DLTs that do not combine transactions in
blocks, once the transaction has been validated, it is time-stamped and linked to the preceding
blocks/transactions with a hash pointer – a hash of the previous block/ transaction – thereby
forming a linear chronological chain of blocks/transactions.

12
The transactions are then confirmed and the block/transaction cannot be altered or
removed – thus, the block/transaction is immutable. Each time a block/transaction is added to
the chain, the digital ledger is updated on all the participating nodes. The systematic update of
the ledger on all the nodes is an efficient way to ensure that there are no divergent versions of
the ledger in the participating nodes.
Data entered onto the blockchain are hashed, i.e. converted into a new digital string of
a fixed length using a mathematical function, and encrypted to ensure data integrity, prevent
forgery, and guarantee that the message was created and sent by the claimed sender and was
not altered in transit. If the sender of the transaction does not wish other participants in the
network to see the content of the message itself, i.e. the plain text data contained in the
documents submitted, he/she can choose to encrypt the message itself, thereby rendering the
data unintelligible to individuals without authorized access.
Once validated, transactions are stored in blocks that are then chained to each other in
chronological order using cryptographic techniques. Data, once added to a blockchain, are
time-stamped and near-impossible to modify. However, while blockchains can help prevent
fraud on the ledger, the tamper-resistance of the technology cannot prevent false information
from being fed into the ledger.
In a blockchain, each peer keeps a complete copy of the data (or as close to it as
possible), and updates are shared with all participants simultaneously. Participants in a
blockchain, therefore, all have access to the same information at any time. In other words, a
blockchain is a shared, trusted ledger that all participants can access and check at any time,
but that no single party can control, which allows people with no particular trust in each other
to collaborate without relying on trusted intermediaries.
As data are replicated as many times as there are nodes, falsifying data or
compromising the whole network would require compromising a large number of nodes,
which would be difficult in practice, although not impossible. In theory, a blockchain network
can be compromised if a validator or pool of validators controls more than 50 percent of the
network’s computing power, which is called a 51 percent attack. While the 51 percent attack
is a problem common to all types of blockchains, it is particularly critical in the case of public
blockchains, given the difficulty of determining who effectively validates blocks.
A particular feature of public blockchains is the considerable amount of computational
power that most of them require to validate transactions, in particular, those using the Proof of
Work consensus mechanism, such as Bitcoin. Though wasteful in terms of energy expenditure,
Proof of Work is required to ensure the safety of the consensus process. It makes the public
blockchain mathematically very hard to hack as the cost of hacking becomes too high for a
system where every node connected is synchronized with the entire blockchain network.
Hence, although hacking the system is not impossible, it is economically inefficient and
practically extremely hard. However, computing power capacity is increasingly being
aggregated. The 51 percent vulnerability is, to date, still subject to heated debates regarding
the severity of its potential consequences.

13
Interestingly, most recent developments could render discussions on so-called “51
percent attacks” obsolete. In a paper released in August 2018, Vitalik Buterin, Ethereum’s co-
founder, proposes a new consensus algorithm that, allegedly, requires just 1 percent of the
nodes to be honest and eliminates the risk of a 51 percent attack (Buterin, 2018). 16
In other
words, an attacker who wanted to control the network would have to control 99 percent of the
nodes of the blockchain and not just 51 percent. The 51 percent attack may soon be called a
99 percent attack.
3.2 Blockchain Versus Distributed Ledger Technology (DLT)
Because it is simple and catchy, the term “Blockchain” is often used to refer to
distributed ledgers whatever their specific features are. Blockchain, however, is only one type
of distributed ledger technology (DLT) – one that compiles transactions in blocks that are
then chained to each other. The blockchain is the most well-known and most tested distributed
ledger technology, but an increasing number of models of transaction flows are being
developed which, like Blockchain, use a blend of cryptographic techniques, but which are
moving away from the concept of blocks.
3.3 Types of Blockchains
Behind the simple term of “Blockchain”, there are in reality many different models
that vary in terms of the degree of decentralization and access, the identity of participants, the
consensus mechanism, speed, level of privacy, energy consumption, fees, and scalability.
Blockchains are often classified as public versus private. Under the private blockchain,
there is a sub-type called consortium or federated blockchain, sometimes considered as a type
of blockchain in its own right (Buterin, 2015). Another commonly used classification of
blockchain applications is permissionless versus permissioned platforms, i.e. the extent to
which access to the platform is restricted– or not – to those with permission. These two
classifications are sometimes conflated and it is not uncommon for people to associate public
with permissionless and private/consortium blockchains with permissioned blockchains. The
reality is, however, slightly more complicated as some public blockchains can be
permissioned.
The world of Blockchain is nebulous, complex and fast-changing, and definitions and
classifications are not cast in stone. As the technology matures and new models of transaction
flows and applications are being developed, definitions and classifications continue to evolve.
16
Buterin, V. (2015) On Public and Private Blockchains, https://bitfury.com/content/.../public-vs-private-pt2-
1.pdf

