Blockchain to boost global GDP by $1.7tn
New analysis by consultancy firm PwC shows blockchain technology has the potential to boost the global gross domestic product by $1.76 trillion over the next decade.
This is the key finding of a new PwC report, “Time for trust: The trillion-dollar reason to rethink blockchain”, which assesses how the technology is currently being used and explores the impact blockchain could have on the global economy.
Through analysis of the top five uses of blockchain, ranked by their potential to generate economic value, the report gauges the technology’s potential to create value across industries, from healthcare, government and public services, to manufacturing, finance, logistics and retail.
“Blockchain technology has long been associated with crypto-currencies 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,” comments Steve Davies, global leader for blockchain and partner at PwC UK.
“As organisations grapple with the impacts of the COVID-19 pandemic, many disruptive trends have been accelerated. 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.”
Putting blockchain to work
The report identifies five key application areas of blockchain and assesses their potential to generate economic value, using economic analysis and industry research.
The analysis suggests a tipping point in 2025 as blockchain technologies are expected to be adopted at scale across the global economy.
PwC notes that tracking and tracing of products and services – or provenance – which emerged as a new priority for many companies’ supply chains during the COVID-19 pandemic, has the largest economic potential ($962 billion).
It points out that blockchain’s application can be wide-ranging and support companies from heavy industries, including mining, through to fashion labels, responding to the rise in public and investor scrutiny around sustainable and ethical sourcing.
According to the firm, payments and financial services, including use of digital currencies, or supporting financial inclusion through cross-border and remittance payments, will amount to $433 billion.
It adds that identity management, including personal IDs, professional credentials and certificates to help curb fraud and identity theft will be $224 billion, while application of blockchain in contracts and dispute resolution ($73 billion), and customer engagement ($54 billion), including blockchain’s use in loyalty programmes, further extends blockchain’s potential into a much wider range of public and private industry sectors.
PwC says blockchain's success will depend on a supportive policy environment, a business ecosystem that is ready to exploit the new opportunities that technology opens, and a suitable industry mix.
Across all continents, it notes, Asia will likely see the most economic benefits from blockchain technology. In terms of individual countries, blockchain could have the highest potential net benefit in China ($440 billion) and the US ($407 billion). Five other countries – Germany, Japan, the UK, India and France – are also estimated to have net benefits over $50 billion.
The benefits for each country differ, however, with manufacturing-focused economies such as China and Germany benefiting more from provenance and traceability, while the US would benefit most from its application in securitisation and payments, as well as identity and credentials, says PwC.
At a sector level, it notes, the biggest beneficiaries look set to be the public administration, education and healthcare sectors.
PwC expects these sectors to benefit approximately $574 billion by 2030, by capitalising on the efficiencies blockchain will bring to the world of identity and credentials.
Rebuilding after COVID-19
Meanwhile, the consultancy firm says there will be broader benefits for business services, communications and media, while wholesalers, retailers, manufacturers and construction services will benefit from using blockchain to engage consumers and meet demand for provenance and traceability.
The potential for blockchain to be considered as part of organisations’ future strategy is linked to research by PwC with business leaders that showed almost two-thirds of CEOs (61%) said they were placing digital transformation of core business operations and processes among their top three priorities, as they move forward.
“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,” says Davis.
“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.”
Riaan Singh, digital strategy lead at PwC Africa, adds: “An increasing number of organisations are recognising that blockchain technology provides an opportunity to change for the better. Using blockchain, organisations can build greater trust and transparency in areas such as certification, recruitment, commercial transactions and the way they secure, share and use data.
“The economic benefits of blockchain are significant and are set to grow even further. As organisations look to embrace new technology, they should seize the opportunity to explore blockchain solutions.”
The report warns that if blockchain’s economic impact potential is to be realised, its energy overhead must be managed. Growing business and government action on climate change, including commitments to Net Zero transformation, will mean organisations need to consider new models for consolidating and sharing infrastructure resources to reduce reliance on traditional data centres and their overall technology-related energy consumption.