Free trade has been an enduring goal of the international community for more than a century. Despite broad technological progress, modern transaction systems remain heavily burdened by antiquated practices. This creates “friction” that slows global commerce and hinders service delivery.
Banks, for example, still issue letters of credit to importers, a practice that has remained virtually unchanged for 700 years since its origin in medieval Italy. The practice requires the costly and time-consuming entry of a banking intermediary into many transactions. Cross-border regulations, customs delays, fraud and corruption are also frictions that add a significant layer of costs, time, and complexity to global trade and business flows. An IBM test determined that paperwork alone accounted for 15 percent of the cost of a shipment of produce from Africa to Europe.
Emerging digital technologies, in the form of blockchain and artificial intelligence (AI), can help reduce or eliminate these frictions by enhancing “digital trust” in transactions.
Blockchain became famous as the technology underpinning the digital currency Bitcoin, but its uses go far beyond payments. Blockchain puts data into shared, distributed ledgers that allow every participant access to the entire history of a transaction using a “permissioned” network—one that is highly secure and can distinguish who can see what.
And because it can process and analyze massive quantities of data, AI can use blockchain data to gain valuable insights and detect patterns in nearly-real time. AI systems can employ this data to generate hypotheses, piece together reasoned arguments, and make recommendations for action.
IBM and Everledger, a company that tracks and protects high-value goods, have built a system based on this approach. It applies AI to analyze secure data on one million diamonds that are kept on a blockchain in a fraction of the time humans could do this. Among other things, the platform ensures that diamonds are authentic and compliant with thousands of regulations, including those imposed by the United Nations to prevent the sale of conflict diamonds.
Friction not only inhibits trade and business flows, it also inhibits people. Small farmers, evaluating the costs of shipping produce overseas—from bank fees to paperwork to bribes—may decide it is simply not worth the time and money to try to sell outside of local markets.
Digital technologies can remove barriers to economic participation by lowering costs and building trust into business relationships. For example, blockchain eliminates the prospect that a trading partner will have to engage in an expensive and time-consuming audit should a transaction with a smaller, lesser-known party go wrong. With a single version of transaction data on a ledger, all the required information to settle a dispute may be evident and visible to everyone who has permission to see it. The audit trail is laid out in one place and there is no need to involve costly intermediaries.
IBM estimates that more than $300 billion in the underlying costs of global commerce can be optimized with digital technologies like AI and blockchain. A simulation conducted by our Chief Economist’s office of the impact of blockchain adoption on the economies of Kenya, Nigeria and South Africa found lower prices and significant improvements in real GDP and fiscal balances across each country. These findings are detailed in a new book published by the International Monetary Fund called Digital Revolutions in Public Finance (ISBN 9781484315224).
The good news for governments is that these technologies can be adopted at relatively low cost through the internet and cloud computing. Moreover, their benefits have been shown so far to require small changes to legal and regulatory frameworks. However, private sector cooperation and participation are essential. Businesses must agree to a new set of government policies on transactions and data-sharing built around blockchain.
The democratization of secure transaction processing depends on effective public-private partnerships. National governments have every incentive to create them. Millions who have been denied access to the marketplace will benefit from the removal of friction from international commerce. In this way, the expansion of digital trust can lead us to a new era of freer and more equitable trade.
Welcome to world of 2099
The world of 2099 will be unrecognisable from the world of today, but it can be predicted, says one visionary. ARTHUR GOLDSTUCK met him in Singapore.
Futuristic structures tower over the landscape. Giant, alien-looking trees light up with dazzling colours amid the hundreds of plant species that grow up their trunks. Cosmetic stores sell their wares via public touch-screens, with products delivered instantly in drawers below the screens.
This is not a vision of the future. It is a sample of Singapore today. But it is also an inkling of the world we may all experience in the future.
Singapore was the venue, last week, of the World Cities Summit, where engineers, politicians, investors and visionaries rubbed shoulders as they talked about the strategies and policies that would enhance urban living in the future.
As part of the Summit, global payment technologies leader Mastercard hosted a small media briefing by one of Singapore’s leading thinkers about the future, Dr Damian Tan, managing director of Vickers Venture Partners. The company’s slogan “We invest in the extraordinary,” offers a small clue to Tan’s perspective.
“We look as far forward as 2099 because, as a venture capital firm, we invest in the long term,” he tells a group of journalists from Africa and the Middle East. “Companies explode in growth because there is value in the future. If there is no growth, they won’t explode.”
The big question that the Smart Cities Summit and Mastercard are trying to help answer is, what will cities look like in the year 2099? Tan can’t give an exact answer, but he offers a framework that helps one approach the question.
“If you want to look at 81 years into the future, and understand the change that will come, you need to double that amount and look into the past. That takes us to 1856. The difference between then and now is the difference you can expect between now and 2099.”
Click here or on the page link below to read on: Page 2: Soldiers and Health in 2099.
- Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter on @art2gee and on YouTube
Street art goes electric
Kaspersky Lab and British street artist D*Face have unveiled the first-ever “art helmet” design at the Formula E finale for electric cars in New York.
The ‘Save The World’ helmets will be raced by DS Virgin Racing’s drivers, Sam Bird and Alex Lynn, as they traverse the New York street circuit during the final races of the Formula E season.
The announcement signals the first art helmet by a Formula E team, continuing the heritage of art in motorsport and the cybersecurity brand’s commitment to contemporary art, creativity and innovation. D*Face took inspiration from Kaspersky Lab’s tagline, “A Company To Save The World”, and hopes that his colourful work will inspire people to take positive action.
D*Face will announce his first-ever art car design with a custom-made livery for the DS Virgin Racing Team. Its design will be released at the “Art Goes Green” event after Saturday’s race. The helmets and art car are the latest installations in the “Save the World” collection, following a major permanent public mural that was installed in Brooklyn, New York, in May.
D*Face, whose real name is Dean Stockton, said: “It is exciting to work with Kaspersky Lab on this project and create art with a real message of hope for a better future. After all, this is our world and we need to look after it. It will take every one of us to make a real lasting, impactful change. I love the mentality of the DS Virgin Racing Team and that of Formula E by showcasing sport in a way that doesn’t harm the environment, but is still just as exhilarating and fun.
“It is time for us all to stand together and make a change… be that stopping data steals, climate change, plastic waste or using damaging fuels. I want everyone to make a pledge to do one thing that will help make a change.”
As a sponsor of DS Virgin Racing Team, Kaspersky Lab is responsible for protecting the team’s devices against cyber threats. The company sees the technical environment in the global sport of Formula E as the next frontier in furthering its research and development of new technologies to keep vehicles secure in the digital world.
Sylvain Filippi, Managing Director at DS Virgin Racing, said: “The whole team fully supports this great initiative and our thanks got to Kaspersky and D*Face for their collaboration. It’s an honour to have such an innovative artist bring his talents to bear in our team ahead of the season-finale; the car, drivers’ crash helmets and mural all look amazing.”
Aldo Fucelli Pessot del Bo, Head of Global Partnerships and Sponsorships at Kaspersky Lab added: “There is a need for innovation on a global scale, both in contemporary art and in the fast-growing sport of Formula E. Now, for the first time ever, Kaspersky Lab is proudly bringing together the two sectors in an effort to Save the World and unleash creativity, encourage freedom of expression and further innovation.”