Business ecommerce firm Tradeshift has linked up with Qedit, a privacy-enhancing technology solutions provider, to develop zero knowledge proofs (ZKPs) for trade finance transactions making use of blockchain technology.
A relatively new concept, zero knowledge proofs technology uses cryptographic methods that enable a person or company to prove an aspect of a transaction on blockchain, without revealing any specific information about the transaction. For example, if a financier needs to know that a certain number of units has been shipped, ZKPs can verify this without revealing the exact number of units.
Founder and CEO of Qedit, Jonathan Rouach tells GTR that the partnership with Tradeshift arose out of a need to create a marketplace for financing invoices, where all the participants, both the suppliers that want to be financed and the financiers, wish to keep the details of the financing private. If a supplier wants to get financed earlier, they shouldn’t have to publish that to everybody on the market, he says.
Through the new partnership, Tradeshift and Qedit are in the process of onboarding trial financiers, with plans to pilot the technology within the next 12 months.
“Our focus is trade finance marketplaces. We need to do technical tests to prove the technology can help facilitate trade and financing across borders,” Mads Stolberg-Larsen, blockchain specialist at Tradeshift tells GTR.
Stolberg-Larsen says: “When you’re completing transactions on blockchain, if you integrate ZKPs you’re able to share data about transactions without revealing anything about those transactions. That is why we created a partnership with Qedit, to be able to build on blockchain in a way where we maintain the privacy of all participants involved.”
Tradeshift is a cloud-based platform that connects companies globally and helps them digitalise and manage their supply chains. Recently Tradeshift has been dipping its toes into blockchain technology with a number of partnerships, including carrying out a transaction on the Ethereum blockchain with fintech company Monerium, using Monerium’s e-money for settlement, and a potential team up on the cards announced by we.trade.
The digitisation of supply chains is a crucial step in making trade more secure, transparent and efficient. However, digitisation can also create concerns regarding the privacy and ownership of data. Traders and lenders are keen to understand who has rights to view certain data and information, and how it is being handled and secured. As ZKPs enable all parties to interact and transact digitally without revealing sensitive information, many of the issues regarding data privacy in trade could be addressed.
Data privacy has already become a major topic of concern in the consumer space with backlash mounting over how consumer data is being used, as witnessed in the Cambridge Analytica scandal, where the political consulting firm harvested the personal data of millions of peoples’ Facebook profiles without their consent.
Stolberg-Larsen adds: “We think this will translate over to the business space, companies will be asking: what are we sharing and how widely is this being distributed?”
Qedit founded the Zero Knowledge Proof Standardization committee last year. It is a global open initiative between industry – the likes of IBM, Deloitte, Microsoft and others and academia to standardise the use of zero knowledge proofs.
Rouach says: “What we are doing is taking this core privacy-enhancing technique and making sure that it is useful for enterprise and interoperable between the different implementations, so that many of these large players can start using these techniques and have trust in the tools.”
He says that it is a balance between choosing the right technology to standardise and executing a proper consensus-building process. “We know the industry takes time to adopt standardised rules, but we want to have them soon enough so that the adoption can be accelerated, but it is difficult to say when there will be a definitive standard.”