Blockchain technology can change the world, and not just via crypto
Over the last three or four years, blockchain adoption has expanded tremendously, and each industry is exploring different use cases for the technology. There are multiple aspects of blockchain — from business to technical and more — but with the way the industry is exploding, it’s really hard to get it right.
It’s best to divide the blockchain topic into two main buckets in order to understand the development of the ecosystem and the key benefits and innovations it provides. One is cryptocurrency, where we cover industries like financial services, insurance and capital markets, including deals via private equity and venture capital. Then we look into the enterprise world, which is about how we apply blockchain as a technology in different industries.
Last year, we published our “Time for Trust” report, which covers the top five use cases for blockchain technology: provenance, payments and financial instruments, identity, contracts and dispute resolution, and customer engagement. These use cases will have a significant impact on the GDP of a country and the global economy.
The number-one use case is traceability, or provenance. In the future, with the decentralized technological revolution and evolution, you will need to understand and provide full transparency for your consumers. For example, if you are buying medicine for cancer, which is very high priced, you will need to know that it’s authentic, not fake. And this is where we have a technological solution that is enabled by blockchain technology. It is the same with buying haute couture expensive clothes, cars, etc. Consumers who are paying a lot of money must be sure that they are buying authentic items, which is why those supply chains could constitute a killer use case for blockchain — especially in the next decade.
The second use case is around peer-to-peer trading. But how does P2P trading make sense within the supply chain? It is around the logistics market. Say, for example, a company wants to send a container from Amsterdam to Australia. It needs to go to a transport company, which will move a container onto a ship, and then actually it goes ahead. There are also transport providers on the other side of the trade, and they do the same. They unload the container and make sure that it is shipped to the importer. But what if you had a marketplace or platform where you could see how many ships are traveling in the next day or next hour? And if there is a space available, you could directly, yourself, place the container that you want to ship out, meaning that you don’t need a middleman. This is what the future looks like with this kind of decentralized technology.
And then the third — and the last bucket — is around document sharing. How can you store all your bills of lading, letters of credit and certificates in a digitized manner? At the moment, you can do it with a cloud solution, but it’s easy to hack a PDF. And there have been cases where transport companies have faced millions and billions of dollars worth of fraud, forcing them to stick with paper documents because then they know that the paper is exact proof, and they have something tangible on their hands. But with blockchain, you can add a timestamp and completely track how a document is being generated, where it is coming from, who has opened it, who has edited it and who has altered it.
Related: Circling back to blockchain’s originally intended purpose: Timestamping
You can completely track that, and that’s also quite a lot of time. There have been many business cases already. For example, if you only put a bill of lading, just one document is saved on the blockchain. And it also saves a hundred dollars per container. So, you can multiply that by the number of containers shipped per day, and that’s already a business case worth billions. There is a huge potential in this use case. So, we see these three buckets in the supply chain.
A mixed feeling about blockchain
But now the question is: What is the status quo at the moment? There is a mixed feeling about this topic, first because blockchain technology itself is super complex — it’s not like the internet of things. With IoT, it’s: “Okay, this is my device, and this is now a digital version of it. This is what IoT does.”
But what does blockchain do? This is the technology behind the curtain. This is why people are having a difficult time understanding it — understanding that it is something like the internet protocol. You don’t really go into detail about what HTTP is doing and how it works, you just take your website and then do whatever you want to do. This is what we are talking about. This is really the topic.
The second thing is the lack of awareness and understanding of blockchain, which consists of five different aspects: immutability, encryption, distribution, tokenization and decentralization.
Related: Understanding the systemic shift from digitization to tokenization of financial services
Those are the five aspects, and the immutability, encryption and distribution provided by blockchain tech have been well established. What companies now need is to make a big jump toward decentralization and tokenization. It’s critical for businesses to understand the tokenization model and how they can incorporate it into their current business model. Moreover, companies need to truly understand the use of tokens — fungible, nonfungible and security tokens.
The only recommendation to companies is to have more and deeper education on this topic, to get into the details of how it relates to their business and what kind of problems it solves — rather than just exploring the technology on a surface.
What comes in the future, and what comes in the next year?
The first, foremost topic is about interoperability. The landscape in the last five years has exploded — literally exploded. If you look at how the internet has developed, we had VPNs in the nineties and then the bubble boom and the way the internet became popular. Today, some companies are still using VPNs, while others are using the internet, and you don’t really see the difference. And this is how we see private and public blockchains working together. So, there is no debate: Public blockchains will prevail, and private blockchains will prevail. And this interoperability topic is really in the market, but a tremendous amount of work needs to be done. This is what companies and solutions will be coming up with in the next five years.
The second topic is about how we integrate with other technologies, as blockchain is just a back-end technology — or a technology kind of behind the curtain. That’s why it’s super important. At the same time, it’s super strategic because it involves multiple companies, but it’s still a technology that is a backbone. And it’s not that just because you have blockchain, it solves everything in your company. So, I think companies need to understand how to integrate it as a form of digital transformation. What we need to do is examine how these technologies will integrate with the existing landscape. This is a major, major topic. Without it, nothing will work. It is indeed a topic that we need to address.
The third futuristic topic is one of my favorite topics. It’s around governance: blockchain governance, but also supply chain governance. This addresses the question of how we manage the supply chain stakeholders involved in the ecosystem. This too goes hand in hand and is something we also need to develop.
And the fourth topic is all around the business model because ultimately, companies forget that we need to make money out of it and also save money. Sometimes, blockchain solutions don’t fly because they’re not able to do that. Like, how do we enable paperless business models? And how do we make revenue out of it? If we are making revenue, how do we share that with our different partners?
I think these are the major topics that will be key in the development of the blockchain ecosystem in the next five years and will help blockchain to reach the next level. This tech will, step by step, reach the level of mass adoption, and incorporating it is a smart strategy that will allow companies to be front-runners in the digital economy and the future of the business world.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Husen Kapasi is the blockchain lead at PwC Europe (advisory), with a focus on enterprise blockchain. He leads the PwC Europe blockchain community, which consists of around 300 members across Europe, and drives topics of blockchain in supply chain across the PwC Global Network. He has been engaged in the blockchain space for five years, with previous experience in digital transformation consulting focusing on IoT. He has a wide range of experience in blockchain implementation across more than 10 industries. He supports clients starting from blockchain strategy through implementation and plays a key role in developing collaborative industry ecosystems as well as tech partnerships.