14
3.3.1 Permissionless Versus Permissioned Blockchains
The distinction between permissionless and permissioned blockchains is mainly
related to the issue of access to the platform. A permissionless blockchain is a blockchain that
is open to anyone with a computer, with no restrictions imposed on who can access the
platform and validate transactions.
In contrast, a permissioned blockchain is a blockchain in which access is restricted.
Access can be restricted at various levels depending on the specificities of the platform, in
particular, whether it is a public, consortium or private platform: to read data, to propose a
new transaction, or to validate transactions (BitFury Group, 2015)17
. While permissionless
blockchains such as Bitcoin are the ones that make the headlines, many blockchain use cases
in the area of international trade are based on permissioned blockchains.
3.3.2 Public Versus Private/Consortium Blockchains
The distinction between the public, consortium and private blockchains is linked to the
issue of management of the platform (who manages it) and user authentication (level of
anonymity of participants). These different types of platforms distinguish themselves by their
degree of decentralization.
3.4 Public Blockchains
In a public platform, no specific entity/entities manage(s) the platform, transactions
are public and individual users can maintain anonymity. No user is given special privileges on
any decision. As such, it is a completely trustless system, in that it does not rely on a trusted
party to validate the transactions but instead relies on the nodes to come to a consensus before
any data (transaction record, block, etc.) are stored on the ledger.
Public blockchain platforms, however, need to ensure that users are incentivized to
reach consensus. On the Bitcoin blockchain, for example, the verification process requires the
performance of complex mathematical problems. The miner, i.e. “validator”, who first solves
the mathematical problem, is rewarded through Bitcoins. Fees charged in return on users
differ significantly between platforms. They are, by far, the highest on the Bitcoin platform.
In early November 2017, the average fee charged for Bitcoin transactions reached more than
US$ 11 per transaction, leading some in the community to argue that the system had reached
its limit, as well as Redman (2017)18
, Chaparro (2017)19
and Bershidsky (2017)20
.
17
https://bitfury.com/content/.../public-vs-private-pt1-1.pdf
18
Redman, J. (2016), Bitcoin and Beyond: Cryptocurrencies, Blockchains, and Global Governance
19
Chaparro, Frank. Cryptocurrencies and Blockchains
20
Bershidsky, L. (2017), Bitcoin and the Value of Financial Freedom - Bloomberg

15
Most public blockchains are permissionless, i.e. they are open to everyone. Thus, any
individual can download the required software on their device without permission and start
running a public node, validating transactions and thereby participating in the consensus
protocol – the protocol that determines which blocks get added to the chain
Because of their highly decentralized nature, public blockchains are considered
particularly secure and resistant to malicious attacks, with no single point of failure.
3.5 Private Blockchains
In fully private blockchains, the permissions to validate and write data onto the
blockchain are controlled by one entity which is highly trusted by the other users, and
participants are identified. In some situations, the entity may restrict the read permission to
some users. Restricted read permissions provide a greater level of privacy to the users, a
feature not available in public blockchains. The entity in control has the power to change the
rules of the private blockchain and may decline transactions based on its established rules and
regulations.
In a private blockchain, verification of the transactions is carried out by a very
restricted number of nodes (according to the rules of the blockchain), which allows for greater
efficiency and much faster processing of transactions than public blockchains, while requiring
much less computing power. Transaction fees may apply for transaction validation as per the
rules of the blockchain.
In addition, given that the validators are known, it is easier for human intervention to
fix faulty nodes and risks of a 51 or 99 percent attack arising from miner collusion do not
apply; but the more centralized nature of these networks makes them less resilient to outside
attacks, and there is a greater risk of human tampering of data.
3.6 Consortium Blockchains
A consortium blockchain is a type of private blockchain that operates under the
leadership of a group rather than a single entity and in which participants are identified. It is a
“partially decentralized” platform (Buterin, 2015)21
.
Instead of allowing anyone with an internet connection to participate in the transaction
verification process or letting a single entity having full control, a few selected nodes are
predetermined. These nodes control the consensus process. They can read and/or write the
data and can decide who has access to the blockchain ledger. The right to read the blockchain
may be public or restricted to the participants (Buterin, 2015).
21
Buterin, V. (2015) On Public and Private Blockchains, https://bitfury.com/content/.../public-vs-private-pt2-
1.pdf

16
For example, a consortium blockchain could be formed among 10 companies, each of
which operates a device connected to the blockchain network. If Company 2 only trades and
shares its invoices with Companies 3, 4 and 5, it could be decided that permissions to read the
shared data be given only to these companies.
The use of such platforms is often motivated by incentives to leverage the specific
features of the distributed ledger technology, enhance cooperation and improve processes
among institutions – e.g. banks, corporations, and government agencies. Hyperledger Fabric,
for example, is a blockchain framework implementation developed by IBM and donated to
the Hyperledger Project of the Linux Foundation, which has been designed to develop
permissioned blockchains that cater to the requirements of the participating enterprises.

