TIME FOR TRUST THE TRILLION-DOLLAR REASONS TO RETHINK BLOCKCHAIN - OCTOBER 2020 - PWC
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Time for trust The trillion-dollar reasons to rethink blockchain October 2020
2 | PwC 2020 | Time for trust
Serious activity around blockchain is cutting through
every industry across the globe right now. It’s driven
by an acute need to win trust in the digital world.
Businesses are rethinking their operations and are
discovering not only is blockchain technology key to
delivering trust, but it’s an opportunity open to all.”
Steve Davies,
Partner and Blockchain Leader, PwC UK
3 | PwC 2020 | Time for trust
Time for trust
In this report PwC explores the impact
blockchain technology can have on the
global economy. We look at how practical,
everyday uses are creating an opportunity
for organisations to deliver value by building
trust and improving efficiency.
Throughout, we present the certificates, public registers or
findings of PwC economists as agreements – which are stored,
well as the views and opinions of shared and amended online.
our global blockchain specialists Transactions are quickly
and industry figures, looking at validated, documented and
how organisations can benefit encrypted for security: from
from blockchain technology and amendments made, to who sent
what steps they can take to get or exchanged them. There’s no
started today. need for a third-party, such
as a bank or a regulator, to
Why blockchain is more verify such actions because
than Bitcoin it’s a shared process, secured
by cryptography.
Blockchain technology has
long been associated with This cuts out intermediaries and
cryptocurrencies such as Bitcoin, puts blockchain in an important
but there is so much more that position for improving trust,
it has to offer. The technology, transparency and efficiency
as we’ll see in this report, across organisations.
creates digital records – such as
Blockchain’s trillion
dollar opportunity
Blockchain technology has the potential to
boost global gross domestic product (GDP) by
US$1.76 trillion over the next decade.
That is the key finding of PwC There is an opportunity for all;
economists, who have assessed our economists expect the majority
how the technology is currently being of businesses to be using the
used and gauged its potential to technology in some form by 2025.
create value across every industry, Once it has hit the mainstream,
from healthcare, government and the economic benefits are expected
public services, to manufacturing, to rise steeply.
finance, logistics and retail.
Blockchain’s global economic impact
PwC economists expect blockchain to boost global GDP by US$1.76 trillion –
which is 1.4% of global GDP – by 2030.
US$1.76 trillion
US$422bn
US$66bn
2021 2025 2030
*This report looks at GDP (in US$, 2019 prices) which is the net additional
value created by blockchain.
5 | PwC 2020 | Time for trust
Winning trust:
Why now?
Organisations are rethinking the way they operate
as they grapple with the impacts of COVID-19
and the way the pandemic has accelerated many
disruptive trends – such as the shift towards
more digital ways of working, communicating
and transacting with customers.
Business priorities
Trust is fragile in a digital world. trust online, from issues such as
Building trust and transparency by fraud and other forms of cyber
investing in digitisation is a priority crime to data loss or misuse.
that has gathered pace during
COVID-19. Now an increasing number of
organisations are recognising that
As CEOs across the globe look blockchain technology provides an
to reconfigure their operations, opportunity to change for the better.
some 61% are placing the digital Using blockchain, organisations can
transformation of core business build greater trust and transparency
operations and processes in areas such as certification,
among their top three priorities, recruitment, commercial transactions
according to PwC research1. and the way they secure, share and
Even before the onset of COVID-19, use data.
more than half of CEOs believed
faltering trust in business was a Blockchain also helps companies
threat to their organisation2. from heavy industries, such as
mining, through to fashion labels,
Organisations have clearly demonstrate their credentials in
recognised the role of their reputation areas such as sustainability and
in building trust with their people, ethical sourcing – to satisfy the
customers and business partners – rise in public and investor scrutiny
and have begun to pay far greater around these issues.
attention to the risks that undermine
1
PwC CEO Panel Survey, August 2020
2
PwC 23rd Annual CEO Survey, January 2020
6 | PwC 2020 | Time for trust
61%
of CEOs put digital
transformation in their
top three priorities
Business benefits
As organisations start to reimagine their other technologies. For example, used in
futures, they have the opportunity to supply chains it can prove the provenance
explore ways blockchain technology of goods ranging from fresh produce to
can drive growth. raw materials, or even diamonds. As these
goods change hands, records can be added,
One of the major benefits of blockchain inspections and deliveries can be logged,
is its potential to create, store and and payments can be released automatically,
share sensitive information online. all in a secure, verifiable and trusted manner.
