Blockchain technology is not really a new phenomenon, but its dust has definitely not settled thus far. Having been around for almost 10 years, the term still has not been normalized – it remains obscure and largely vague for a sizable segment of people.
Business Forward speaks with regional director for professional development at PricewaterhouseCoopers’ (PWC) Academy Middle East Gavin Aspden and Manager within the PwC Middle East Digital Trust Daniel Johnson to understand where blockchain goes beyond mere cryptocurrency.
Is blockchain only limited to the buying and selling of cryptocurrency, or is there more to it?
Though the cryptocurrency markets have made it to headlines all across the globe due to its price volatility, but it is far from being the only use case of blockchain. Entrepreneurs and organizations have identified the benefit of using blockchain technology to provide the concept of trust in a trustless environment through the mechanism of consensus algorithms, and therefore working towards taking advantage of this in a number of creative and innovative ways.
Solving the problem of trust between parties that cannot or do not want to trust one another has led to the rise of thousands of blockchain projects ranging from attempting to improve the transparency of food along the supply chain, to the sharing of secure medical records across multiple hospitals. So, the price of Bitcoin may continue to make news for years to come, but the story of implementing blockchain applications for the betterment of humankind and society as a whole has only just begun.
Are there any specific industry sectors that could become major users of blockchain technology?
All industry sectors stand to experience the benefits of blockchain as the technology continues to evolve in the long run. However, the financial services sector in particular has become a clear leader in the adoption of blockchain thus far. This is confirmed by the response provided within our 2018 PwC Global Blockchain Survey which states that, as of 2018, 46 percent of all blockchain use cases arise from within the financial services divisions. Other industries that also stand to see significant changes in the short-term include those that center around incorporating supply chain methodologies – such as industrial manufacturing and distribution and organizations’ ability to securely share sensitive data between multiple partners, for example within the healthcare sector.
All industry sectors stand to experience the benefits of blockchain
How could blockchain be used in the near future?
Despite being around for almost 10 years following the inception of Bitcoin in 2009, blockchain is still considered a new and emerging technology. As such, the most successful use cases in the near-term will more than likely utilize the simple exchange of value which is where it all began in the first place. Applications, such as the smart metering of electricity, digital identity management and recording health statistics via the distributed ledger technology, all help towards providing a use case where blockchain can be used as a viable solution. Another major use case that has seen significant development, and a large number of proof of concepts, involves the tracking of goods along the supply chain where blockchain can significantly improve auditability and transparency. In the future, it is possible that blockchain might be combined with other emerging technologies to produce hybrid results. We are likely to see a combination of decentralised artificial intelligence and blockchain in the near future for enabling and implementing large networks of internet of things (IoT) devices.
A sizable number of startups are now leaning towards initial coin offerings (ICOs); if legal, what are the benefits and what are the dangers?
ICOs are a mean of raising capital using blockchain technology where a predefined number of digital tokens are offered for a limited time to investors. Initially, many regulators struggled to accurately align ICOs with existing financial instruments which led to a great deal of confusion as to how to deal with them. Many regulatory authorities simply took the decision to immediately ban ICOs whilst others have opted for a wait-and-see approach, offering warnings and guidance but refusing to directly intervene.
This resulted in most ICOs being conducted with little or no regulatory oversight. Whilst on one hand, this has made launching an ICO significantly easier as compared to traditional fundraising models such as initial public offerings (IPOs) and has also enabled billions of US dollars to flow into the blockchain market, on the other hand, it has encouraged and introduced a large number of scams, leading to many investors losing significant amounts of money. As regulators have developed a better understanding of the distributed nature of blockchain technology and have attempted to align token sales to more traditional financial offerings, ICOs have been likened to the offering of securities, giving rise to the term security token offerings (STOs). STOs are becoming increasingly important in the world of blockchain fundraising by providing a more stable regulated instrument whereby organisations are able to “tokenize” existing assets to raise the required funds.