17
Table 2: Overview of the Main Characteristics of Various Types of Blockchains
Degree of Centralization Public Consorsium Private
Management No Centralized Management Mutliple Organization Single Entity
Access Permissionless Permissioned Permissioned Permissionless Permisssioned
Open read/open validation of
transactions
Open read/permissioned
validation of transactions
Permissioned or open-
read/permissioned
Open read/open validation of
transactions
Permissioned
read/validation of
transactions
Participants Anonymous/pseudonymous Anonymous/pseudonymous Identified Usually identified Identified
Validation based on
consensus protocol
Open to every participant in
the network
Open to every participant in
the network, subject to
certain conditions
By pre-approved participants
(across the organizations
involved)
Depending on the consensus
protocol chosen for the
platform
By pre-approved
participants (within the
single entity)
Speed of validation Slow Quicker Quick Quick Quick
Users’ level of privacy None None
Tailored to the needs of
participants
participants
participants
The computing power
required (energy
consumption)
High (but variable depending
on the consensus mechanism)
Intermediate. Variable
depending on the consensus
mechanism
Lower Lower Lower
Transaction fees Yes Yes
Optional – depending on the
rules of the Blockchain
Optional – depending on the
rules of the Blockchain
Optional – depending
on the rules of the
Blockchain
Scalability Slow Slightly Higher Higher Higher Higher
Example(s)
Proof of Work (Bitcoin,
Ethereum)
Proof of Stake (Nxt)
Blockchains built on
Hyperledger Fabric.
Permissioned blockchains
built on Ethereum.
FastTrackTrade
Private blockchains
built on Ethereum
Source: WTO, Emmanuelle Gan

18
3.7 Smart Contracts
One of the most interesting features of blockchain technology, in particular in the
context of international trade, is smart contracts. Smart contracts are not a type of blockchain
per se, but rather a functionality of the blockchain technology.
The term smart contract is, in fact, a misnomer: smart contracts are neither smart
(there is no cognitive or artificial intelligence component to them, only the automatic
execution of a pre-defined task when certain conditions are met), nor are they contracts in a
legal sense (Deloitte, 2018).
Smart contracts are computer programmes that automatically enforce themselves (self-
execute) without the intervention of a third party when specific conditions are met (based on
the “if… then…” logic – e.g., if the goods are unloaded at the port of X, then funds are
transferred). They state the obligations of each party to the contract, as well as the benefits
and penalties that may be due to either party under different circumstances.
Unlike a traditional legal contract, they can also take information as an input, process
it through the rules set out in the contract, and take any agreed action as a result. Such
information is fed into the smart contract by so-called oracles22
, i.e. data feeds – provided by
third-party service providers – on the pre-defined conditions foreseen in the smart contract.
Such conditions can be any external data like temperature, payment completion, price
fluctuations, etc. A smart insurance contract could, for example, have as an oracle a sensor
placed in a refrigerated container. If the temperature goes above a certain level, insurance
payouts would automatically be triggered and a request for inspection sent. As blockchains
cannot access data outside their network, oracles are the only way for smart contracts to
“interact” with data outside of the blockchain environment. Smart contracts, in other words,
usually work in conjunction with other technologies, in particular, the IoT, i.e. networks of
sensors and smart devices that are connected to the internet and that can send and receive data.
Smart contracts generally use data generated from the IoT to trigger actions.
The automatic nature of smart contracts makes them a particularly interesting tool to
use in international trade to automate transactions. However, the use of smart contracts does
raise certain legal issues that are important to bear in mind, in particular issues of enforcement
and liability that may need to be addressed if the contract has been miscoded. In addition,
smart contracts are computer programmes, and, like any programming code, they may contain
unintended mistakes (Delmolino, 2015).
22
An oracle, in the context of blockchains and smart contracts, is an agent that finds and verifies real-world
occurrences and submits this information to a blockchain to be used by smart contracts.