Contracts, identity documents, certificates,
official records and agreements can all Food retailers have created ‘source to
be verified in a safe and secure way. shelf’ solutions using blockchain which
track the journey of produce as it moves
For example, personal records such as through a supply chain. It helps them
birth certificates or driving licences can provide proof of origin and of environmental
be generated and viewed on mobile and manufacturing credentials, as well
apps for instant, reliable proof of identity. as allowing them to spot fake goods,
Universities and other awarding bodies can or contaminants, with speed and accuracy.
create degree and qualification certificates The technology can also be used to
that can be shared by graduates with trigger warnings around quality issues,
prospective employers at the touch of or automatically issue proceedings in
a button. They can be instantly verified, the event of a dispute.
with no need to run a credentials check
with a third party. This saves time and Blockchain streamlines processes by
money, improves efficiencies which can consolidating records, automatically, online.
be a deterrent to fraud. This spells an end to inefficient paper
trails, reducing the related risk of manual
Technology today allows you to trace error and oversight, and the reputational
the origins and follow the journey of just damage that can follow.
about anything, but blockchain enables
far greater confidence and trust than
7 | PwC 2020 | Time for trust
Set for success:
The top five
uses driving
blockchain adoption
PwC economists have identified the top five
uses of blockchain, ranked by their potential
to generate economic value.
1. Provenance (potential boost to global
Earlier in my career I
took the mystique out GDP by 2030: US$962bn)
of barcodes and I feel
Blockchain has enormous potential to help organisations verify the
reinvigorated as I face sources of their goods and track their movement at every step,
similar challenges getting strengthening transparency in any supply chain. Fraud, contaminations
businesses excited by, or counterfeits can be pinpointed immediately, ensuring customer
and educated on, the safety and enhancing efforts to be socially and ethically responsible.
opportunities blockchain
presents them and
partners in their supply
chain. There’s a
competitive advantage
to be gained in adopting
blockchain technology
early because it’s going
to change the world like
barcodes did in the 70s
and 80s – creating even
greater trust in all of your
business transactions.”
Brian Marcel,
Chairman,
IBCS Group
8 | PwC 2020 | Time for trust
Blockchain can be a real There is also potential for
differentiator, a new technology healthcare organisations.
with the potential to be a force For healthcare organisations,
for good. blockchain can ensure patient
safety is at the heart of the
Take retailers – they can track pharmaceutical supply chain.
the provenance of products, It has the potential to give patients
enabling them to build customer confidence in the authenticity and
loyalty and trust through origin of drugs, medical products
transparency. If they want to and provides transparency around
demonstrate that a product medical supplies and therapies.
is environmentally friendly, It’s early days but the need is there.
or that everyone involved in its
production was paid and treated Blockchain’s ability to offer such
fairly, they can. Counterfeit, transparency around life changing
stolen or contaminated goods treatments can build confidence
can be flagged within seconds. and propel the industry forward.”
The technology provides a safe
and transparent journey for goods,
allowing organisations to prove
they live up to their values.
Anthony Bruce, Partner and Pharmaceutical
and Life Sciences Leader, PwC UK
9 | PwC 2020 | Time for trust
2. Payments and Financial Instruments (US$433bn)
Central Banks around the world have By comparison, cryptocurrencies such
been exploring how blockchain can as Bitcoin are not backed by fiat money,
improve their nation’s payments nor do they represent fiat money in a
infrastructure through central digital format, but they can be used
bank‑issued digital currencies (CBDCs). for payments. However, unlike CBDCs
(which are legal tender) and regulated
Wholesale CBDCs can facilitate more stable coins, cryptocurrencies are not
efficient clearing operations between a regulated means of payment in many
central banks and their member banks, jurisdictions and their use is even illegal
while retail CBDCs would effectively be in certain countries.
the equivalent of a bank note, in digital
form, for public use.
