PwC’s article “Making Sense of Bitcoin, Cryptocurrency and Blockchain” provides an excellent overview of blockchain technology, cryptocurrencies, and the applications of these beyond digital currencies. This is shared with business leaders, investors, and anyone in professional services with the intent of them to gain knowledge and intelligence as they navigate the new realms of digital assets and distributed ledger technologies.
Blockchain Technology Explained
In its simplest description, blockchain is a decentralised ledger that records all transactions on a peer-to-peer network. This technology allows all participants in a transaction to verify the transaction without having to utilize or rely on a single clearing authority. The article suggests potential blockchain applications including: enterprise, sustainability, tokenization, fund transfers, and supply chain tracking. Using blockchain, processes can reduce costs by eliminating intermediaries and increasing transparency.
What is Cryptocurrency?
Cryptocurrency is defined as a digital form of payment that operates on a blockchain. Some defining characteristics are:
Lacks intrinsic value: Cryptocurrencies are not backed by real or physical assets or commodities (e.g. gold).
Intangible: Cryptocurrencies only exist within networks and cannot be touched.
Decentralization: Supply is not limited to a central authority or institution, such as a central bank.
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The most well-known example of a cryptocurrency is Bitcoin. The example illustrates how cryptocurrencies can maintain their functionality and characteristics without centralized authority.
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Benefits and Challenges of Blockchain
The article identified the following benefits of blockchain:
Transparency: All transactions are tracked and visible to participants in the network.
Traceability: Improved ability to track assets and identify legitimate transactions.
Immutable ledger: Once items are recorded on the ledger, the history or record cannot be altered or tampered with.
Cost management: Processes can be improved by keeping things electronic, and may eliminate the need for generic intermediaries.
However, the article also identified and acknowledged challenges:
Complexity of the technology: Adopting/understanding the blockchain related technologies requires specialized knowledge.
Regulatory and legal impact: Stated risks that stem from existing or future regulation.
Implementation: There may be difficulties with implementing blockchain solutions into existing or future systems.
Multiple “competing” platforms: The development of too many blockchain arrangements could lead to fragmentation.
Potential Applications Beyond Cryptocurrency
- PwC stresses that blockchain can do much more than support digital currencies. Some examples include:
- Supply Chain Management: Manage visibility and traceability of goods from source to end user.
- Travel Industry: Decrease costs through lowering intermediaries and increasing tracking of travel costs.
- Sustainability: Capture data from distributed sources in order to manage resources in a more sustainable way.
Financial Inclusion: Provide capital to those without access to the capital markets, enabling them to fund projects that spur economic growth.
These examples show how much blockchain could benefit society in terms of improving efficiencies, transparency and including more folks in the economy.
Strategic Implications for Businesses
The article recommends that organizations start to think of blockchain not just as technology, but as a next generation business process improvement tool. By opening the way for collaboration and lowering “cost of trust” with blockchain, the process could be improved between companies. Think of it as an approach that supports organizations considering blockchain as a strategic asset that can provide a tangible return on investment.
Additional Resources and Insights
PwC offers pointers to additional resources/direction for those readers looking for a wider understanding:
Demystifying Cryptocurrency and Digital Assets – an introduction to the mechanics of digital assets and their potential future
Digital Assets and Crypto – an information hub covering multiple aspects of the crypto industry
2023 Digital Asset Predictions – insight on where the industry is going and considerations for business
Web3 and Sustainability – discussions on how new technologies can enhance customer engagement and environmental strategy
These resources aim to provide business leaders with the information to help navigate the intricate and developing digital asset landscape.
Conclusion
The report “Making Sense of Bitcoin, Cryptocurrency and Blockchain,” is a useful introduction highlighting the basic principles of blockchain technology, and its impact across different industries. The article attempts to ground technical explanations in the contexts of practical applications and thus use this framing as a road map for organizational thinking about integrating blockchain into operations. While recognizing that blockchain demands a certain amount of commitment that presents challenges to organizational leadership, PwC is quick to highlight the transformative potential of blockchain for organizations that fully integrate the technology, and by declaring that organizations can take a proactive stance to explore and begin taking advantage of blockchain.
