Bitcoin has gone beyond being a tool for geeks to trade money. Now, cryptocurrency and related technologies are set to enable new types of contracts and business dealings in financial services.
The market is poised for stellar growth. A new market research report published by MarketsandMarkets estimates that the blockchain technology market will grow from $210.2 million in 2016 to $2,312.5 million by 2021, in its report titled Blockchain Technology Market— Global Forecast to 2021. That represents at a Compound Annual Growth Rate (CAGR) of 61.5%. "The major driving forces for this growth are transparency, immutability & scalability, and huge opportunities across industry verticals in APAC countries, especially India, Australia, and China," the report said.
It's a short hop to thinking about how these technologies may change the supply chain as well. PwC offers the following definitions:
- Blockchain is the technology that enables the existence of cryptocurrency (among other things). It is, quite simply, a digital, decentralized ledger that keeps a record of all transactions that take place across a peer-to-peer network.
- Bitcoin is the name of the best-known cryptocurrency, the one for which blockchain technology was invented.
- A cryptocurrency is a medium of exchange, such as the US dollar, but is digital and uses encryption techniques to control the creation of monetary units and to verify the transfer of funds.
Blockchain has supply chain aficionados excited because the technology will support new business processes that allow for assets to be transferred over the Internet without the need for a centralized third party. PwC said:
From a business perspective, it's helpful to think of blockchain technology as a type of next-generation business process improvement software. Collaborative technology, such as blockchain, promises the ability to improve the business processes that occur between companies, radically lowering the'cost of trust.'
This thought has the potential of bringing supply chain automation to the next level. Market research firm Gartner said:
While the current hype is around the financial services industry, there are many possible applications including music distribution, identity verification, title registry and supply chain.
Supply chain managers could, conceivably, create smart contracts that could basically execute themselves on certain types of buys. Take a look at the infographic below and then let us know what applications you see in your industry or company in the comments section below.
— Hailey Lynne McKeefry, Editor in Chief, EBN