Will blockchain technology impact the economy?

Blockchain technology has always been directly associated with boom and bust cycles, faulty investment and get-rich-quick schemes. Cryptocurrencies are based on blockchain technology and they are synonymous with uncertain investment strategies and unregulated trading.

That being said, blockchain technology can be implemented in a great variety of different use cases and industries, and is in no way limited to cryptocurrencies such as Bitcoin, Ethereum, Ripple or Luna coin. In fact, blockchain technology can be used in a startling number of different ways – hence its economic potential.

The global economy has been faltering since the end of the Covid-19 pandemic and the layoffs in the tech sector are causing a general sense of unease. This is a good time to start looking to technology and assessing which new developments are passing trends and which are here to stay. Keep reading to learn more about what blockchain technology is and what it can do for the global economy – spoiler alert: it could be extremely beneficial!

Blockchain technology 101

Even the least tech savvy among us have become familiar with the word blockchain over the last few years as the technology has grown in popularity. Whether it was your uncle asking questions about it at a family gathering, a friend telling you that you need to invest in a blockchain-based startup, or someone in a bar complaining about NFTs, conversation about blockchain technology is inescapable.

However, even though most people have talked about (or heard about) blockchain technology for years, many people don’t understand how it works or what exactly it is. Blockchain is a type of technology that is essentially a massive, unchangeable ledger or advanced database which allows for the recording of transactions and tracing of assets in a particular network.

When a certain number of transactions have been recorded, the block is completed and a new block begins, hence the chain in blockchain. The blocks are connected together via something called cryptography, which secures the block from unauthorized access and in doing so, secures transactions between two points of the blockchain network.

What can blockchain do for the economy?

Right now, times are getting a little lean around the world and people are starting to ask themselves what is deflation in a modern, tech-focused economy, what a recession will look like today, and how we can advance to the next stage of economic growth without leaving too many people behind. These are certainly difficult economic times and if the forecasts are correct, it looks like there will be more difficulties ahead.

This is where blockchain technology comes in and potentially opens up a new and previously untapped aspect of the tech sector. According to a PWC market report, various blockchain technologies are projected to boost the global economy by $1.76tn between 2020 and 2030.

The massive growth due to blockchain is derived from increased levels of tracking and tracing allowed by the technology, which in turn has the result of increasing trust. Personal, commercial and financial data is a hot commodity these days and big companies and banks are willing to invest in security. The fact that blockchain technology creates incredibly secure, encrypted databases is very attractive to large companies and financial institutions such as banks.

The many applications of blockchain technology

It is not just safety and security that blockchain technology will be used for. It can also be used in customer engagement, contract drafting and dispute resolution, identity management and payment processing.

Identity management may sound strange but it is something that many of us struggle with every day – remembering passwords, entering passcodes and getting through multifactor authentication. These are all things that blockchain technology can assist with and help to cut down on fraud and identity theft.

The fact that blockchain technology can be applied to so many different sectors and commercial requirements shows the huge amount of potential this tech has. As the technology develops and specializes, more and more companies will start using blockchain technology.

The result of increased blockchain use is that the transactions which underpin the commercial and financial world will become easier, faster and more secure. More transactions will be made and the global economy could potentially begin to speed up – so buckle up!