Financial institutions have also
been experimenting, for example by
using ‘stable coins’ as new digital
instruments to transform cross border
payments by lowering remittance
fees and enabling near instantaneous
transactions. Stable coins are tokens
that are typically backed by fiat
money (which is a government-issued
currency), or other real-world assets
and can operate on a blockchain.
Blockchain is transforming
the investment and asset
management market and
is improving transactional
security and transparency.
It’s increasingly protecting
the market from illicit activity,
fraud and money laundering
because we can quickly
identify behavioural changes,
trace reported illicit funds, get
alerted to potential associated
risk and get deeper insights
into the risk patterns of all
transaction parties.”
Pawel Kuskowski,
CEO & Co-founder,
Coinfirm
10 | PwC 2020 | Time for trust
Blockchain first appeared as Yet most people won’t even
the technology underpinning realise they are using blockchain.
Bitcoin in 2009 and that remains It’s back‑end technology that
the best known example of allows the financial services
how the technology works. industry to create and manage
However, the crypto space has assets more efficiently.
evolved and matured significantly.
Particularly over the last few years, Blockchain has the potential to
the crypto industry has become cut costs, speed up transactions
increasingly institutionalised. As the and promote greater financial
regulatory landscape becomes inclusion by streamlining
better defined, regulated financial cross‑border and remittance
institutions are more confidently payments. These powerful
exploring how they can adopt innovations will transform
blockchain and crypto assets. payments infrastructure for people,
businesses and governments.”
Lucy Gazmararian,
Crypto and FinTech Advisory, PwC Hong Kong11 | PwC 2020 | Time for trust
3. Identity (US$224bn)
Blockchain can safeguard valuable personal credentials online, from personal
identification, such as driving licences, to professional credentials and
certificates, bringing vast cost efficiencies and helping to curb fraud and
identity theft.
Individuals want to be able to At PwC, we have partnered
access and share their professional with, among others, the Institute
qualifications anywhere, anytime, of Chartered Accountants and
and organisations want to a major European university to
know they can trust those develop our Smart Credentials
qualifications. As the education blockchain solution. It shares
sector accelerates its move into the credentials of chartered
digital learning, particularly in light accountants and technology
of COVID-19, it is embracing graduates in a ‘digital wallet’,
new technology with greater saving time and money in the
urgency and freeing us all from verification processes, while
time‑consuming, inefficient, combating fraud. Students
paper‑based credentials systems, can also add any number of
which are so easily violated. documents to it, from their
birth certificates to a sporting
qualification, which they can
control and share.”
Caitroina McCusker,
Partner and Education Consulting Leader, PwC UK12 | PwC 2020 | Time for trust
4. Contracts and Dispute Resolution (US$73bn)
Blockchain holds great promise in the realm of contracts and dispute resolution.
The technology can bring together ledgers, contracts and payments, improving
the flow of commercial agreements and flagging any disputes.
Blockchain is causing major automatically creates an audit
disruption to some really complex trail. This saves time, lowers costs
systems in the agreements and and removes friction to improve
contracts space. The types of the flow of any commercial
The world has terms and conditions usually agreement, within and across
changed. Disputes seen in a legal contract can be borders. As an early adopter of
can no longer easily be added to blockchain payments. this technology, we are among
resolved face to face. Known as smart contracts, the world’s leading providers of
Business continuity they can synchronise the release smart contract assurance.
requires issues to of payments with the delivery
be determined using of goods, services, or even If a dispute occurs, blockchain
remotely accessed financial instruments. can help by automatically
enterprise-grade blocking payments and triggering
technology and human The biggest advantages are in the alerts that automate dispute
expertise. Blockchain signing and filing: the contracts processes. With its tracking
is fantastic in resolving don’t need to be signed in abilities, the technology can help
disputes because it person, and the technology quickly unwind disputes and
has its own evidential exposures in a trusted way.”
audit trail, embedded
at its core.”
Dean Armstrong, Guenther Dobrauz, Partner and Global Financial
CEO, Proof of Trust Services Leader, PwC Switzerland13 | PwC 2020 | Time for trust
5. Customer Engagement (US$54bn)
Blockchain can breathe new life into traditional, card-based loyalty and reward
programmes. The technology can boost engagement through integration with
customer relationship management (CRM) platforms such as Salesforce3,
HubSpot CRM and Microsoft Dynamics 365 Sales and generate more value
by making them more user-friendly for smartphone users.
