A basic overview of how Blockchain will impact the Global Economy
Blockchain in bullet points
- Blockchain is a decentralised immutable digital ledger of all transactions on a peer-to-peer network.
- Digital ledgers are replicated and circulated across entire networks of computer systems.
- Information stored on a blockchain cannot be deleted, altered, and/or hacked.
How is, and will this technology impact the world?
Based on how blockchain is currently being used and the impact it has already made, “an analysis by PwC shows blockchain technology has the potential to boost global gross domestic product (GDP) by $1.76 trillion over the next decade.”
Thanks to cryptocurrencies such as Bitcoin, blockchain has been the buzzword circulating for the past few years and many people are aware of the impact it has had in the banking and financial services industry. However, we have only just scratched the surface is utilising blockchain to its full capability. As we start to see blockchain being used in other sectors, the impact it will have in many (if not all) industries will be revolutionary.
Where can blockchain be used predominantly?
Currently, blockchain has the capability to benefit almost all industries. The top five of those industries include:
- Government and public services
- Logistics and retail
Steve Davies, Global Leader, Blockchain and Partner, PwC UK has stated that blockchain could be particularly effective “in how public and private organizations secure, share and use data”.
Blockchain has the potential to work alongside societies' shared desires to work within more transparent and trustworthy environments. It will give organisations the ability to improve their processes and operations to be in line with this want and need whilst maintaining and ensuring cyber safety.
It is predicted that there will be a surge in blockchain usage in 2025, where the technology will be hugely embraced and implemented on a global scale. A report from PwC informs us of five major usage areas of blockchain, these include:
- Payments and financial services – not limited to just digital currencies, it can also reduce cost and time by streamlining cross-border and remittance payments.
- Blockchain provenance – record keeping and the ability to track and trace data, products, and services will help the supply chain industry and companies with ethical and sustainable sourcing.
- Identity management – blockchain will provide personal data such as passport numbers, medical records, etc., will provide a hack-proof, secure platform to prevent fraud and identity theft. This will be especially beneficial within industries such as e-commerce, insurance, and healthcare.
- Contracts and dispute resolution – “If a dispute occurs, blockchain can help by automatically blocking payments and triggering alerts that automate dispute processes” ³.
- Customer engagement - along with the above-mentioned tracing and provenance, blockchain will immensely help to promote transparency and protection for the customer experience. This will bring a range of benefits across the wholesaler, retail, manufacturing, and construction industries.
What are the economic benefits of blockchain?
Economically, blockchain will have different impacts for different countries.
For example, China and Germany whose economies are built on strong manufacturing would benefit from provenance, whereas the US would likely benefit most in relation to identity and payment security.
In general, we will see economic benefits in specific sectors, in particular; manufacturing & supply chain, healthcare, and public administration.
Digital transformation means more implementation
“61% of CEOs said they were placing digital transformation of core business operations and processes among their top three priorities, as they rebuild from COVID-19.”
Digital transformation has been accelerated thanks to COVID-19 and is the forefront of business priorities. As companies delve further into tech enhancements, blockchain could very well be one of the key priorities in digital transformation in the near future.
It will be key for business strategists to identify the root value that blockchain will have within a company and build the right solution. While blockchain is being marketed as a diverse solution (and the potential for it is most definitely there), it is important for companies to recognize its suitability and whether it will enhance the business operation or service.
Precision and accuracy are one of the benefits of blockchain, but it could also be a disadvantage if a company does not have a strategy or operation in place to minimise risk and error, as the system is immutable – meaning if a mistake is recorded into a blockchain, it cannot be changed or amended.
If blockchain is to become widely adopted and used in several major industries, there could be a negative impact on the environment due to the large amounts of energy consumption required. Companies should also work towards counteracting the energy operating costs and also taking responsibility and action to prevent further impact our current climate change concerns.
All organisations must be in conversation about innovative modes for merging and distributing resources, ideally to decrease dependence on data centres and also to ensure their tech-related energy consumption is not having major negative effects on the planet.
 PwC, “Time for Trust” Report, 2020