‘The Big Four’ is a moniker often used when referring to the world’s largest accounting networks. As such, when one of these industry giants forecasts the future economy, the world listens. PricewaterhouseCoopers (PwC) has recently released a report looking at the use cases of blockchain technology, and how it stands to impact global gross domestic product (GDP) in the years to come.
By noting the ability of blockchain to improve, “…trust, transparency and efficiency across organisations”, PwC has painted an arguably shining bright future for the nascent technology.
One of the appeals behind blockchain is its potential to change a bevy of industries for the better. While these use cases are numerous, PwC has dialed in on what it believes to be the 5 most ‘game-changing’ applications for the technology.
The ability to track, verify, and record the lifecycle of a product, beginning at its point of origin is known as provenance. The term, while often associated with fine art, is applicable when referring to supply chains. When applied to supply chains, blockchain, and its nature as a digital ledger, has the ability to save money by eliminating counterfeit goods, trace food industry contaminations, and more.
An example of this would be services such as ‘tracr’ – a blockchain service used by De Beers Group to verify the authenticity and origin of diamonds.
PwC expects for this implementation to account for a $962B USD boost to global GDP by 2030.
Central Bank Digital Currencies (CBDCs), cryptocurrencies, and stablecoins each rely on blockchain to function. While each utilizes blockchain is varying manners, they all provide a few key benefits to the end user:
- Financial transparency
- Increased efficiency
- Instantaneous transactions
- Increase financial inclusion
An example of this would be Bitcoin – the largest cryptocurrency, which can be used to transfer value between individuals worldwide, without the need for intermediaries.
PwC expects for this implementation to account for a $433B USD boost to global GDP by 2030.
While blockchain can offer financial transparency, it can also be used to safeguard sensitive data, and in the process prevent identity theft. This data may include everything from passports, to social insurance numbers, and more.
An example of this would be a service such as ‘IBM Verify Credentials’ – a blockchain based service built to safeguard, while providing easy distribution of one’s credentials on command.
PwC expects for this implementation to account for a $224B USD boost to the global GDP by 2030.
4. Contracts and Dispute Resolution
One of the most intriguing aspects of blockchain, is the ability for hosting ‘smart-contracts’. Blockchain protocols which support smart-contracts provide the ability to encode pre-set terms and conditions into digital contracts. By doing so, many processes can become automated, while simultaneously provide a digital trail for auditing purposed.
An example of this would be a blockchain based, ‘will and testament’ – a legal document which would automatically transfer ownership of property upon a pre-set parameter (creators death).
PwC expects for this implementation to account for a $73B USD boost to the global GDP by 2030.
5. Customer Engagement
Loyalty/reward programs have been around for decades. They, unfortunately, result in end-users being required to maintain many different accounts, while carrying cards for each. Blockchain allows for aggregation platforms to be developed – providing the user with access to their varying accounts through a single portal. In doing so, blockchain can breathe new life into a system falling out of fashion with subsequent generations by reintroducing convenience, and incentivized spending.
An example of this would be the anticipated release of Bakkt’s reward program, which allows for loyalty points to be converted to cryptocurrencies.
PwC expects for this implementation to account for a $54B USD boost to the global GDP by 2030.
Cumulatively, PwC expects that use of blockchain in these applications, and others will be directly responsible for the addition of roughly $1.76 trillion to the global gross domestic product (GDP). This is expected to occur in a mere 9 years.
With the current global GDP sitting around roughly $80 trillion, this would mean that at $1.76 trillion, blockchain would be responsible for roughly 1.4% of global GDP – if PwC economists are correct.
Fitting the Agenda
Building on the 5 use cases previously noted, blockchain holds the potential to help PwC itself in achieving recently announced goals – ‘net-zero carbon emissions by 2030’.
One area in which this is possible, is through increased efficiency in supply chains between PwC and its many partners around the world.
Supply chains have long been labelled as inefficient, and in need of change. Another example of a blockchain based project looking to change this narrative is ‘TradeLens’. This project, which is working to digitize global supply chains, was most recently adopted by Canadian shipping giant ‘Canada Pacific’.
If it isn’t obvious, blockchain is a hot topic right now. With economic unrest being experienced around the world, individuals and businesses alike are actively searching for solutions to a plethora of problems. Blockchain is not a perfect solution for all, however. With the technology holding the potential to upend various industries (such as the aforementioned use cases), also comes a series of new issues – regulatory guidance and taxing.
PwC has noted this hurdle, and recently released a report on the need for continued growth surrounding the regulation of digital assets such as cryptocurrencies – one of blockchain’s most common implementations, and commonly used as a form of payments.
In its report, PwC highlights the stances of various countries around the world towards digital assets such as cryptocurrencies. If one thing was made clear, it is that while progress has been made, much more is needed.
“…significant work has been done over the last few years by tax authorities to provide guidance to taxpayers. However, we have also observed that the guidance that has been issued has not kept up to date with recent development in the industry.”
“Given the rate of change in the industry, as well as the breadth of applications for digital financial assets, it will be important that future guidance issued is principles-based and not overly prescriptive. This will avoid the guidance becoming out of date before it’s released and prevent tax from holding back the development of exciting new business models that may not yet be conceived by policy makers.”
Founded in 1998, PricewaterhouseCoopers (PwC), maintains headquarters in London, United Kingdom. Today, the PwC network is recognized as one of the world’s largest account firms, employing greater than 250,000 individuals worldwide.