19
4. ANALYSIS OF BLOCK CHAIN AFFECTIVENESS
The number of arguments claiming that Blockchain can revolutionize various areas of
international trade, from trade finance to customs procedures and intellectual property, are
rising. The transparent, decentralized and immutable nature of Blockchain has sparked the
interest of private actors – and governments – to explore the potential of this technology to
enhance the efficiency of trade processes, and a myriad of proofs of concepts and pilot
projects using Blockchain has been developed in virtually all areas of international trade.
Does Blockchain really have the potential to revolutionize international trade? This
chapter examines how blockchain technology can affect the various steps involved in
international trade in goods, from trade finance to customs procedures, certification, and
transportation and logistics, and help move toward greater digitalization of trade.
The above-mentioned features of Blockchain indicate that it may be a potential
infrastructure for international trade - paper transfer. But since the number of documents used
was too high, the focus of the study was taken by Bills of Lading.
A blockchain-based bill of lading, as with any electronic bill of lading, may not
flourish unless there is sufficient support from the applicable legal systems. Accordingly, the
remaining part of this article will examine two international works of particular relevance: the
Rotterdam Rules (UN Convention on Contracts for the International Carriage of Goods
Wholly or Partly by Sea) and the draft UNCITRAL Model Law on Electronic Transferable
Records. Blockchain technology was born after the adoption of the Rotterdam Rules and it
was not widely known when work on the Model Law was started.
4.1 Towards Paperless Trade
International trade transactions involve a multitude of actors and continue to rely
extensively on paper. In 2014, shipping company Maersk followed a refrigerated container
filled with roses and avocados from Kenya to the Netherlands to document the maze of
physical processes and paperwork that impact every shipment. The numbers speak for
themselves: they found that around 30 actors and more than 100 people were involved
throughout the journey, with the number of interactions exceeding 200. The shipment took
about 34 days to go from the farm to the retailers, including 10 days waiting for documents to
be processed. One of the critical documents went missing, only to be found later amid a pile
of paper (Park, 2018).
As explained in detail in the second chapter, today's international trade operates in a
paper-intensive process. This is risky and costly in many respects.
Not only do these various paper-intensive processes increase coordination and
administrative costs, but they are also prone to errors, losses, and fraud. Although notable

20
progress has already been achieved, full digitalization of cross-border trade transactions of
goods is not yet in sight. The complexity and costs associated with international trade in
goods have led an increasing number of companies and governments to investigate how
Blockchain could be used to cut paperwork and enhance processes involved in the export of
goods, from trade finance to border procedures and transportation, with the hope of moving
closer to truly paperless trade.
4.2 Rotterdam Rules And Uncitral’s Model Law Project
One notable initiative for embracing electronic bills of lading is found in the
Rotterdam Rules, where these bills are called ‘negotiable electronic transport records’. The
Rotterdam Rules were adopted in 2008, prior to the birth of the blockchain technology
(Takahashi, 2016)23
. Although not yet in force, if the Rotterdam Rules become part of the
legal infrastructure, the question will arise whether a blockchain-based bill of lading
constitutes a ‘negotiable electronic transport record’.
Since 2011, UNCITRAL has been working to create the Model Law on Electronic
Transferable Records. It is expected that the drafting of the text will be completed towards the
end of 2016 with a guide to enactment to follow. As currently drafted, an ‘electronic
transferable record’ is defined as an electronic record which contains all of the information
that would make a paper-based transferable document effective, the latter being described as a
document that ‘entitles the holder to claim the performance of the obligation indicated in the
document’. The main targets are bills of lading and promissory notes.13 An important aim of
the Model Law is to promote the equal treatment of electronic records with the corresponding
transferable documents. It is submitted that the Model Law should be made compatible with
blockchain technology so as to facilitate its implementation to replace transferable documents.
4.3 Uniqueness of Electronic Document
A transferable document, by its nature, must be inherently unique document
throughout its life cycle. It is a feature known as the ‘guarantee of uniqueness’ or ‘guarantee
of singularity’, which is essential to ensure that only the holder of the document can exercise
the right to claim the performance of the obligation. This feature is difficult to replicate in an
electronic environment because an electronic record can be copied to create an
indistinguishable duplicate. Until recently it had been thought that, in an electronic
environment, the guarantee of uniqueness was possible only by means of a central registry
administered by a trusted entity. However, it becomes possible in open systems too by
blockchain technology. It has been pointed out by an insightful author that: ‘at least in theory,
the same result could also be achieved if computer technology were able to create a “unique”
electronic record that could be exclusively held by a holder and transferred to another without
23
Koji Takahashi, "Blockchain Technology and Electronic Bills of Lading" (2016) P22

21
replication at some point down the negotiating chain’ (Faria, 2011) 24
. Later in the same
article, the author also states that: ‘one conceivable model… might rely on a technical device
that would assure the uniqueness of an electronic record to allow the record itself to be
“passed” down a negotiation chain’. To this sentence, the author attaches a footnote stating
that: ‘so far, however, computer technology has not yet been able to create such a “unique”
electronic record, which means that electronic negotiability systems continue to rely
essentially on electronic registries’.
The blockchain technology that was invented to avoid double-spending can now
provide the guarantee of uniqueness25
. The author could hardly be blamed for not mentioning
it since this article was published in 2011, some years before the blockchain technology came
to be widely known outside the circles of information technology specialists.
4.4 Block Chain-Based Electronic Bill of Lading
The guarantee of uniqueness, an essential feature of transferable documents, makes the
latter an attractive use case of blockchain technology. Besides, a blockchain-based bill of
lading would have advantages over existing and previous electronic bills of lading. The
digitalization process of the bill of lading started in 1986 with several different projects. These
projects, known as the @GlobalTrade, TradeCard, SeaDocs or Bolero projects, are based on a
closed and centralized registry-based membership system. All stakeholders need to be
registered in the system in order to perform the transfer operation in a centralized registry-
based membership system. If there is a transaction for a non-member stakeholder, a bill of
lading on paper is issued (Miriam, 2013: 132)26
. The necessity of all stakeholders to be a
member of the system is the biggest obstacle in the use of an electronic bill of lading. As it
can be seen in Table 3, United Nations Conference on Trade and Development (UNCTAD)'s
survey, on 82 companies operating in different sectors (banks, customers who receive
transportation services and transport commissions, etc.), shows that infrastructure and market
for the use of electronic bill of lading has not been ready yet.
In the study, it was found out that electronic bill of lading users trade with non-
member importers/exporters, they do not use the closed system electronic bill of lading
platforms continuously and they prefer mostly printed bills on paper. There are also some
differences between the electronic bill of lading platforms.
24
José Angelo Estrella Faria ‘Uniform law and functional equivalence: diverting paths or stops along the same
road? Thoughts on a new international regime for transport documents’ (2011) 2 Elon Law Review 1.
25
To be precise, blockchain technology does not create a unique transactional record but avoids the continued
circulation of duplicate records by enabling a consensus to be reached on priority among the competing
transactions.
26
Geert Lovink and Miriam Rasch, Blockchain technology as a regulatory technology.

