Image credit: Included
Agile Dynamics, a research-based consulting service has announced the launch of its latest research paper.
Entitled ‘Disrupt and Innovate: Harness the Power of Blockchain‘, the paper examines how to unlock growth via layer 1 blockchain protocols, focusing in particular on the benefits for emerging markets.
Among other insights, the research reveals that custom layer one blockchain protocol provides potential benefits such as increased financial inclusion, reduced transaction costs and improved transparency – all of which align with the concept of technological sovereignty. It empowers entities to have ownership and control over their data while safeguarding their sovereignty, reducing dependence on external entities, being more competitive on the global stage, and both encouraging and supporting domestic technology companies.
With multiple applications across all sectors, and as a driving component of Web3 technologies, blockchain has proven enormously valuable to the global economy. It is estimated that blockchain technology will increase global gross domestic product (GDP) by $2.1 billion of projected global GDP in 2030. About half (49 percent) of the $2.1 billion will come from emerging markets.
As of 2023, estimated global holdings of cryptocurrency – which is enabled by blockchain technology – is at an average of 4.2 percent, with over 420 million crypto users worldwide. Around 7.5 percent of these are in emerging markets, including the UAE, India, China and Egypt.
The report finds that 73 percent of study respondents believe that a reduction in operating costs will be one of the main advantages of blockchain technology. This is closely followed by 67 percent of respondents who believe that a key benefit of blockchain will be to improve speed and efficiency. Other benefits noted include improving security and privacy (55 percent), innovation (50 percent) and financial processes (44 percent).
Blockchain technology’s ability to drive value by reducing costs across a wide range of functions is another key aspect explored in the report. The strongest applicability is in operations and IT – which typically make up 30-50 percent of most organizations’ cost structure, but departments including finance, sales and marketing and risk management will also benefit. Benefits in this regard include more efficient data management; elimination of redundant infrastructure, systems and processes; a shift to self-service solutions, and reduced costs of data management, among other benefits.
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 benefits have led more than 90% of the major banks based in Europe, North America and Australia to test and invest in blockchain solutions.
However, achieving long-term value will only be realized if commercially viable solutions can be implemented at scale. According to the report, this is probably three to five years away.
One hurdle that blockchain technology must overcome for its full value to be unlocked is a challenge referred to 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.
As the report states, if the architecture does not overcome this challenge, the blockchain application is set to fail at some point. To achieve all three options, a fully decentralized network that is both secure and scalable is required.
In the report, Agile Dynamics examines the growing world of blockchain, including an analysis of various blockchain platforms.
The report focuses on 10, selected based on criteria such as Total Value Locked (TVL), Total Active Users, technical metrics, technical characteristics and more. Aspects such as technical design, blockchain and ecosystem data, and the individuals and organizations behind each platform are considered to draw insights into what the future of the broader smart contract platform landscape might look like.
While there are clear advantages to each of the platforms analyzed, and some of them may meet the demands and requirements of markets in developing countries, the report finds that ultimately they do not necessarily meet the full needs of emerging markets. This gives considerable room for further development of the sector, which will lead to greater results for both platform owners and users.
Agile Dynamics explores what the future of blockchain technology might look like, including next-generation technology features. The report charts three stages of blockchain technology’s maturity journey, which it calls Emerging Blockchain Technology, Next-Gen Blockchain and Fourth Generation Chain. In the latter, a permissionless, decentralized, scalable blockchain protocol will be achieved. It will be focused on interoperability challenges, designed to provide the fastest and most efficient cross-chain interoperability, speed, scalability and security. It will also integrate micro-validation and tokenization, among many other benefits.
Speaking about the report and its content, Paul Lalovich, managing partner at Agile Dynamics, said: “The world of blockchain is evolving rapidly, 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, 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 devices, 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, to achieve digital transformation and to create differentiation by using technology in a practical business context. We use deep insights derived from data, as shown in ‘Disrupt and Innovate: Harness the Power of Blockchain‘, combined with extensive experience across industries and applications to help our clients realize business opportunities for growth.”