THE PROMISE OF BLOCKCHAIN

WILL THIS DISRUPTIVE TECH FINALLY REALISE ITS FULL POTENTIAL?

Not long ago, blockchain was heralded as the future by industry pundits, and businesses were urged to invest in the technology for new efficiencies. However, distributed ledger technology failed to gain mainstream acceptance and find a purpose beyond cryptocurrencies. So is blockchain still relevant in 2023 and beyond?

IDC FutureScape, which was published in October 2022, predicts that by 2026, approximately 80% of global banks will integrate crypto assets into their risk management systems and decisionmaking processes.

Apart from BFSI, industries such as healthcare, retail, logistics, and manufacturing are also investing in blockchain use cases. For example, the healthcare uses blockchain to digitise health information exchange and trace counterfeit drugs. Logistics is using it to provide secure end-toend supply chain information and data sharing. Manufacturing and retail are using blockchain for assets and goods management, equipment and service management, warranty claims, regulatory compliance, and loyalty programs. However, IDC research finds blockchain adoption (excluding cryptocurrency) in the MEA region has slowed down in the past few years. In September 2022, 29% of CIOs across GCC countries planned to increase investment in blockchain by 10% or more in the next 12-18 months. However, according to the January 2023 IDC CIO DX survey, spending priority on blockchain has slipped to be in the bottom three technologies across GCC countries.

“Blockchain technology is being widely adopted across various industries in the Middle East & Africa (MEA) region, with the BFSI sector leading the way. The region has seen an increasing number of banks and financial institutions using blockchain for various purposes such as cross-border payments, trade finance, claims processing, and KYC filing,” says Manish Ranjan, Senior Program Manager – Software, Cloud & IT Services at IDC MEA.

What are some of the top trends that will dominate the blockchain industry this year?

According to the World Bank, blockchain’s global market size is expected to reach $1.43 trillion by 2030, with a compound annual growth rate (CAGR) of 85.9%. As blockchain use cases continue to expand, there will be ongoing and emerging trends in 2023. For example, there is a growing trend toward the use of blockchain technology for the supply chain management.

“Blockchain-based supply chain solutions can help to increase transparency and traceability in supply chains, reduce fraud, and improve efficiency. Another major trend that will continue through 2023 is the adoption of decentralised finance (DeFi). DeFi applications enable peer-to-peer transactions and eliminate the need for intermediaries such as banks. Additionally, more industries will see an integration of non-fungible tokens (NFTs). Currently, NFT’s are being used in gaming, sports, art, and other industries. Nike is a good example of this, having acquired RTFKT studio, a digital collectibles company, which will allow the company to sell virtual sneakers to outfit people’s avatars in the metaverse,” says

Stephen Gill, Academic Head of the School of Mathematical and Computer Sciences, Heriot-Watt University Dubai.

Finally, blockchain technology is also being used to develop digital identity solutions as they are more secure and protect user privacy better than traditional identity systems. It is expected that this trend will continue to expand as more organisations realise the benefits of blockchain-based digital identity, he adds.

Blockchain and IoT

Gartner calls the combination of blockchain and IoT a digital transformation sweet spot. A study conducted by Aftrex Market Research in 2018 discovered that the total Blockchain and IoT market could grow to $254.31 billion in 2026. This is due to benefits such as more speed, lower costs, enhanced privacy, and efficient logistics and supply chain.

“With blockchain technology, every data point, including inventory and shipping information, can be decentralised and secured, resulting in improved efficiency and transparency for the IoT-enabled logistics industry,” says Sandeep Shrivastava, Manager – Digital Business Solutions at GBM.

He says the Internet of Things (IoT) technology’s main asset is, precisely, the data that the myriad of sensors embedded in the environment are constantly generating. The diffusion of platforms for IoT data sharing and monetisation is one of the key success factors which may help to drive the data economy and industrial transformation.

One interesting area of research that is emerging is the use of blockchain to enable a highly scalable Internet of Things Data Marketplace - a data sharing platform based on blockchain, over which data producers and data consumers can share data in a decentralised and trustworthy manner. The blockchain-based IoT Data Marketplace (BIDM) enables a data marketplace where owners of IoT infrastructures can expose the observations that their devices generate while retaining control over who accesses each observation, while directly getting revenue according to the prices they have set.

Gill says combining blockchain and IoT can create more secure and trusted networks. Since blockchain technology enables secure and transparent transactions, while IoT provides real-time data, this combination can help to prevent cyber-attacks and ensure that data is not tampered with. Additionally, using blockchain with IoT will allow streamlining processes and reducing costs.

What is blockchain’s potential for cybersecurity?

One key feature of blockchain is its immutability. The blocks in the chain are linked cryptographically and altering any data stored on them requires significant resources.

“As blockchain technology evolves, we see new use cases emerging in areas such as cybersecurity, particularly for identity management. Decentralised identifiers (DIDs) offer a promising alternative to our current reliance on emails, passwords, usernames, and other centralised systems. With blockchain tools at our disposal, we can now build innovative identity management systems based on DIDs,” says Shrivastava from GBM.

Gill from Heriot-Watt sums up: “Since blockchain is based on principles of decentralisation and cryptography, this ensures trust in transactions. For example, once transactions are recorded on the blockchain, they cannot be changed. This significantly decreases the likelihood of hackers tampering with stored data. Additionally, decentralisation means no central point of control, making it difficult for cybercriminals to gain access and launch an attack.

“Most importantly, blockchain’s use of advanced encryption techniques make it almost impossible for hackers to access sensitive information. However, there are some infrastructural challenges that can compromise security on the blockchain. For example, since blockchains are transparent by design, participants may share data that attackers can use to infer confidential or sensitive information. Additionally, attackers may compromise private keys to control participants accounts through phishing. Therefore, while blockchain has a great potential for cybersecurity, additional efforts must be made to mitigate cyber threats.”