22
Table 3: Obstacles to Electronic Bill of lading
Obstacles Responders
(Percent)
Infrastructure / market / trading partners are not ready yet 51
The legal framework is not clear or not enough 44
Electronic counterparts are not safe enough 25
Switch to technology and/or electronic environment is very costly 12
Privacy concerns 10
Source: UNCTAD, 2003: 27
The main difference is that some electronic bill of lading, such as SeaDocs, can be
sold in the endorsement, while others generate a non-endorsed electronic bill of lading.
Therefore, the current state of the electronic bill of lading platforms may not meet the needs
of the market. Thus, as seen in Table 4, in the same study conducted by UNCTAD, it is seen
that 88% of the participants prefer to use a negotiable bill of lading. Whereas, the non-
negotiable bill of lading is less preferred than the negotiable bill of lading.
Table 4: Use of Transport Documents
Transportation Documents
Responders
(Percent)
Negotiable Bill of Lading 88
Non-negotiable Bill of Lading 51
Multi Modal / Combined Transport Certificate 53
--- Negotiable 37
--- Non-negotiable 27
Other 20
There are a number of reasons why the negotiable bills are preferred by the
participants. The main reason is that the bill of lading constitutes a guarantee for the seller for
a number of financial reasons (eg letter of credit or the sale of the goods to others while in
transportation). Another important reason is that there is a standard document requested by all
parties involved in the trade of goods. In addition, some countries (North Africa, South
America, Black Sea, and Middle East developing countries) want to use the negotiable bill of
lading in freight transportation. Sometimes the goods can be sold while transportation, and in
this case, the negotiable bill of lading for the parties can be a practical and fast solution. Table
5 lists the reasons for the preference of the negotiable bills of lading in detail.

23
Table 5: Reasons for the Preference of the Negotiable Bills of Lading
Transportation Documents
Responders
(Percent)
Establishing assurance in a letter of credit or other financial matters 75
A document requested by all parties involved in the trade of goods 35
The use of a negotiable bill of lading is a legal obligation in some
countries
31
Easy to sell while the goods are in transportation 25
Practical and valid anywhere 20
Providing convenience for the buyer in customs operations 14
Others 5
For the above reasons, it is foreseen that block-chain-based bill of lading will be
regulated as a negotiable electronic transport record rules under the UNCITRAL Model Law
Project. These rules, which are in the planning stage, have become draft at the end of 2016.
4.5 Preventing Human Errors
Blockchain's consensus and open ledger features make it possible to avoid human
errors and falsifying.
For a blockchain-based bill of lading to prepare a negotiable electronic transport
record within the meaning of the Rotterdam Rules, it must also be able to provide for an
assurance that the record retains its integrity. There are two grounds for saying that a
blockchain-based bill of lading would be more tamper-resistant than an order bill of lading.
First, while the identity of transferors is authenticated with respect to an order bill of lading
by the handwritten signatures attached to endorsements, with respect to a blockchain based
token27
, the identity of transferors, although pseudonymous, is authenticated by the digital
signatures. The digital signature is more secure than any handwritten signature. Secondly, the
digital signature also ensures the uniformity of transactions, a function which a handwritten
signature cannot perform. It may, therefore, be said that a blockchain-based bill of lading
would be able, better than a paper bill of lading, to provide for an assurance that the record
retains its integrity. It follows from the foregoing analysis that a blockchain-based bill of
lading may, as a species of ‘negotiable electronic transport record’, be viewed as functionally
equivalent to a paper bill of lading under the Rotterdam Rules.
27
A token is a unit value that exists on an existing blockchain. Tokens do not have their own blockchain but
depend or exist on an existing blockchain of a cryptocurrency.