Blockchain could prevent loyalty That’s not unreasonable,
programmes from falling out but integrating all that information
of use. Loyalty and reward is fraught with complexities.
programmes were created in the This is where blockchain can
1980s when we bought things help, allowing consumers to
with cash. The idea is still sound, store, check, consolidate and
but redemption rates are low. spend points online. It can
Consumers just aren’t motivated also be used in a similar way
to use them as much as they for gift cards and vouchers.
could. The younger generation With digital payments now the
is likely to be carrying around norm, consolidation of these
nothing more than a smartphone programmes is inevitable,
as a means of payment. They and blockchain is key in
don’t want a wallet full of plastic unlocking value, in a fair way,
cards. They want to redeem, for all involved.”
share and swap their points,
whether air miles or supermarket
rewards, on their smartphone.
Haydn Jones, Senior Blockchain Market
Specialist, PwC UK, and author of ‘The Executive
Guide to Blockchain’
3
https://www.salesforce.com/products/platform/products/blockchain/14 | PwC 2020 | Time for trust
Global leaders:
The countries
leading the
blockchain revolution
PwC economists expect China and the United
States to benefit the most from blockchain
technology over the next decade.
Blockchain’s success requires Elsewhere, our economists
a friendly policy environment, expect northern and western
a business ecosystem that is ready Europe to benefit the most in
to exploit the new opportunities that percentage terms – thanks to
technology opens, and a suitable existing technology infrastructure
industry mix. China is embracing and well‑equipped workforces.
innovation and pushing ahead with Sweden could enjoy a 3% boost
2.3%
its own central bank issued digital to GDP from blockchain by
currency, DCEP (Digital Currency 2030, followed by Luxembourg
Electronic Payment). This will help (2.6%) and Germany (2.4%).
it reap a US$440bn reward over the The UK, in fourth place (2.3%),
next decade, representing a potential has an opportunity to pursue
potential contribution 1.7% boost to GDP. Not far behind its own agenda for blockchain
to UK GDP by 2030 is the US, where the expected following its departure from the EU.
US$407bn prize is driven mainly
by the opportunity around its vast
supply chains, as well as the social
and ethical demands of consumers.15 | PwC 2020 | Time for trust
Blockchain’s comparative economic contributions
2021 2025 2030
US$962bn
1 trn
US$433bn
500 bn
US$231bn
US$224bn
US$105bn
US$73bn
US$54bn
US$54bn
US$34bn
US$18bn
US$17bn
US$13bn
US$9bn
US$3bn
US$2bn
1 bn
Provenance Payments Identity Contracts Customer
and Financial and Disputes Engagement
Instruments Resolution
Countries have to believe in each other in order to work together, which is difficult
when each government believes their own system is right and might regard
others with distrust. Blockchain technology can provide a platform for sharing
data around global issues, such as climate change, that transcends borders
and facilitates trust between countries.”
Tomohiro Maruyama, Senior Manager, PwC Japan16 | PwC 2020 | Time for trust
Industry leaders:
The sectors that
will reap the
greatest rewards
Our economists expect blockchain
technology to bring benefits across a wide
range of industry sectors. Much of the
value will be realised behind the scenes.
We expect between 10% and 15%
of worldwide infrastructure to be using
blockchain within a decade.
The biggest beneficiaries look set Meanwhile, there will be broader
to be the public administration, benefits for business services,
education and healthcare communications and media,
sectors. PwC economists while wholesalers, retailers,
expect these sectors to benefit manufacturers and construction
to the tune of $574bn by 2030, services will benefit from
by capitalising on the efficiencies using blockchain to engage
blockchain will bring to the world consumers and meet demand
of identity and credentials. for provenance and traceability.
Blockchain is a team
sport. It works best
when companies come
together even with
industry competitors
and lay the groundwork
for blockchain in terms
of processes, sharing data
and required automation
via smart contracts.
Once they understand
the value that comes
out of it, blockchain will
become an integral part
of business technology.”
