Agile Dynamics reveals the importance of blockchain in emerging countries

A new article titled ‘Disrupt and Innovate: Harness the Power of Blockchain’ has been published by Agile Dynamics. The research-based consultancy that helps businesses better understand and leverage the potential of new technologies to achieve digital transformation published this report to examine how to unlock growth via layer 1 blockchain protocols. It focuses particularly on the benefits for emerging markets.

The Agile Dynamics report reveals that custom layer 1 blockchain protocols offer a number of benefits to the industry. Not only do they increase financial inclusion, it also reduces transaction costs and improves transparency. All these goals are consistent with the concept of technological sovereignty.

Devices are empowered by the technology. It encourages ownership and control of data, while safeguarding sovereignty, reducing dependence on external entities and being more competitive on the global stage. Finally, 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 increase global gross domestic product (GDP) by US$2.1 trillion of projected global GDP in 2030. About half (49 percent) of the US$2.1 trillion will come from emerging markets.

Without blockchain technology, cryptocurrencies would not exist. The report finds that as of 2023, crypto ownership rates averaged 4.2 percent. This represents over 420 million crypto users worldwide. Around 7.5 percent of these are in emerging markets, including the UAE, India, China and Egypt.

Reduce costs

The reasons for blockchain’s adoption vary depending on who you talk to. To find out what some of these reasons might be, Agile Dynamics asked its respondents. The report shows that 73 per cent consider a reduction in operating costs to be the main advantage of the technology. However, 67 percent believe that speed and efficiency are the biggest advantages. Other benefits noted include improving security and privacy (55 percent), innovation (50 percent) and financial processes (44 percent).

As the report shows, reducing operating costs is the most important benefit respondents agreed upon when discussing blockchain technology. However, the Agile Dynamics report further finds that costs can be cut across the board. While typically 30-50 percent of organizations’ cost structure goes to operations and IT, other departments also benefit. Finance, sales and marketing and risk management are all beneficiaries of the technology. Some benefits in this regard include:

• More efficient data handling
• Elimination of redundant infrastructure, systems and processes
• A shift to self-service solutions
• A reduced cost of data management

Cost reduction is a key strategic value of blockchain technology, especially in the short term. This is followed by income generation and capital relief. These advantages have led to more than 90 percent of the major banks based in Europe, North America and Australia testing and investing in blockchain solutions. However, achieving long-term value will only be realized if commercially viable solutions can be implemented on a large scale. According to Agile Dynamics’ report, this is probably three to five years away.

It is not as simple as it looks

Unfortunately, blockchain is a two-sided coin. Although it has its advantages, it also has its faults. Agile Dynamics explains that one of the biggest mistakes is known as the ‘Blockchain Trilemma’. This refers to a situation where there are three options available – in this case security, scalability and decentralization – but only two of them can be achieved simultaneously.

The report’s solution to this problem lies in an organization’s infrastructure. It points out that if the architecture does not overcome the challenge, the blockchain application is set to fail in time. To avoid this eventuality, organizations must ensure that they have a fully decentralized network that is both secure and scalable.

Analyze different platforms

There are a number of different things to consider when analyzing a blockchain platform. Total Value Locked (TVL), total number of active users, technical metrics and technical characteristics are just some of the parameters used by Agile Dynamics in the report.

Aspects such as technical design, blockchain and ecosystem data, and the individuals and organizations behind each platform are also considered to draw insights into what the future of the broader smart contract platform landscape might look like.

In total, Agile Dynamics looks at 10 different blockchain platforms in the report.

Each platform has its advantages. While some meet the demands and requirements of developing markets, the report finds that ultimately they do not necessarily meet the full needs of emerging markets. But this is not necessarily a bad thing. This means that there is room for further development in the sector which will lead to greater results for everyone – both platform owners and users.

Looking to the future

Of course, the true potential of blockchain has yet to be revealed. We have only seen the tip of the iceberg when it comes to how it can affect society. Looking to the future, Agile Dynamics charts 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, decentralized, scalable blockchain protocol, the report explains. It will integrate micro-validation and tokenization, as well as tackle interoperability challenges. In turn, it should provide the fastest and most efficient interoperability across chains, speed, scalability and security.

The importance of the report

To talk about the report and its contents, Paul Lalovichmanaging partner at Agile Dynamics, said: “The world of blockchain is evolving rapidly. It is becoming an increasingly important component of our ultra-connected world.

“Our report shows how blockchain can be the most effective solution to start a technological sovereignty journey. This is thanks to its ability to support the concept by offering decentralization, data ownership and privacy, open source principles, trust and security, interoperability and more. By leveraging blockchain, you have the ability to have more control and autonomy over your technology infrastructure and systems.

“This reduces dependence on external entities, and helps safeguard your sovereignty. Blockchain is also a distinct and cost-effective means of stimulating innovation and promoting growth, especially in an economic context, and it has proven to be more cost-effective than any other technology in building out a project with the highest projected compound annual growth rate up to 2030.”

Lalovich continued: “Agile Dynamics is committed to helping organizations harness the power of technology. We want to achieve digital transformation and create differentiation by applying technology in a practical business context. We use deep insights derived from data, as shown in Disrupt and Innovate: Harness the Power of Blockchainin combination with extensive experience across industries and applications to help our clients realize business opportunities for growth.”