Layer 1 blockchain protocols offer advantages such as increased financial inclusion, reduced transaction costs, and improved transparency, all of which align with the concept of technology sovereignty, according to a recent study.
Agile Dynamics, a research-based consultancy specialising in digital transformation, has announced the release of its latest research paper titled ‘Disrupt and Innovate: Harness the Power of Blockchain.’ The paper delves into the potential benefits of layer 1 blockchain protocols, particularly in emerging markets.
The report emphasised that blockchain can empower entities to have ownership and control over their data while reducing dependence on external entities and fostering domestic technology companies’ growth and competitiveness on the global stage.
Blockchain technology has proven to be immensely valuable to the global economy, with estimated projections suggesting it will boost the global GDP by US$2.1 trillion by 2030, with nearly half of this growth coming from emerging markets. Furthermore, as of 2023, the global ownership rates of cryptocurrency, enabled by blockchain technology, have reached an average of 4.2 percent, with over 420 million crypto users worldwide, including notable growth markets like the UAE, India, China, and Egypt.
According to the Agile Dynamics report, 73 percent of respondents believe that a reduction in operational costs will be one of the main advantages of blockchain technology, closely followed by 67 percent who believe it will improve speed and efficiency. Other advantages include enhancing security and privacy (55 percent), fostering innovation (50 percent), and streamlining financial processes (44 percent).
The report emphasises blockchain technology’s ability to drive cost reduction across various functions within organisations. The most significant applicability is found in Operations and IT, which typically comprise a significant portion of an organisation’s cost structure. However, departments such as Finance, Sales and Marketing, and Risk Management will also benefit from the efficiencies provided by blockchain technology, including more efficient data management, elimination of redundant infrastructure and processes, and reduced costs of data handling.
While cost reduction is a primary short-term strategy, blockchain technology also offers advantages in revenue generation and capital relief. Over 90 percent of major banks in Europe, North America, and Australia have invested in testing blockchain solutions. However, the report notes that achieving long-term value depends on deploying commercially viable solutions at scale, a goal that may take 3-5 years to realise.
Challenges remain
One major obstacle that blockchain technology must overcome is the ‘Blockchain Trilemma,’ which refers to the challenge of achieving three options simultaneously: security, scalability, and decentralisation. The report highlights that a fully decentralised network that is secure and scalable is necessary for a blockchain application to succeed.
Agile Dynamics’ report examines the world of blockchain, analysing different blockchain platforms based on various criteria. While each platform has merits and can meet the demands of developing markets, the report concludes that they may not fully meet the needs of growth markets, leaving room for further development in the sector.
Looking ahead, Agile Dynamics explores the future of blockchain technology and identifies three stages of its maturity journey: Emerging Blockchain Technology, Next-Gen Blockchain, and Fourth Generation Chain. The ultimate goal is to achieve a permissionless, decentralised, scalable blockchain protocol that addresses interoperability challenges while providing fast and efficient cross-chain interoperability, speed, scalability, and security. This future blockchain will also integrate micro-validation and tokenisation, among other benefits.
Paul Lalovich, Managing Partner at Agile Dynamics, commented on the report, emphasising how blockchain can be the most effective solution to embark on a technology sovereignty journey. By leveraging blockchain’s decentralisation, data ownership, privacy, trust, and security, organisations can gain more control and autonomy over their technology infrastructure, reducing dependence on external entities and safeguarding their sovereignty.
“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.”
In conclusion, Agile Dynamics’ research paper ‘Disrupt and Innovate: Harness the Power of Blockchain’ offers valuable insights into the potential benefits and future of blockchain technology. By combining deep data-driven insights with extensive industry experience, Agile Dynamics aims to help its clients seize business opportunities for growth and leverage technology effectively.
