Blockchain / Distributed Ledger Technology (DLT)

What is blockchain?


Blockchain, or distributed ledger technology (DLT), is a decentralized digital network of records that can be simultaneously accessed by all permitted users and that are automatically updated and validated if an authorized change is made. All changes are time-stamped and DLT transactions are based on consensus, replication, and immutability. This provides a high level of security, even in transactions where parties do not know each other or have other verification tools.


Why does blockchain matter for MSMEs and trade? 


Blockchain technology holds the potential to facilitate trade transactions and access to finance, along with reducing costs. By providing an immutable record of transactions, MSME with access to IT infrastructure and the right digital know-how may be able to use this technology in their international trade dealings or provide alternative documentation to verify their credibility when trying to access finance. From identity management to smart contracts, a Finextra article entitled Blockchain: A game-changer for Small and Medium-sized enterprises provides additional information on the benefits of blockchain for MSMEs.


What can policymakers do?


While blockchain technology could reduce barriers for MSMES to engage more in international trade, there are a number of challenges that need to be overcome. Some challenges relate to blockchain technology adoption, including: scalability; security; interoperability; and the lack of clear legal framework. Other challenges relate to MSMEs themselves, including the lack of technical skills and internet access to adopt, use and seize the benefits of blockchain technology.

Where can policymakers access more resources?

Where can policymakers access best practices and national examples?

  • The European Blockchain Partnership (EBP): This is an initiative to develop an EU strategy on blockchain and build a blockchain infrastructure for public services. Visit the EU Commission website.
  • The Arab Regional Fintech Working Group: This working group published a report on Strategies for adopting DLT/ Blockchain Technologies  in Arab Countries. The report includes recommendations and an overview of other national blockchain initiatives, including in Australia and the Russian Federation.
  • The ITU Distributed Ledger Technology use cases: Visit the ITU website to access a series of cases studying how DLT is put into practice.

Businesses & Entrepreneurs

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Policymakers & Researchers

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