In mid-2016, the United Kingdom underwent with a referendum about whether to leave or stay member with the European Union which went in favor of the former with a resounding 51.9% votes made in favor of leaving. More than 30 million people voted with a turnout of around 72%, and the result has come out more commonly since then to be known as “Brexit”, meaning Britain’s exit from the European Union.
So, as things stand, UK is due to leave the EU on 29th March 2019 and it could have significant consequences on a large number of accounts relating to all matters of life. The most impact would most definitely be made on the respective economies of all parties involved and other factors would include increment in taxes, implications on trade, rights of residence, etc. For the change to take place seamlessly, there has been a “transition period”, which refers to the time after 29th March 2019 to 31st December 2020. The purpose of the transition period is to get everything in place and allow businesses and trade to function under the newly applicable post-Brexit rules between the United Kingdom and the European Union. In such regard, UK’s Brexit teams have been formed to look after all possible cases of consequence after March 29th, which have put forth several suggestions to be taken up as solutions.
How Blockchain can help the post-Brexit era
Blockchain is the use of Distributed Ledger Technology to store and transact just about anything over a network without the requirement of an intermediary like banks in the financial industry. Blockchain carries out and verifies transactions on its own and creates a secure validation of all data on the blockchain. It has been talked up by UK’s Brexit team in line with other technologies being looked at to deal with complex predicaments after Brexit takes place.
Post-Brexit cross-border trade and commerce
A major application of blockchain could be applied to deal with the border issues over Northern Ireland and the Republic of Ireland, where a customs border would now be necessary. United Kingdom looks to use technology as means to save time and capacity and is looking at blockchain as a viable technology of real potential in the field of trade and commerce. Used at the core of operations at the customs border in Ireland, it could simplify complex processes of trade and logistics. The biggest benefit, as ever with blockchain comes with its decentralized nature of operation, which would remove the need for an intermediary to secure each transaction. Whether currency transfers, trade of physical goods, tracking and certification on any shipment in the form of bills and insurance, just about everything can be made a part of blockchain and be accessible to all interested parties, be it investors, suppliers, transporters and even regulators and auditors. Having all information in one place with no fear of alteration and data loss would help reduce costs greatly and aid the manpower involved at different task heads.
The primary contribution of blockchain at the heart of Brexit would be to establish a robust data holding platform that would contain transactional and logistical history of all goods and trade across borders. It would greatly reduce requirement for inspection on the borders, as long as goods are properly labeled and can be verified over recorded data on the blockchain. What this will ensure is the loss of revenue from fraudulent activities such as laundering across borders, smuggling and counterfeiting. For example, to relieve from around 10 billion EUR loss annually, Europe is implementing a system to track all cigarettes which will be marked with a unique identifier and security stamp. These cigarettes could be easily recorded for all accountancy over blockchain and create an immutable record of such high stakes products.
On the blockchain, every product can be interpreted with a digital ID which would record even the slightest of detail about the product, from its color and clarity to its origin and making. This absolute record of everything, would make it near-impossible to pull of criminality of any sorts. To guard against clones, blockchain also pertains to transparency and visibility to detect any duplicates.
Use of smart contracts
Apart from proving itself to provide watertight data storage, blockchain can also provide transactional services via smart contracts that would automate payments in all forms of trade and exchange of all kinds of products and goods. Smart contracts could prove to be of great usage to trade of goods and other services across the EU and UK. Such as for trade of liquids and foods, IoT sensors could be installed at containers that would be linked to smart contracts to trigger payments if the produce is delivered at the right temperature of humidity. In the same way, cross border transport could be automated to provide ease for users as any delay in arrival or departure could be linked to annulment of operation of a different service. Basically, with the usage of smart contracts over blockchain, actions and decisions can be triggered which would otherwise have had to be made by humans that is not only time consuming but sometimes indecisive.
Of course, in reality, blockchain implementation has been adopted very little all over the world, so it may not come as a seamless solution to Brexiteers and other parties involved. More so, it has failed to gather regulatory oversight anywhere in the world which has given it a lack of repute or authority in the eyes of governments and sections of the public. The technology still needs to be watered and nurtured more, in the form of provision of education at the ground level. It needs to be tried and tested rigorously to ensure that it will not provide that ‘one wrong authentication from the right authority’ to trigger wrongful trade or payments. The space suffers further when proposed to across border traders and merchants that do not understand it. Its transparency, however beneficial, hurts profit margins for these marketeers who remain reluctant to consider or adopt it.
Nonetheless, regulation combined with research and implementation of this revolutionary technology would surely revolutionize the post-Brexit status quo in both the United Kingdom and the incumbent members of the European Union. For UK, it is to be seen if they will take back their exit from the EU before blockchain technology can upgrade itself by leaps and bounds.