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White Paper Blockchain in Trade Facilitation Version 2 This document is presented to the 26th UN/CEFACT Plenary as document ECE/TRADE/C/CEFACT/2019/9/Rev.1 White Paper on Blockchain v2 Note The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. The United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) Simple, Transparent and Effective Processes for Global Commerce UN/CEFACT’s mission is to improve the ability of business, trade and administrative organizations, from developed, developing and transitional economies, to exchange products and relevant services effectively. Its principal focus is on facilitating national and international transactions, through the simplification and harmonization of processes, procedures and information flows, and so contribute to the growth of global commerce. Participation in UN/CEFACT is open to experts from United Nations Member States, Intergovernmental Organizations and Non-Governmental Organizations recognized by the United Nations Economic and Social Council (ECOSOC). Through this participation of government and business representatives from around the world, UN/CEFACT has developed a range of trade facilitation and e-business standards, recommendations and tools that are approved within a broad intergovernmental process and implemented globally. www.unece.org/cefact P a g e 2 | 158 U N E C E – UN/CEFACT White Paper on Blockchain v2 Acknowledgement This paper has been prepared under the leadership of Virginia Cram Martos, under the guidance of Vice Chair Tahseen Khan. Lance Thompson, Tomas Malik and Helen Ross of the UNECE secretariat supported this work. The following experts contributed to parts of this work: Ahmed Abdulla, Jorge Alvarado, Ferdinando Ametrano, Anurag Bana, Gadi Benmoshe, Simone Bonetti, Alex Cahana, Enrico Camerinelli, Steve Capell, Concettina Cassa, Savino Damico, Dario Delle Noci, Tom Fong, Chris Gough, Edmund Gray, Luca Grisot, Thierry Grumiaux, Rudy Hemeleers, Jahidul Hasan, Kazuo Hotta, Ravi Jagannathan, Erik Jonker, Christophe Joubert, Henry Kim, Ad Kroft, Vijay Kumar, Marek Laskowski, Wassilios Lytras, Pietro Marchionni, Gianluca Marcolongo, François Masquelier, Richard Morton, Ronan Mualem, Anushka Patchava, Anita Patel, David Roff, Hans Rook, Eiichi Sakai, Carlo Salomone, Daniel Sarr, Mohit Sethi, Lisa Simpson, Fabio Sorrentino, Kaushik Srinivasan, Akio Suzuki, Tunghua Tai, Mikio Tanaka, Max Tay, Daniele Tumietto, Frans van Diepen, Venkatraman Viravanallur, Rupert Whiting and Burak Yetiskin. The designations employed and presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Disclaimers The opinions, figures and estimates set forth in this publication are the responsibility of the authors and should not be considered as reflecting the views or carrying the endorsement of the United Nations, UNECE, its member States, or other organizations that have contributed to this document. Mention of specific names and commercial products and services does not imply the endorsement of the United Nations. The use of the publication for any commercial purposes, including resale, is prohibited, unless permission is first obtained from the UNECE secretariats. Request for permission should state the purpose and the extent of the reproduction. For non-commercial purposes, all material in this publication may be freely quoted or reprinted, but acknowledgement is required, together with a copy of the publication containing the quote or reprint. U N E C E – UN/CEFACT P a g e 3 | 158 White Paper on Blockchain v2 Foreword I am pleased to present this revised version of the White paper Overview on Blockchain and sectoral challenges and opportunities. Blockchain technology is one of the most talked about topics in the sphere of information technology as well as in the facilitation of electronic business. The cryptocurrency Blockchain applications are well known and well- publicized, however, this technology has the potential to influence the way that we do business today, as its use expands to new areas. Blockchain, which is one form of Distributed Ledger Technology (DLT), offers opportunities to increase the reliability and security of trade transactions. The repetition of data among multiple ledgers in a network, as well as the immutability of information after it has been integrated into the Blockchain, can increase levels of confidence for both traders and regulators. Additionally, these technologies have the potential to facilitate cross- border trade, increase access to global value chains for small businesses in developing economies, as well as support the effectiveness of government services that support more inclusive economic and social progress. Immutable original electronic certificates, licenses and declarations can be linked with goods, in order to facilitate regulatory procedures. Blockchain can help trade facilitation because of the following characteristics: it is immutable (nearly impossible to change once transactions are written), automated (actions can be automatically executed) and historized (have full transaction history, which can be used to track and trace). Furthermore, Blockchain implementation is useful to make possible contributions to the achievement of the United Nation agenda for 2030, the Sustainable Development Goals (or SDGs). Some Blockchain applications which are already being used to support the SDGs include the establishment of identities (for example for refugees); the tracking of information linked to identities (related to health, social benefits); the distribution of resources (financial and material support) and the tracing of goods and their content and original source. I hope that this publication will offer a useful aid to all parties interested in the technical applications and implementation of Blockchain technologies and that this important process will continue to contribute to the enhancement and growth of international trade. Maria Ceccarelli Chief of Section, Trade Facilitation Section United Nations Economic Commission for Europe P a g e 4 | 158 U N E C E – UN/CEFACT White Paper on Blockchain v2 Table of Contents PART I............................................................................................................................................................ 7 1 AN INTRODUCTION TO BLOCKCHAIN AND TRADE FACILITATION ............................................................. 7 1.1 INTRODUCTION .......................................................................................................................................... 7 2 WHAT IS BLOCKCHAIN AND WHAT SHOULD YOU KNOW ABOUT IT? ....................................................... 9 2.1 HISTORY AND BACKGROUND ......................................................................................................................... 9 2.2 BLOCKCHAIN: HOW IT WORKS ..................................................................................................................... 10 2.3 BLOCKCHAIN TYPES ................................................................................................................................... 14 2.4 OTHER THINGS YOU SHOULD KNOW ............................................................................................................. 17 3 IMPLEMENTING BLOCKCHAIN FOR TRADE FACILITATION ...................................................................... 22 3.1 WHEN TO USE BLOCKCHAINS AND WHEN NOT TO ........................................................................................... 22 3.2 IMPLEMENTATION CHALLENGES................................................................................................................... 24 4 DATA SECURITY AND REGULATORY ISSUES ........................................................................................... 32 4.1 INTRODUCTION ........................................................................................................................................ 32 4.2 IDENTITIES AND IDENTIFICATION .................................................................................................................. 33 4.3 AUTHENTICATION AND AUTHORIZATION........................................................................................................ 35 4.4 DATA INTEGRITY AND TIME STAMPING .......................................................................................................... 36 4.5 PRIVACY AND CONFIDENTIALITY OF INFORMATION........................................................................................... 37 4.6 LEGAL ASPECTS ........................................................................................................................................ 39 PART II ........................................................................................................................................................... 48 5 SUPPLY CHAIN TRANSPARENCY ............................................................................................................
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