KPMG Puts Across 6 Blockchain Predictions For 2020
2019 was the year organizations shifting blockchain and crypto-assets “beyond the hype phase,” embrace the technology over real use cases, according to a report by KPMG.
Admittedly, last year saw the extended opening of significant firms into the field of distributed ledger technology in areas ranging from infrastructure and finance to transport and public policy.
In banking, Swiss Bank UBS and Barclays began experimenting with how the tech could be deployed to speed up back-office functions and settlement among estimates the industry could shave off US$20 billion in middleman costs.
JP Morgan also joined the fray with JPM Coin, a token designed to facilitate transactions between institutional accounts. With more than 100 blockchain patents filed, meanwhile, Mastercard’s activity in the field led the payments monolith to become the third-biggest blockchain innovator worldwide.
Examples across various sectors have included Walmart Canada deploying the world’s first blockchain-based freight and payment network; leading carmakers, including BMW and Daimler, exploring use cases in raw materials tracking and tokenization, and Starbucks teaming up with Microsoft, using the technology to trace its coffee “from bean to cup.”
Businesses like these are realizing the potentially powerful applications of blockchain and demonstrating how core tenets in decentralization and transparency can be applied— as one component of a broader technological confluence.
More than 50 percent of global organizations now believe the technology represents a top-five strategic priority within the next two years.
“Business executives are leveraging the capabilities of blockchain and tokenized assets to spur an unprecedented level of innovation, differentiate themselves, drive new revenue models and retain market share, as well as to advance their strategies, systems, and processes,” said Arun Ghosh, US Blockchain Leader at KPMG.
“In 2020, we anticipate adoption at scale, given its ubiquitous and wide availability as organizations embed enterprise blockchain in their digital strategy and investments.”
According to Ghosh, the quickening pace of blockchain and crypto-asset adoption could be driven by six key trends.
Cryptoassets adoption led by MPC
One of the biggest hurdles to crypto-asset adoption is that of charge— how assets are owned, secured, stored, transferred, and accessed in decentralized environments. This area has so far needed both solutions and regulatory guidance.
However, progress in multiparty computation technology (MPC), and more providers joining this sector will help defeat the custody challenge, allowing secure, highly-available wallet infrastructure for high-frequency traders and asset managers wanting instant access to their funds.
Public sector leaders to facilitate growth
The public sector will drive the development, and rising adoption of crypto assets states Ghosh: “the race to integrate crypto into existing global financial institutions is very real.”
Throughout the world, governments are contemplating the launch of central bank digital currencies (CBDC), to accomplish strategic and competitive benefits within the global trade systems.
Central banks in Asia and Europe, for instance, are in the final stages of introducing digital currencies for future payment systems and cross-border payments, and KPMG suspects resulting frameworks to support initiatives in the private sector.
Interoperability to drive scale
There will be a change from private-permissioned to interoperable blockchain implementations.
As private blockchain implementations appear, the next stage is combining private and public blockchains to strengthen ecosystems and trade networks.
Interoperability will make way for greater effectiveness across supply chains, allowing the integration of middle- and back-office methods and payment layers.
“Given that blockchain is a cloud-first technology, this configuration of new, commercially-available distributed ledgers can serve as a ‘trust layer’ for existing and new data; drive accountability, reliability, and traceability across ecosystems by validating and protecting stored data,” Ghosh states.
Blockchain can enable trusted AI
With the maturation of machine learning and AI investments, companies can shift to blockchain to ensure data models are protected.
The confluence of AI and blockchain will lead to “more success” in computing the technology. Blockchain can allow trusted AI by verifying and authorizing data models and outputs, by giving an end-to-end view of automation and decision engines, while securing data input authenticity, that models were never tampered with.
Blockchain for sustainability
KPMG and Ghosh consider blockchain could become a “central component” in the union of technology utilized to control climate change.
Decentralized, transparent data models facilitated by the technology can house data transferred through IoT, and make it apparent to a vast number of nations and regulators that are collectively monitoring and reporting on carbon emissions and increasing sea levels, amongst other applications.
Zero-knowledge systems will allow new forms of self-sovereignty.
Speedy advances in cryptography are facilitating the development of zero-knowledge trust systems, unlocking the potential for advanced data privacy use cases, and the creation of digital identities.
Zero-knowledge systems and zero-knowledge proof cryptography are enabling participants of a network to manage and verify or “prove” their data, identity, or other features without revealing underlying information.