24
5. SWOT ANALYSIS ON BLOCK CHAIN
In this study, a SWOT analysis was performed on blockchain based electronic bill of
lading and some analyzes were made about new technologies and trends used in blockchain
based bill of lading. A SWOT analysis is a technique used to determine the strengths and
weaknesses of the organization, technique, process or situation examined and to identify
opportunities and threats arising from the external environment. The SWOT analysis used in
this study was adapted from Niranjana Murthy (2018)'s study on blockchain technology.
5.1 Swot Analysis on Block Chain Based Electronic Bill of lading
The strengths (S), weaknesses (W), opportunities (O) and threats (T) faced by blockchain
based electronic bill of lading are as follows:
5.1.1 Strengths of Block Chain-based Electronic Bill of Lading
 It provides 100% transparency between exporter, importer, port, bearing,
customs, etc.
 There is no need for a third party as in the platforms like @GlobalTrade,
TradeCard, SeaDocs or Bolero, etc.
 Having an auditable electronic sign by the parties
 Increasing productivity and efficiency in business processes related to
electronic bills of lading
 Electronic bill of lading is circulating in a decentralized structure on the
blockchain technology
 Creating high quality and accurate data on the electronic bill of lading
 Electronic bill of lading can reaches receiver at the right time and thus ensures
high efficiency and speed
 Producing electronic bill of lading with low cost, no need for membership in
open systems
 Low risk for delays due to timely delivery of the electronic bill of lading
 Adding the data in the content of the electronic bill of lading with a digital
signature and thus ensuring high data security,

25
 Thanks to its high privacy feature, it allows the opening of the electronic bill
of lading by persons or organizations having an electronic signature.
5.1.2 Weaknesses of Block Chain-based Electronic Bill of Lading
 Challenges to be adopted by the transport and banking sectors of the
electronic bill of lading technology
 Integration problems with an existing electronic bill of lading technologies
 Lack of international standards in blockchain technology
 Blockchain based electronic bill of lading technology is still in the
development stage
 As the number of participants related to the electronic bill of lading increases,
the scalability problems can occur on the blockchain system
 Security issues against cyber attacks (eg. 51% attack, etc.)
 Electronic bill of lading cannot be stored for other transactions
 Blockchain technology has not yet reached maturity.
5.1.3 Opportunities of Block Chain Based Electronic Bill of Lading
 Unlike another electronic bill of lading, blockchain based electronic bill of
lading can be arranged in the form of negotiable electronic transport record.
 Automatic processing of electronic bill of lading,
 Optimizing business processes related to electronic bills of lading
 Creating trust in the eye of participants by encrypting blocks with an
electronic signature
 High-speed transfer of an electronic bill of lading between participants
 Increasing customer satisfaction with the environment of trust
 Increased service quality
 Providing innovation in all sectors such as logistics and banking,

26
 The possibilities of blockchain technology for the internet of things and thus
the interconnection of the freight and electronic bills in the virtual
environment
 Allows development of programmable control mechanisms
5.1.4 Threats of Block Chain Based Electronic Bill of Lading
 More scientific studies are needed to ensure complete and efficient operation
of blockchain-based platforms
 The number of employees working in the documentation or bill of lading
departments, especially in container operators, will be reduced or these
departments will be completely closed.
 There will be problems in the adaptation of state and institutions to this new
technology
 High investment is required for R & D studies related to blockchain based
electronic bill of lading
 Legal regulations related to blockchain based electronic bill of lading may
have serious effects
 The fact that technology has not reached sufficient maturity in terms of trust
and confidentiality.
 The confirmation of the electronic bill of lading takes time.
5.2 Implementation Constraints
Although this new technology allows us to transfer much faster and more secure
documents, there are obstacles to the applicability of this system. High R & D costs and the
fact that the training of the parties in international trade on this new technology requires a
long-term investment are the biggest obstacles to this system. In addition, Blockchain is a
very young technology that has not proven its reliability, its limits have not been tested and
have not yet adopted international legal regulations.

27
5.3 Possible Positive Results
Niranjana Murthy (2018) examined the contribution of blockchain technology to business
marketing in seven parts.
a) Activity: In blockchain technology, transactions are performed directly between the
two parties and no third party is involved. In this way, operations can be done very
quickly. For example, an electronic bill of lading prepared by the freight broker can
only be seen between authorized parties, so that both a fast and reliable transportation
service can be provided.
b) Auditability: Each process on the blockchain network is subsequently recorded, so
that it can be seen by whom and when the transactions are performed. Under one bill
of lading, there may be more than one customer load and these loads can be added
later. The fact that all added loads are visible only by the parties involved is also
important for the suitability of the transactions. In this way, the loading can be done
without error.
c) Traceability: The tracking of the goods on the supply chain is very easy thanks to
blockchain technology and provides a significant advantage. A logistic service
provider using this technology will be able to offer the customers the opportunity to
monitor the load with the bill of lading.
d) Transparency: The lack of transparency in financial and commercial transactions
may lead to bad business relations and delays. Due to the difficulties experienced by
the banking sector in terms of the trust, the use of an electronic bill of lading has
remained limited.
e) Security: Block chain-based bill of lading can be recorded with high-security
encryption technology. Information security is provided by complex algorithms. The
biggest advantage of the Internet of Things in the blockchain is the protection of each
block with a digital signature when accessing the information.
f) Feedback: The fact that the goods on the supply chain are fully traceable allows
parties to make good asset management. It is also obvious that logistics service
providers who see all the movements on the bill of lading will have better feedback
on the quality of their services.
g) Others: Blockchain technology is designed for crypto money but responds to many
needs of enterprises. Therefore, in order to create a cost difference, marketers want to
use this system in their own business. A study by Greenwitch Associates (2016)28
on
134 enterprises reveals that blockchain technology is thought to reduce operational
costs in particular. This allows logistic service providers to make significant cost
reductions in their services.
28
Blockchain Adoption in Capital Markets, https://www.greenwich.com/printpdf/41011

