Despite flagging interest in the technologies blockchain underscores, a new report suggests it could yet play a role in revolutionising the world of cross-border transactions. If rolled out globally, researchers suggest that by 2030 blockchain could add more than $2 trillion to the world’s GDP.
Over the last year, the bubbles around NFTs and cryptocurrency have burst in spectacular fashion. After relentless hype campaigns projecting NFTs as the future of securities trading, an estimated 95% were found to be ‘worthless’ as of September 2023. Meanwhile, with AI having been determined to be the next flavour of the month, chip manufacturers like Nvidia have wasted no time in deriding cryptocurrency as ‘useless’, and encouraged users of automation to focus on developing tools away from the world of bitcoin mining.
Even so, the technology underwriting both systems of value-storage is still touted as the way of the future by some experts. Blockchain technology – defined as a digital system in which a record of transactions, especially those made in a cryptocurrency, is maintained across computers that are linked in a peer-to-peer network – was initially hyped as the next big thing because of its apparent invulnerability to being hacked, combined with a layer of transparency which could ensure stable trading of assets.
These benefits were of limited interest to many companies, as internal fraud often takes a bigger toll on finances than external attacks. Meanwhile, the fact much of the technology remains under development means that there is a lingering air of regulatory uncertainty and trust issues surrounding the technology that acts as a barrier to wider business adoption.
Even so, some markets remain heavily invested in the future of blockchain – particularly the Middle East. There, heightened adoption of cryptocurrency and related technologies mean there has been wider adoption of blockchain, resulting in greater awareness of its apparent potential. And according to Middle East based consultancy Agile Dynamics, if that potential were exported to other economies, it could still have a major positive impact on gross domestic product.
A new study from Agile Dynamics asserts that the wider use of blockchain could buoy the world’s GDP by $2.1 trillion by 2030 – a leap of 2%. The researchers elaborated that almost half of this growth would come from emerging markets, as the technology could be used as a way to bridge gaps in the economic infrastructure of less-wealthy economies. However, that is not to say the firm concludes there are no relevant use cases for leading economies.
Efficiency savings
According to the Agile Dynamics report, 73% of business leaders the firm polled believe that a reduction in operational costs will be one of the main advantages of blockchain technology. This was closely followed by 67% who believe it will improve speed and efficiency. Other advantages include enhancing security and privacy at 55%, and fostering innovation at 50% – each crucial advantages in markets like the UK and US, where firms struggle to improve on sluggish productivity.
Paul Lalovich, managing partner at Agile Dynamics, commented, “By leveraging blockchain’s decentralisation, data ownership, privacy, trust, and security, organisations can gain more control and autonomy over their technology infrastructure, reducing dependence on external entities and safeguarding their sovereignty. You also have the ability for more control and autonomy over your technology infrastructure and systems. This reduces dependence on external entities, and helps to safeguard your sovereignty. Blockchain is also a distinct and cost-effect means to stimulate innovation and foster growth.”
Cross-border transactions could be the biggest window of opportunity for the use of blockchain, according to the analysts. When used for cross-border payments, blockchain provides “payment processing in seconds rather than days”, driving a 40–80% reduction in transaction processing costs, while also still ensuring security and end-to-end traceability of payment-related data. As a result, the deployment of blockchain for cross-border settlement is estimated to drive increasingly significant cost savings for banks; rising from $301 million in 2021 to $10 billion in 2030.
The bottlenecks
Reaping the $2 trillion benefits remains easier said than done, though. To hit such a figure by 2030, there would need to be global adoption of the technology which is to date unprecedented.
That is the only way forward, though, with the report highlighting that a fully decentralised network that is secure and scalable is necessary for a blockchain application to succeed. Key barriers still stand in place, according to Agile Dynamics. One major obstacle that blockchain technology must overcome is the ‘Blockchain Trilemma,’ – the challenge of achieving three options simultaneously: security, scalability, and decentralisation.
When surveyed for their take on what is holding back blockchain, business leaders supplied a familiar set of leading worries. While change in culture, organisational barriers and lack of awareness were key issues, regulation and governance was noted as a top-three worry by half of leaders. It was also the most commonly-named first-class concern, with 27% noting it was the leading issue for the eternally nascent technology. And as long as the technology is seen as being ‘in development’, that may be too much for regulators or businesses to move past.
This news is republished from another source.
