Interoperable Legal Entity Decentralized Data Servers (LEDDS) for Trade
A report issued by the Dataswyft Practice Team for the ICC Future Trade Forum, 29-30 March, 2023, Singapore.
Summary
In today's digital age, the world of trade is transitioning towards digital operations, making data exchange and usage essential to fulfill legal, commercial, financial, and regulatory functions. However, the current management of data in trade is a patchwork of fragmented systems, platforms, and stakeholders, which often leads to inefficiency, duplication of efforts, lack of interoperability, and privacy and security concerns. Clarisse Girot, Head of Data Governance and Privacy Unit at the OECD, highlights the need for global convergence and cooperation in establishing frameworks for data protection to avoid creating trade barriers.
Legal entity decentralized data servers (LEDDS) can be an effective solution to address the pain points of data exchange in trade. They provide a secure and decentralized data processing platform for each legal entity (whether individuals or firms) that enables the exchange of data between different stakeholders and services involved in trade. LEDDS uses international contract laws that reduce coordination costs and improve interoperability, without the need to deal with the services that orchestrate the exchange. By creating standardization in the exchange process in a similar fashion to using containers for shipping. LEDDS standardizes the storage and protocols that facilitate the exchange as well as the objects of exchange, if necessary. These servers can also provide “edge” AI functionality that help the services that use them to analyze and interpret trade data, providing edge insights that can improve decision-making and reduce delays in the trade process.
The journey towards digital trade involves balancing solutions that are far-reaching with solutions that are fast. While most in the industry agree on the need for solutions, many are divided on the journey's pace and progress. However, there are several threats to the journey that may result in market failure, such as transaction costs, cost of entry, lock-in, and insufficient incentives for service providers to invest in solutions.
Changing the nature of the data to make it easier to share can be an effective strategy to address some of these threats. LEDDS changes the nature of data into a self-sovereign class of data, making it more accessible. This enables stakeholders to reduce the costs and risks associated with exchanges and enable the market for solutions to be more readily developed.
LEDDS is currently available as an out-of-the-box solution that leapfrogs the current discourse around weighty, cost-prohibitive and “invasive” approaches. Legal reclassification of data into self-sovereign asset class offers a broad section of the market, from individuals to micro-SME businesses to large enterprises, a nimble, easy-to-adopt solution.
In conclusion, LEDDS can be an essential solution for the challenges of data exchange in trade. They provide a secure and efficient distributed platform for stakeholders to avoid market failure and enable a more robust market for solutions to be developed.