BrazilAgile Dynamics: Blockchain tech can lift global GDP by 2% by 2030
The potential of blockchain technology on economy and society has been a topic of much debate in recent years. A new report by Agile Dynamics sheds more light on the technology’s economic potential, estimating blockchain can increase the global gross domestic product (GDP) by some $2.1 trillion by 2030.
Launched just about fourteen years ago, blockchain technology has the potential to grow to be a bedrock of record-keeping systems, such as payments, transactions, currencies, and more.
Built on the pillars of cryptocurrencies (with Bitcoin the most well-known example), blockchain technology has evolved spectacularly since its early days. Today, blockchain offers a unique architecture that can securely maintain data on a distributed ledger and ensure that processes are run according to predetermined protocols.
While many blockchain-based applications and use cases are still in their infancy, the potential through further advancement and adoption is immense, according to research from management consulting firm Agile Dynamics. The firm’s researchers estimate blockchain will boost the global GDP by $2.1 trillion by 2030, with nearly half of this growth coming from emerging markets, particularly in Asia, South America, and Africa.
In comparison: $2.1 trillion is equivalent to 2% of the projected global GDP in 2030.
The benefits of blockchain?
There are numerous benefits that blockchain can offer to organizations, including enhanced security and transparency, reducing fraud, and ensuring traceability in transactions. Its decentralized nature fosters trust and efficiency, streamlining processes, and cutting costs for businesses.
The report shows that 75% of respondents to a survey see the reduction in operational costs as the primary benefit of blockchain. That is closely followed by 69% who expect improved speed and efficiency. Other benefits highlighted include enhanced security and privacy (57%), the promotion of innovation (51%), and the streamlining of financial processes (46%).
Blockchain has the potential to reduce costs in many different areas of an organization, with Operations and IT seeing the most significant impact, while departments like Finance, Sales & Marketing, and Risk Management could also greatly benefit.
“Blockchain can be the most effective solution to embark on a technology sovereignty journey. By leveraging blockchain’s decentralization, data ownership, privacy, trust, and security, organizations can gain more control and autonomy over their technology infrastructure, reducing dependence on external entities and safeguarding their sovereignty,” said Paul Lalovich, managing partner at Agile Dynamics.
“By leveraging blockchain, you 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.”
Use case: payments
Highlight payments as an example, Agile Dynamics highlights how organizations can save around $10 billion globally in cross-border payments by using blockchain technology. Besides a 40% to 80% reduction in costs related to money transfers, blockchain also makes the process faster and allows for better traceability and security.
The organizations who facilitate the payments process, banks and payment providers, will see their cost savings in the domain grow dramatically, to as much as $10 billion in 2030.
According to research from Capgemini, total digital transactions currently stand at 1.3 trillion, with that number to rise to 2.3 trillion by 2027. Hinting at the potential that blockchain may go government-backed mainstream, many central banks – including those of the UAE and Saudi Arabia – are currently exploring launching an own digital currency, built on the fundamentals of the blockchain concept.
The obstacles
In order to reap the more than $2 trillion in global benefits, the world will need to adopt blockchain at a much higher rate than currently being seen. Yet doing that will not be easy because there are still a list of obstacles to overcome.
For example, one major obstacle for blockchain technology to overcome is the ‘Blockchain Trilemma’, or in other words, the challenge of achieving three key criteria simultaneously: security, scalability, and decentralization. The research shows that a fully decentralized network that is both secure and scalable will be necessary for any blockchain application to succeed.
According to research, regulatory uncertainty is the most frequently cited barrier to blockchain adoption worldwide. About 48% of respondents ranked it as one of the top three barriers affecting their organization in the next three to five years, with 27% ranking it as the number one barrier.
Other challenges to further blockchain implementation include lack of awareness of blockchain and the benefits it offers, organizational difficulties or lack of cooperation that can hinder adoption, security and privacy concerns, and cost barriers to adopting blockchain technologies, among other issues.
The report comes at a time of cooling for the world of blockchain. A series of bubble-like rises followed by dramatic crashes of the cryptocurrency sector (such as the monumental collapse of crypto exchange FTX and cryptocoin Terra) have damaged trust and investor confidence in blockchain. Agile Dynamics’ report highlights that building trust and stability will be a key pillar of the sector’s forecasted path to growth.
