It seems strange to be back talking about technologies such as blockchain. All the rage prior to the COVID-19 pandemic, the distributed ledger has understandably taken a backseat to current global health priorities. But as we try to find a ‘COVID normal,’ the potential brought by emergent or underutilised technologies takes on new meaning as businesses look for advantages in a very different playing field.
Blockchain is one of those technologies, which, according to PwC’s report, Time for trust: The trillion-dollar reasons to rethink blockchain, has the potential to impact the global economy to the tune of US$1.76 trillion in global gross domestic product over the next decade.
While not there yet, once blockchain hits mainstream usage its economic benefits are predicted to rise. So how should businesses look to get started?
With businesses reimagining their futures and accelerating digital transformation efforts blockchain’s use is a natural area to explore, particularly where trust, verification and the immutability of records or transactions is necessary. We identified the top five uses of blockchain, ranked by their potential to generate economic value:
1. Provenance — potential boost to global GDP by 2030: US$962 billion.
Blockchain excels at tamper proof verification, and so has enormous potential for businesses who need to verify the sources of goods— such as food, luxury products, organic food or even pharmaceuticals. Fraud, contamination and counterfeiting can be pinpointed immediately when movements are tracked, ensuring that customers remain safe and the organisation ethically responsible. Manuka honey from New Zealand’s The True Honey Co., for example, has been tracked along supply chains with evidence of its authenticity grade testing.1
2. Payments and financial instruments — potential boost to global GDP by 2030: US$433 billion.
Central banks are exploring blockchain use to improve their nation’s payment infrastructure by using central bank-issued digital currencies (CBDCs). Wholesale, these could create more efficient clearing operations between banks, while in a retail setting they could be used as digital currency. Stable coins, similar to cryptocurrency but backed by real-world assets or government-issued currency, could lower fees for cross border payments and enable instant transactions. The Australian Securities Exchange (ASX) plans to introduce a new blockchain system for local equity trades in 2022.2
3. Identity — potential boost to global GDP by 2030: US$224 billion.
Personal identification such as licenses and professional credentials and certificates could be accessed via blockchain, bringing cost efficiencies and curbing fraud and identity theft. In South Korea, for example, drivers are able to use a digital driver’s license via a blockchain-enabled app, instead of having a physical card.3 In healthcare, hospitals and physician groups must check numerous credentials from multiple entities (universities, licensing boards etc) when hiring a new nurse or doctor which delays the time until they can practice — blockchain could radically change this.
4. Contracts and dispute resolution — potential boost to global GDP by 2030: US$73 billion.
In the world of contracts, there is still much happening via paper, email and manual processing. Using blockchain, ledgers, smart contracts and payments could be accessed together, improving the flow of commercial agreements and flagging any disputes. Evidence of smart contract use can be seen by the UK Government’s decision to ask the Law Commission to consider legal issues and suggest reforms to ensure that the law can meet the growth in use.4
5. Customer engagement — potential boost to global GDP by 2030: US$54 billion.
Increasingly, customers have wallets full of loyalty and reward program cards. With blockchain and customer relationship management (CRM) platforms such as Salesforce, HubSpot CRM and Microsoft Dynamics 365 Sales, customer engagement could get a much needed boost via user-friendly smartphone apps. Blockchain could enable rewards points to be earned via multiple channels, be consolidated across brands, and to be stored in an online wallet, easily redeemable at any time.5 Emirates, as an example, is trialling a blockchain solution where points earned at any of its 120 partners, can be reconciled in real time instead of taking up to two months.6
There are misconceptions around the technology that need to be overcome before organisations can get real value from blockchain. First, while Bitcoin is the reason that blockchain technology came to fame, they are not, in fact, the same thing. Businesses thinking that blockchain will only be useful in a financial space should think again.
Second, blockchain, having been associated so closely as it has with Bitcoin, has been seen as problematic from an energy use standpoint. Many blockchain solutions however now use different cryptographic methods to the resource-intensive Bitcoin. An opportunity also exists to decrease energy use as different technologies can be consolidated or replaced via a single blockchain enabled platform that performs multiple steps, and indeed, could be shared across multiple companies.
Third, blockchain should not be developed by an organisation for internal use — that isn’t where value lies. Where the technology shines is between organisations, where trust is facilitated and intermediaries cut out. Industry approaches will provide the best value, but careful consideration should be given to practicalities such as the type of blockchain enterprise used, and how blockchain will integrate with legacy tech.
Finally, and perhaps obviously, it is time to stop thinking about blockchain as a hobby. To really work and create the value we believe it could provide, the C-suite has to support and facilitate blockchain collaboration within industry. It will be complicated, but establishing proof of concept via a satellite project, for example, will give business the time to develop a working blockchain solution that will be ready when it comes time to integrate as a core product.
Serious activity around blockchain is starting to cut through industries across the globe. Its use is being driven by an acute need to win trust in an increasingly virtual world post-COVID. Businesses who are rethinking their operations will discover that not only is blockchain technology key to delivering that trust, but that it’s an opportunity open to all.
To determine whether blockchain could create value for your organisation, try the simple test in the report, Time for trust: The trillion-dollar reasons to rethink blockchain.
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