28
6. CONCLUSION
A blockchain-based bill of lading would have advantages over the existing models of
electronic bills of lading. Thus, an open blockchain platform requires no prior subscription to
membership, unlike the existing models. This will be a significant advantage since the
membership requirement has been known to be a major obstacle to the spread of electronic
bills of lading. There are also other advantages which stem from the decentralization enabled
by blockchain technology.
A blockchain-based bill of lading would not take off unless it is sufficiently supported
by the applicable legal systems, and we have seen the particular importance of the Rotterdam
Rules and the draft UNCITRAL Model Law on Electronic Transferable Records. Under the
principle of functional equivalence which underpins both projects, the exclusive control of an
electronic record is deemed to be functionally equivalent to the possession of a paper bill of
lading. In this regard, a blockchain-based electronic bill of lading would be subject to the
exclusive control of the holder of the private key corresponding to the address where the bill
of lading is kept. While the holder of a blockchain-based bill of lading is pseudonymous, it
should not prevent the holder from being able to demonstrate that he/she is the holder. Being
also tamper-resistant, a blockchain-based bill of lading should qualify as a ‘negotiable
electronic transport record’ within the meaning of the Rotterdam Rules. The UNCITRAL
Model Law, on the other hand, will be influential in shaping the law of individual countries.
Finalizing the Model Law in a way compatible with blockchain technology will facilitate the
implementation of the technology and encourage its replacement of paper bills of lading and
other transferable documents
One of the biggest obstacles to the traditional electronic bill of lading platforms is the
membership system. Because the customers of logistics service providers are mostly not
members of these systems and therefore they still use printed paper of bill of lading. This
requires the existence of a department drawing up the bills of lading within the organizational
structures of the logistics service providers. Since the company's printed bill of lading
requirements will be put away due to blockchain based electronic bill of lading platforms, the
assets of the bill of lading departments will be eliminated.
Another advantage of such systems is the reduction of human errors. An error in a bill
of lading printed on paper may cause problems in a letter of credit transactions between the
bank and the exporter, and the importer will not be able to withdraw his goods from the
customs. As all the transactions carried out by the logistics service provider that draws up the
blockchain based bill of lading are transparent and decentralized, it creates a mechanism in
which all parties of the bill of lading can check the instant movement of the process.
Traditional electronic bill of lading has compatibility problems with the financial
system. For example, while TradeCard and GlobalTrade are fully supported in the financial

29
system, SeaDocs and Bolero project have compatibility problems with the banking system.
However, since blockchain based electronic bill of lading offers all the information to
participants in an open system in an encrypted message, it is easier for the banking system to
operate without being bound to any master database or center.
There are also cross-platform differences in the negotiability features of the bill of
lading. The Bolero and SeaDocs electronic bill of lading platforms allow the issuance of a
negotiable bill of lading, while TradeCard and GlobalTrade non-negotiable bill of lading.
Chandler (1989) claims that there is a lack of security in the negotiable bill of lading
platforms29
. Even these differences between the platforms make the work more complicated
for the load owners who are not familiar with the issue. Given the needs of the freight
transport market, the demand for the negotiable bill of lading can be seen to be very high due
to security, legal requirements and facilitating trade between the parties. For this reason, it is
thought that the blockchain based bill of lading will be preferred over other electronic
platforms and/or paper versions.
Blockchain-based bill of lading can accelerate the documentation processes in
international trade, reduce human resources allocated for documentation, provide a better
information management system by increasing accuracy and integration, facilitate to access to
data, help to reduce of demurrage costs, minimize the risks related to the document falsify and
involuntary errors, provide an improvement data and asset management. Blockchain-based
document transfer will enable the parties to increase performance, reliability, responsiveness,
flexibility, cost advantage and asset management efficiency in international trade.
29
G. F. Chandler, ‘The Electronic Transmission of Bills of Lading’ (1989) J Mar L. & Com. v. 20.

