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10 years of blockchain
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02/AprNews & Updates
10% of global GDP will be on blockchains by 2027 says Cisco report
By 2027, 10 per cent of global gross domestic product (GDP) will be stored on blockchains, according to a new report – published at the end of March by telecommunications and networking conglomerate Cisco – that highlights how dominant the transformational technology is likely to become within the next eight years.
Despite being just over a decade old, blockchain technology, which underpins crypto assets (most famously bitcoin), is already proving to be a major disruptor across various sectors, with increasing numbers of distributed ledger technology (DLT) platforms in development.
Indeed, blockchain has the potential to revolutionise a raft of industries – ranging from banking to healthcare, from property to education, and most in between. Why? Because it promises to streamline processes, remove trust, increase transparency and security, and reduce costs.
The Blockchain by Cisco report predicts significant uptake and adoption of the technology, suggesting that blockchain could become the standard across several industries within just a few years.
Trust in blockchain
The report focuses on blockchain’s ability to automate trust as a focal point for widespread use. One of the key statistics emphasised in the study is that “83 per cent of executives believe trust is the cornerstone of the digital economy”.
“Blockchain-based technologies can build a foundation for trust in the enterprise through the digitization of business processes, tokenization of assets, and codification of complex contracts,” the report states.
“The true innovation of blockchain is its ability to automate trust among parties. Transactions are settled in a collective fashion and recorded on a distributed ledger, which removes the need for an established third party to create a trusted relationship. Participants can directly use the blockchain as the source of truth.”
The impact is that blockchain will likely be increasingly implemented in business practices since it negates the need for a trusted third-party intermediary – such as a bank – to establish and maintain trust in a relationship.
Fourfold rise in investment by 2021
The prediction that about 10 per cent of global GDP will be stored on blockchains by 2027 is founded upon the belief that several trillion pounds of value may be stored on permissioned blockchains – whereby reading information, transactions, and writing new blocks onto the chain is limited. Notably, the report does not include data from crypto assets, either, so the technology could become even more dominant if they are factored in.
The Cisco research cites February’s The Worldwide Semiannual Blockchain Spending Guide report from the advisory firm International Data Corporation (IDC), which predicts the market for blockchain spending expanding to $9.7 billion (£7.3 billion) per year by 2021. That would represent a fourfold rise on what was spent in 2018, when $2.1bn (£1.6bn) went towards blockchain projects.
Cisco’s report identifies a lack of transparency as a major obstacle in modern trade, and one that is especially prevalent in global supply chains. It develops this point by underlining the sheer complexity of global trade networks where multiple intermediaries, including financial institutions and brokers, vastly increase rates in certain markets. “Suppliers in emerging markets today pay interest on receivable financing as high as 30 per cent,” it notes.
Blockchain: a business boon
Addressing these challenges, Cisco highlights how blockchain technology can enable business ecosystems to interact and transact securely without human intervention and drastically simplify operations for organisations both large and small.
“Blockchain has the potential to change the rules by automating trust, increasing transparency, and simplifying business processes,” the report concludes. “To unleash its full potential, it needs to be based on an established set of standards that meets the complex needs of the enterprise.
“Today’s organisations are seeking industry-specific solutions to transform their business processes and need the ability to build blockchain networks that are interoperable.”
While critics might label Cisco’s projections for blockchain’s near future as optimistic, as well as self-serving, it is worth considering that in 2017 Deloitte made equally positive predictions. Two years earlier, the World Economic Forum (WEF) calculated that blockchain technology would underpin 10 per cent of global GDP by 2027. In 2017, the WEF updated its forecast to say that it would be achieved by 2025 – two year quicker than Cisco’s forecast.
It is increasingly clear that even the biggest sceptics will have to admit that before long blockchain’s inexorable rise will come to dominate a wide range of industries across the world – and sooner rather than later.