Crypto Adds Efficiency to Global Trade and Finance, Says Bequant Exec

Global trade and financing suffer from inefficiencies due to traditional infrastructures. However, according to Martha Reyes, head of research at Bequant, crypto can solve this problem.

In an interview with Coin-Crypto, Reyes shared her thoughts on the state of global trade and financing and how crypto is making it more efficient. According to Reyes, despite the growth and size of global trade, areas such as remittances still suffer from the number of intermediaries that have to go through transactions. This leads to long transaction times. Reyes notes that legacy cross-border payment systems make global trade a “primary candidate” for blockchain technology adoption.

“Digital ledger technology can make complex trade transactions more efficient and secure. Smart contracts allow parties to specify the terms of an agreement and ensure that they are immutable and transparent.”

Reyes adds that the traceability of ownership for documents and agreements stored in smart contracts makes security more stringent. Apart from this, the researcher notes that transaction settlement within blockchains is a lot faster and reduces friction.

In addition to global trade, Reyes thinks that tokenization also helps with financing. This can bring benefits for small and medium-sized enterprises (SMEs) in the form of access to capital.

“Tokenizing trade finance assets can facilitate access to capital for SMEs willing to trade, as well as for investors seeking returns, and more efficiently match supply and demand.”

Reyes also cited XDC Network as an example. “The smart contract transactions contain a digital currency, XDC, which represents the value of off-chain, bank-generated assets that have revenue-generating capabilities,” Reyes said.

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The head of research believes that this is a way of “breaking down barriers” and giving SMEs access to finance outside the realm of the traditional financing system. Reyes notes that this “can also increase competition among lenders.”

In addition to the topic, Bequant’s head of research also discussed the emergence of hybrid protocols and what sets them apart.

“As more institutions take an interest in DLT, and they are often required to keep the information in their transactions private, this could pose a dilemma when using a public blockchain. Some institutions are even creating their own centralized blockchains. This is where a hybrid model comes in handy.”

Reyes notes that within hybrid networks, transaction details can be private, while the data given to the public network for transaction confirmation is limited. According to Reyes, “The technology combines the speed of private blockchains with the security of public blockchains, leveraging the strengths of both while minimizing the drawbacks.”

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