Blockchain technologies have the potential to add $1.76tn to the global gross domestic product (GDP) by 2030, according to analysis by professional services giant PwC.
In a new report, Time for trust: The trillion-dollar reason to rethink blockchain, PwC argued that the technology’s potential benefits for tracking, tracing and trust had significant economic value, and the technology should not simply be dismissed as part of the cryptocurrency ecosystem.
“Blockchain technology has long been associated with cryptocurrencies such as Bitcoin, but there is so much more that it has to offer, particularly in how public and private organisations secure, share and use data,” explained Steve Davies, global leader, blockchain and partner at PwC UK.
In particular, it highlights the widespread applications of the technology to rebuild the economy in the wake of the coronavirus pandemic.
“As organisations grapple with the impacts of the Covid-19 pandemic, many disruptive trends have been accelerated,” said Davies.
“The analysis shows the potential for blockchain to support organisations in how they rebuild and reconfigure their operations underpinned by improvements in trust, transparency and efficiency across organisations and society.”
2025: The blockchain tipping point to boost global GDP
Blockchain is beginning to be explored by a host of industries away from cryptocurrency, as its distributed ledger capabilities have widespread applications in areas such as supply chain management and smart contracts.
However, PwC predicts that 2025 will be the “tipping point” for at-scale adoption of blockchain, where it will begin to have a significant impact on GDP.
It has identified five areas with particular economic potential.
The most valuable is tracking and tracing of products and services, which provides transparency about the origin of goods and prevents fraud. Art, wine and food products are among the areas beginning to use blockchain for this purpose, but PwC estimates that this area could add $962bn global GDP.
Payments and financial services is the second most valuable area, with cross-border payments in particular being an area of high potential. The finance industry is beginning to explore this, including with the establishment of central bank digital currencies, but as a whole it could add $433bn.
Identity management to prevent fraud and identity theft, meanwhile has $244bn potential, while applying blockchain to contracts and dispute resolution could add $73bn to global GDP and customer engagement, including loyalty programmes, could add $54bn.
Some countries, however, would see more benefits from blockchain than others. China has the highest potential benefit, at $440bn, closely followed by the US at $407bn. Germany, Japan, France, India and the UK all have potential benefits of over $50bn.
Creating an environment for blockchain to thrive
Despite the benefits, blockchain can only succeed if the regulatory environment is supportive, business engagement is appropriate and its energy overhead is managed.
PwC advises that organisations consider new models to consolidate and share infrastructure, reducing their reliance on traditional data centres, while also making blockchain a central focus of future planning.
“One of the biggest mistakes organisations can make with implementing emerging technologies is to leave it in the realm of the enthusiast in the team,” said Davies.
“It needs C-Suite support to work, identify the strategic opportunity and value, and to facilitate the right level of collaboration within an industry.
“Given the scale of economic disruption organisations are dealing with currently, establishing proof of concept uses which can be extended and scaled if successful, will enable businesses to identify the value, while building trust and transparency in the solution to deliver on blockchain’s potential.”