A new paper titled ‘Disrupt and Innovate: Harness the Power of Blockchain’ has been released by Agile Dynamics. The research-based consultancy service that helps businesses to better understand and harness the potential of new technologies to achieve digital transformation published this report to examine how to unlock growth via layer 1 blockchain protocols. It specifically focuses on the advantages for emerging markets.
The Agile Dynamics report reveals that customised layer 1 blockchain protocols offer a variety of benefits for the industry. Not only does they increase financial inclusion, it also reduces transaction costs and improves transparency. All of these goals align with the concept of technology sovereignty.
Entities are empowered by the technology. It encourages ownership and control of data, all the while safeguarding sovereignty, reducing dependence on external entities and being more competitive on the global stage. Lastly, it both encourages and supports domestic technology companies.
Web 3.0 technologies and blockchain continue to prove their value to the global economy as their applications across industries only continue to grow. The report estimates that blockchain technology will boost global gross domestic product (GDP) by US$2.1trillion of the projected global GDP in 2030. Approximately half (49 per cent) of the US$2.1trillion will come from growth markets.
Without blockchain technology, cryptocurrencies would not exist. The report finds that as of 2023, crypto ownership rates sat at an average of 4.2 per cent. This represents over 420 million crypto users worldwide. Around 7.5 per cent of these are in growth markets, including the UAE, India, China and Egypt.
Reducing costs
The reasons for blockchain’s adoption vary depending on who you speak to. Looking to find out what some of these reasons may be, Agile Dynamics asked its respondents. The report shows that 73 per cent consider a reduction in operational costs to be the main advantage of the technology. However, 67 per cent believe that speed and efficiency are the biggest benefits. Other advantages noted include improving security and privacy (55 per cent), bringing innovation (50 per cent), and financial processes (44 per cent).
As the report shows, reducing operational costs is the main benefit respondents agreed upon when discussing blockchain technology. However, Agile Dynamics’s report further finds that costs can be cut across the board. While typically, 30-50 per cent of organisations’ cost structure goes into operations and IT, other departments benefit too. Finance, sales and marketing and risk management are all beneficiaries of the technology. Some advantages in this respect include:
- More efficient data management
- Elimination of redundant infrastructure, systems and processes
- A shift to self-service solutions
- A reduced cost of data handling
Cost reduction is a main strategy value of blockchain technology, particularly in the short term. This is followed by revenue generation and capital relief. These advantages have led more than 90 per cent of major banks based in Europe, North America and Australia to test and invest in blockchain solutions. Achieving long-term value, however, will only be realised if commercially viable solutions can be deployed at scale. According to Agile Dynamics’ report, this is likely three to five years away.
It isn’t as simple as it looks
Unfortunately, blockchain is a two-sided coin. While it has its benefits, it also has its flaws. Agile Dynamics explains that one of the biggest flaws is known as the ‘Blockchain Trilemma‘. This refers to a situation in which there are three options available – in this case, security, scalability, and decentralisation – but only two of them can be achieved simultaneously.
The report’s solution to this problem lies in an organisation’s infrastructure. It points out that if the architecture does not overcome the challenge, then the blockchain application is set to fail in time. In order to avoid this eventuality, organisations must ensure they have a fully decentralised network that is both secure and scalable.
Analysing different platforms
There are a variety of different things that must be taken into consideration when analysing a blockchain platform. Total value locked (TVL), total active users, technical metrics, and technical properties, are just a few of the parameters used by Agile Dynamics in the report.
Aspects such as technical designs, blockchain and ecosystem data, and the individuals and organisations behind each platform are also taken into consideration to draw insights into what the future of the broader smart contracting platform landscape could look like.
In total, Agile Dynamics looks at 10 different blockchain platforms in the report.
Each platform has its perks. While some meet the demands and requirements of developing world markets, the report finds that, ultimately, they don’t necessarily meet the full needs of growth markets. But this isn’t necessarily a bad thing. It means there is space for further development in the sector which will lead to greater outcomes for everyone – platform owners and users alike.
Looking to the future
Of course, the true potential of blockchain hasn’t been unearthed yet. We’ve only seen the tip of the iceberg when it comes to how it could impact society. When looking to the future, Agile Dynamics maps out the next three stages of blockchain’s maturity journey. In order, the stages are: Emerging Blockchain Technology, Next-Gen Blockchain, and Fourth Generation Chain.
A Fourth Generation Chain will be a permissionless, decentralised, scalable blockchain protocol, explains the report. It will integrate micro-validation and tokenisation as well as tackle interoperability challenges. In turn, it should provide the fastest and most efficient cross-chain interoperability, speed, scalability, and security.
Importance of the report
Speaking on the report and its contents, Paul Lalovich, managing partner at Agile Dynamics, said: “The world of blockchain is evolving rapidly. It is becoming an increasingly vital component of our ultra-connected world.
“Our report demonstrates how blockchain could be the most effective solution to begin a technology sovereignty journey. This is thanks to its ability to support the concept through providing decentralisation, data ownership and privacy, open source principles, trust and security, interoperability and more. By leveraging blockchain, you have the ability for more control and autonomy over your technology infrastructure and systems.
“This reduces dependence on external entities, and helps to safeguard your sovereignty. Blockchain is also a distinct and cost-effect means to stimulate innovation and foster growth, particularly in an economic context, and it has been demonstrated to be more cost-effective than any other technology for building out a project with the highest forecasted compound annual growth rate through to 2030.”
Lalovich continued: “Agile Dynamics is committed to helping organisations to harness the power of technology. We want to achieve digital transformation and to create differentiation by applying technology in a practical business context. We use deep insights derived from data, as demonstrated in Disrupt and Innovate: Harness the Power of Blockchain, in combination with extensive experience across industries and applications to help our clients realise business opportunities for growth.”