Husen Kapasi,
Blockchain Leader,
PwC Europe17 | PwC 2020 | Time for trust
The global impact of blockchain GDP boost
and jobs enhanced by 2030
Luxembourg Germany
GDP ↑ US$2bn GDP ↑ US$95bn
6,600 889,000
Sweden
UK
GDP ↑ US$18bn India
GDP ↑ US$72bn
138,000 GDP ↑ US$62bn
695,000
3.2m
France
GDP ↑ US$59bn
Japan
510,000
GDP ↑ US$72bn
617,000
Spain
GDP ↑ US$24bn
227,000
USA Italy UAE China
GDP ↑ US$407bn GDP ↑ US$25bn GDP ↑ US$6bn GDP ↑ US$440bn
2.2m 233,000 86,000 11.4m
Rest of the world
GDP ↑ US$473bn 21m18 | PwC 2020 | Time for trust
Unlocking value:
Getting started
with blockchain
Though every industry stands to benefit from
blockchain, there are some misconceptions around
the technology that may deter organisations from
getting started.
These issues must be addressed in order to drive
understanding and overcome inertia.
Look beyond Bitcoin
Raising awareness of blockchain’s
broad uses may be the most important
step in driving transformational change.
Many people do not understand
blockchain technology and find it hard
to see the immediate benefits. Others
cannot see beyond its association with
Bitcoin and cryptocurrencies. Blockchain will be at
The first time blockchain was seen the core of digital trade
in action was when it exploded finance, delivering benefits
onto the scene as the technology of automation efficiency,
behind Bitcoin. transparency, provenance,
immutable records and
The two have been linked ever since, ultimately trust. With the
and as a result blockchain has taken
ability to reduce fraud,
off a lot more quickly in the financial
lower costs and improve
services space. It has taken longer to
reach other industries, but in the last
the network, blockchain
few years there have been big leaps will enable credibility
in the technology and the uses for and support continued,
blockchain have broadened. growing international
trade. This will also help
Now is the time for every organisation businesses to achieve
to look at how it will transform their ESG ambitions.”
their industry.
Dr. Ruth Wandhöfer,
Partner Gauss
Ventures, Co-Founder
and Partner Sinonyx,
I-NED, Advisor19 | PwC 2020 | Time for trust
Be energy aware Focus on collaborations Take it seriously
One of the main advances in There’s little value in an organisation One of the biggest mistakes
thinking since we published our building a blockchain solution organisations can make with
2018 Global Blockchain Survey for internal use. For blockchain blockchain is to consider it a
has been the way blockchain to reach its full potential, hobby, and leave it in the realm
solutions use energy, to the organisations must collaborate. of the enthusiast in the team.
extent that it is now very It needs C-Suite support to work
different to that of Bitcoin. The beauty of blockchain is and to facilitate the right level of
it facilitates trust between collaboration within an industry.
The energy quotient of Bitcoin organisations, allowing It is complicated, and takes time
brought all of the wrong kind peer-to-peer exchanges to develop a blockchain solution.
of headlines for blockchain, that cut out the intermediary. But organisations should accept
largely triggered by the link to Organisations should come that and start by establishing
Bitcoin ‘mining’, the home to large together to create an industry a proof of concept which,
numbers of computers solving approach. The key is to get clear if successful, can be extended
complex mathematical algorithms. on what you stand for as an as a satellite project.
However, with more than a decade organisation, or industry, and look
since the launch of Bitcoin in 2009, for areas where you might be By starting with a satellite
much has changed in how the struggling to prove it with verifying project, when the time comes
underlying cryptography is applied data. Look to turn conversations to move it to the inside – as a
to blockchain solutions, and the into partnership investments core product – you’ll be ready.
energy overhead this creates. that incentivise and engage And the opportunities to extract
end-to-end organisations. value, while building trust and
Nonetheless, it must be transparency for your organisation
remembered that all technology It should be relatively easy to will be there.
uses energy in the form of data collaborate, but it’s harder to
centres, computing, storage establish a common approach
and networking. So combining when organisations compete.
platforms that support for Careful consideration needs
example, payment and ledger, to be given to a number of
offers a two-for-one opportunity, practicalities, such as choosing
especially when shared across which blockchain enterprise to
multiple companies. That’s where align with – there is a spectrum
some real opportunities for of platforms and frameworks to
consolidation, and, in actual fact, choose from, such as Ethereum,
energy reduction, really kick in. R3, Hedera, Ripple, MultiChain
Blockchain has reduced, and can and Hyperledger – and how to
continue to reduce, reliance on integrate new technology with
traditional data centres, which can existing technology. There is work
actually help organisations bring to be done, and it needs to be done
down their energy consumption. in collaboration to succeed.20 | PwC 2020 | Time for trust
Can blockchain deliver
for your organisation?
