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June 27, 2017
Blockchain at the border? What matters isn’t how it works, but what it’ll deliver.
By: James Canham

The other day, in an attempt to become (if only briefly) the coolest person in my social circle, I took a Tesla for a test drive. As I expected, it felt great. So I added it to my bucket-list of purchases for some indeterminate point in the future—probably when I’m too old to enjoy it.

But while I enjoyed driving the Tesla, what I didn’t know—or care about—was how it works. Put simply, I had no idea what was happening under the bonnet. Or even if a Tesla has a bonnet in the traditional sense.

For me, there’s a parallel here with the current frenzy of excitement over Blockchain technology. Whatever business you’re in, you can’t go to a meeting or attend a conference these days without someone mentioning Blockchain and its “disruptive impact” or “transformational potential.”

I can’t claim to be totally innocent on this one. I freely admit that there was a time when I sat in meetings discussing Blockchain without really knowing what I was talking about. However, since no-one picked me up on it, I suspect the other people there were not real sure either.

So … everyone’s talking about Blockchain, but few people know what’s happening under the bonnet. And again like the Tesla, the key thing about Blockchain is this: What matters isn’t how it works, but what it does. And in terms of border services, what it does is herald a revolution—possibly the biggest advance since the introduction of computers.

Why? Well, irrespective of the technology that makes it work, Blockchain is essentially all about trust. We live in a world where trust is challenged all the time. Can I believe this person is who they say they are? Can I be sure my funds transfer will arrive? If I buy from this website, will I get the item I’ve paid for?

What Blockchain does is remove the need for trust and replace it with verifiable truth. This is because something that’s written or changed on a Blockchain “distributed ledger” in one place is replicated and visible to others authorized to view the same ledger elsewhere. You can’t change one instance of the ledger without all the others changing too, in total lockstep.

If you’re fogging over, stay with me because this a massive breakthrough for border and customs services. To demonstrate why, let me describe some of the impacts.

Take customs declarations. Historically you would fill one of these out, and it would appear on a system somewhere to be accessed later by authorized stakeholders. But with Blockchain, the moment you submit the declaration it’s visible in non-reputable form to all the associated parties on the import side. The importer can trust the information about what’s in the consignment, while also being able to check whether the related finance is legitimate, and—thanks to the Internet of Things—track and trace it along the supply chain and determine if it’s been interfered with.

If you think this sounds like nirvana for the customs world, you’re probably right. But the benefits go further. Fraud—especially trade finance fraud—is a huge challenge for customs agencies worldwide. We all know how the scam works: The fraudsters say they’re shipping the same consignment to three or four places at once, and use the same documents to get finance from different parties.

With Blockchain, when you look at consignment details you can already see the link to finance. So the opportunity for fraud disappears—meaning the criminals will have to slink off and look for someone else to rip off.

And aside from customs, there are equally profound impacts elsewhere at the border. For example, individual travelers will be able to use Blockchain to store all their relevant travel documentation and records—passport, visas, ticketing, payment cards, personal travel history—in one secure yet easily accessible place.

This not only makes things much easier for the traveler, both in transit and going through immigration. It’s also very powerful from a security perspective, enabling authorized agencies to have lawful visibility into people’s documentation and travel history, including which jurisdictions they’ve visited and when. Events in Europe over the past year have underlined the value of this.

In my view, the scale of the benefits means the implementation of Blockchain in border and customs services is not a question of if, but when. Forward-thinking customs agencies are already launching Blockchain projects. And on the shipping side, Maersk is testing out Blockchain-based trade tracking. It won’t be long before the Blockchain developments on the agency and shipping/trader sides begin to converge and coalesce into Blockchain-enabled trade and customs ecosystems.

When will we see this start to happen? A decade or two ago, you’d hear about some new technology and it would become mainstream five years later. These days the time-lag is about six months. So my money’s on us seeing Blockchain at the border sooner rather than later. Certainly before I get round to buying that Tesla.

See this post on LinkedIn: Blockchain at the Border? What matters isn’t how it works, but what it’ll deliver.

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