30
REFERENCES
Abdou, M. 2014. Dış Ticaret: Ihracatta Kullanılan Belgeler. Antalya. Akdeniz University.
Adams, D. 2017. Blockchain Platforms: Today and Tomorrow. Hewlett Packard
Arora, A., Arora, M. 2018. Digital-Information Tracking Framework Using Blockchain.
Publishingindia
Blass, T. 2018. Blockchain: How It Will Change Trade Security?. London. D.C. Houghton
Ltd.
Chandler, G. 1989. The Electronic Transmission of Bills of Lading. Mar, L.&Com.
Civelek, M., Özalp, A. 2018. Blockchain Technology and Fınal Challenge for Paperless
Foreign Trade. Istanbul. Eurasian Business & Economics Journal.
Coppola, F. 2018. The Fast Changing World of Blockchain Solutions for Trade Finance.
AmEx.
Darcy. A., Berg, C., Davidson, S. 2018. Blockchain Trade Tech. New Guinea. APEC.
Dujak, D. 2019. Blockchain Applications in Supply Chain. Croatia. Springer International
Publishing AG.
Fearnley, B. 2018. Driving Business Transformation with Blockchain. Framingham. IDC.
Ganne, E. 2018. Can Blockchain Revolutionize International Trade?. Geneva: WTO.
Gupta, M. 2017. Blockchain for Dummies. Hoboken. IBM, John Wiley & Sons, Inc.
Guna, N., Thummar, D., Jadav, V., Kore, A. 2018. Blockchain-A Secure Mode for
Transaction. Maharashtra. IRJET.
Lehnis, M. 2018. How Blockchain Promotes International Trade, Identity and Financial
Inclusion. Bitcoin Magazine.
Lynch, K. 2018. New Forum to Analyze AI and Blockchain Technology for International
Trade. AmEx.
Mahdi, H., Maaruf, A. 2018. Applications of Blockchain Technology beyond Cryptocurrency.
AETiC.
Manyika, J., Lund, S., Bughin, J., Woetzel, J., Stamenov, K., Dhringra. D. 2016. Digital
Globalization: The New Era of Global Flows. Washington DC. McKinsey & Company
Mendonca, S., Varsha. 2018. Blockchain –A decentralized ledger. Mangaluru. IRJET.
Peterson, B. 2002. International Business Development and the Internet. Denmark.
Researchgate.

31
Pichler, R. 2016. Smart Contract Development with Ethereum. RIAT.
Ramberg, Jckernoon. 2008. Guide to Export-Import Basics. Paris. ICC.
Sangtani, G. 2018. Blockchain Simplified: Why, What, How, Where of Blockchain. Figyasa
Foundation.
Shilov, K. 2018. What is the Future of Global Trade and Transportation While the Blockchain
Is Here?.
Takahashi, K. 2017. Implications of the Blockchain Technology for the UNCITRAL Works.
Uncitral.
Takahashi, K. Blockchain Technology and Electronic Bills of Lading. Journal of International
Maritime Law.
Ulukut, O. 2018. Toplumları Kökünden Değiştirme Gücüne Sahip Blockchain Teknolojisi.
Istanbul: Webrazzi.
Verduyn, M. 2018. Bitcoin, Cryptocurrencies and Blockchain Technologies: What Insights
from and for IR?. Toronto. University of Toronto.
Yildirim, F. 2016. Kripto Paralar, Crypto Moneys, Blockchain Technologies and the Likely
Effects to International Relations. Istanbul. Researchgate.
Yildiz, R., Başbuğ, S. Blok Zincir Teknolojisi Kapsamında Elektronik Konşimento.
Iskenderun Technical University.
Zsigri, C. 2017. HPE Joins The Blockchain Race with Mission-Critical Offering. New York.
451Research LLC.

32
ABBREVIATIONS
AWB: Air Waybill
CMI: The Committee Maritime International
CMR: Convention Merchandises Routier
DLT: Distributed Ledger Technology
FIATA: International Federation of Freight Forwarders Association
FCR: Forwarders Certificate of Receipt
FCT: Forwarders Certificate of Transport
FBL: Negotiable FIATA Multimodal Transport Bill of Lading
FIATA: International Federation of Freight Forwarders Association
INOTERM: International Commercial Terms
IDA: Infocomm Development Authority of Singapore
UCP: Uniform Customs and Practice for Documentary Credits
UNCTAD: United Nations Conference on Trade and Development
UNICITRAL: The United Nations Commission on International Trade Law
WTO: World Trade Organsation

A PROSPECTIVE STUDY ON FASTER AND MORE SECURE DOCUMENT TRAFFIC FOR INTERNATIONAL TRADE WITH BLOCKCHAIN TECHNOLOGY

More Related Content

What's hot (20)

Similar to A PROSPECTIVE STUDY ON FASTER AND MORE SECURE DOCUMENT TRAFFIC FOR INTERNATIONAL TRADE WITH BLOCKCHAIN TECHNOLOGY (20)

More from Hüseyin Tekler (12)

Recently uploaded (20)

A PROSPECTIVE STUDY ON FASTER AND MORE SECURE DOCUMENT TRAFFIC FOR INTERNATIONAL TRADE WITH BLOCKCHAIN TECHNOLOGY