Our research shows that there are clear
reasons to rethink blockchain: the economic
benefits of the technology are real and
are set to grow. As organisations look to
reconfigure and embrace new technology,
they should seize the opportunity to explore
blockchain solutions.
PwC has a simple process to determine whether blockchain can
create value for your organisation.
Do any of the To find out how
below apply to your blockchain can deliver
organisation? for your organisation, Blockchain is going to
get in touch: become an infrastructure
1. Multiple parties share
and view common data Steve Davies technology – like the
internet. No one really
2. Multiple parties update Partner and Blockchain Leader,
PwC UK cares how the internet
and record data
works, but it has become
steve.t.davies@pwc.com
3. Verification of records integral to our daily lives.
is needed For any questions The same will be true of
4. Intermediaries add costs related to our economic blockchain. We haven’t
and complexities modelling get in touch: reached that tipping
point yet because there
5. Interactions are Jonathan Gillham
are no dominant players.
time sensitive Director of Econometrics and At some point soon,
6. Transactions depend on Economic Modelling, PwC UK
this will change.”
two or more parties jonathan.gillham@pwc.com
If your answer is ‘yes’ for four
or more of these, blockchain
Guenther Dobrauz,
could deliver for you and Global Leader,
we can work with you on Financial Services,
a plan to make it happen. PwC Switzerland
We’ll help you implement the
plan and turn it into a reality.
And finally, we’ll be there after
project delivery to support
business change.21 | PwC 2020 | Time for trust
Research
methodology
Our report looks at the GDP impact of blockchain, which is the net
additional value of goods and services within an economy as a result
of blockchain technology. There have been previous reports, issued by
others in the industry, which have predicted a higher contribution from
blockchain. These may refer to total business revenues.
This study provides a scenario of For each use case identified as goods and inputs; spending
the impact blockchain technology likely to have a significant impact by consumers on goods;
could have on the global economy on the global economy, a range investment decisions, and
by 2030 if uptake and the quality of sources and techniques to dynamics in the market such
of products and services available estimate their productivity impact as demand for factors like
develop as expected. were used. Existing research on capital and labour, trade,
their adoption and associated employment and wage effects.
PwC conducted interviews productivity increases, forecasts
with specialists in blockchain from ABI Research, and PwC In this report, we did not
technology at PwC, and third economic analysis were drawn on model the impacts of COVID-19
party sources in emerging to estimate productivity change separately. However, given how
technologies, to form a that could occur with each COVID-19 has encouraged
comprehensive list of potential use case. remote working and technological
use cases for blockchain that solutions across sectors, we
these specialists believe could Multi-factor productivity figures consider that we have taken a
realistically be implemented were incorporated into PwC’s prudent approach in estimating
by 2030. dynamic Computable General blockchain’s economic impact.
Equilibrium (CGE) model to
Our analysis also includes estimate the aggregate effects
economic impacts that, of blockchain adoption on global
while not currently considered GDP up to 2030.
transformative use cases,
will have significant productivity The CGE model captures
effects, such as impacts on global economic interactions in the
supply chains and compliance global economy including:
adherence across industries. trade and spending between
firms on one another’s22 | PwC 2020 | Time for trust
More from PwC
Our teams of emerging technologies
and economic specialists have produced
a series of reports exploring how to
balance business understanding and
human insight with technology innovation.
The series includes the following reports:
Seeing is believing: How VR and AR will transform
business and the economy
www.pwc.com/seeingisbelieving
Sizing the prize: What’s the real value of AI for your
business and how can you capitalise?
www.pwc.com/ai-study
The impact of drones on the UK economy
www.pwc.co.uk/dronesreportwww.pwc.com/timefortrust About PwC At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with over 276,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. © 2020 PwC. All rights reserved. Definition: PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
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