The World Trade Organization (WTO) mentions several leading cryptocurrencies in its latest report, featuring coins like bitcoin, Ethereum, XRP, and IOTA, which are touted by the WTO as “pioneering technologies.” The 236-page report is dubbed “The Future of world trade: How digital technologies are transforming global commerce.”
It suggests that all blockchain technology, and Ripple in particular, can have dramatic and disruptive effects on the global financial system. The report highlights Ripple as a company that could radically change the way banks around the world move money. Although the cryptocurrency XRP is not explicitly mentioned in this context, it can be interpreted that XRP is meant as the “bridge currency” alluded to.
“Ripple has ambitions to circumvent the correspondent banking model through its distributed ledger platform. It gives banks the ability to convert funds directly into different currencies in a matter of seconds and at little to no cost, without relying on correspondent banks. The company has licenses with more than 100 banks and financial institutions, but it seems that only a limited number of large operations have taken place to date. Banks are still testing the system.”
The report also highlights that there are other distributed ledger technologies in addition to blockchain that are promising. In particular, the World Trade Organization IOTA describes:
“Blockchain is the most well-known distributed ledger technology (DLT), but an increasing number of other models are being developed that, like Blockchain, are distributed and use various cryptographic techniques, but that are moving away from the concept of ‘blocks’ – or even from both the concepts of ‘blocks’ and ‘chains’. One example of this is IOTA, a cryptocurrency designed for machine-to-machine communication, in which each transaction is linked to two previous transactions as part of the validation process to form a ‘tangle’ rather than a ‘chain’.”
BTC and ETH
The report also covers Bitcoin and Ethereum, stating that both cryptocurrencies are pioneers in their field. At the same time, the World Trade Organization points to the future challenges that still exist in order to be able to stand up to Visa.
“[The] real potential of Blockchain to truly transform the way business is done remains to be fully assessed. Indeed, the deployment of Blockchain currently hinges on various challenges. Firstly, scalability of the main public blockchains remains limited due to the predetermined size of blocks and to the level of energy required to power the networks.
For example, the Bitcoin network on average can handle approximately seven transactions per second (TPS), while Ethereum has the capacity for 14 TPS. Visa, meanwhile, can process 2,000 TPS and boasts top performance of 56,000 TPS, according to data cited in the report.
The WTO report goes on to say:
“Secondly, existing blockchain networks and platforms have their own technical specificities and do not “talk to each other”. Organizations such as the International Organization for Standardization (ISO) and the International Chamber of Commerce (ICC) have started to look into issues of interoperability and standardization and various technical solutions are being developed by IT developers. However, solving the “digital island problem” is likely to take time.
“Finally, the use of blockchain technology raises a number of legal issues, ranging from the legal status of Blockchain transactions (whether blockchain transactions are recognized legally) to applicable law (which law applies in the case of a blockchain spanning various jurisdictions) and liability issues … not to mention possible compatibility issues with existing regulations.”
You can read the full report here.