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Brexit A Boon For Blockchain?

The questions loom on Brexit. While the United States is preparing to leave the European Union (EU), for trade, there remain the unknowns of how trade will be affected and how capital, goods and services can be traced. At the end of this month, a Nexus study found that over 200 companies surveyed, more than half of large and medium-sized companies are trying to adopt blockchain in an attempt to mitigate operational risks in the wake of Brexit.

As noted by Nexus, about 33% of companies claim to use blockchain to combat fraud, while 11% will use blockchain to reduce costs and 10% consider blockchain useful in supply chain management.

The concept of blockchain used after Brexit – specifically to help navigate a new customs scenario – is nothing new. As reported in July through the white paper, the UK government argued in part of "exploring how machine learning and artificial intelligence can allow operators to automate the collection and presentation of data required for customs declarations ". This would leave room for the blockchain.

The paper noted that "this could also include the analysis of how to allow cross-border data sharing, including potentially storing the entire transaction chain for each shipment of goods, while allowing for sharing secure data between traders and between relevant government departments, could reduce the need for repeated input of the same data and help fight fraud in import and export. "

In an interview with PYMNTS, conducted through a written exchange, Alex El-Nemer, executive director of Nexus, said of his company's study that "the most interesting thing about our surveys was that all companies had similar plans for increase the implementation, for the same reasons, regardless of size, sector and scale, perhaps reflecting the broader interest in adopting the blockchain, but also the signal that companies recognize their potential to generate savings ".

He said companies could mull over the blockchain to prepare for Brexit because "if they support the imminent departure from the UK [EU] or no, the majority of business leaders agree that the process is likely to lead to economic turbulence and a level of uncertainty in 2019, at least in the short term. "

The data show that 51% of companies consider the blockchain useful as the Brexit takes shape, shows that, possibly, "this trend reflects the need to improve transparency in view of this situation, reducing fraud, improving innovation and reducing costs as key reasons The problem is most likely the consequences of the market for such an important political process, rather than something inherent to the Brexit itself. "

The efficiency of the supply chain stands out as a key use case, as the blockchain can be used to track the movement of key parts and products, for example, of the automotive and manufacturing sectors.

El-Nemer also noted that in the cross-border trade "a & # 39; area for the boom is the music industry, which can start using both blockchain and cryptocurrency to ensure that artists get paid on time and properly, when the music is broadcast online.In the United States, we have already seen legislation approved to make this happen, with the recent implementation of the Music Modernization Act. "

There are also questions on the Irish border. As has been widely noted, the United Kingdom is part of the customs union of the EU and the single market, at least for now. Post Brexit, which will change, and the Irish border will be a customs border with separate controls and commercial processes.

The Nexus director said that "we have included this question in the research, as British Chancellor Philip Hammond recently suggested that the blockchain could provide a potential remedy for the Irish border issue, which is causing problems to the current Brexit negotiations. his proposal was met with a mixed reaction by technology experts and this was reflected in our research … It is debatable that blockchain could help to provide a clear record of the movement of freight trucks across the border, thus avoiding the need for a "hard" border, this solution should be supported by an additional and properly tested technology, so no one can say with any certainty that it would solve the whole problem. "

When asked about the timing of Brexit-stimulated blockchain, he said: "I expect that in the next 12 months many other organizations will have greater use of technology, and in the next three years it will become an essential aspect of the overwhelming majority of companies. ".

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