Digital assets could replace fiat
Cryptocurrencies,  Politics

Watch out fiat… 83% think digital assets will be an alternative or a replacement

Deloitte’s 2020 Global Blockchain Survey paints a picture of a maturing industry, but one where crucial use cases remain extremely underdeveloped

Digital assets aren’t just trying to steal fiat’s lunch money—they could soon become lunch money.

Deloitte’s 2020 Global Blockchain Survey revealed that 83% of respondents believe digital assets will serve as an alternative to fiat currencies within five to 10 years—or could replace old-fashioned banknotes and coins completely.

Tellingly, this figure rises to 94% in China, where trials are furiously taking place as the country strives to launch the world’s first central bank digital currency.

“Blockchain has already pivoted from the realm of the possible into the world of the practical.”

Deloitte 2020 Global Blockchain Survey

Unfortunately, this optimism doesn’t appear to be backed up with clear ideas about how digital assets will be used, or the specific role they will assume in the global economy.

Everestian challenges also lie ahead. A myriad of issues relating to tax and regulatory compliance need to be ironed out before digital assets can go mainstream—and even then, businesses and consumers will require time to become more comfortable with them, too.

Blockchain matures

The consulting giant polled 1,488 senior executives and practitioners across 14 countries for its 2020 survey—all of whom had a broad understanding of blockchain and knowledge about their organization’s strategies.

Deloitte’s findings painted a picture of increased adoption, and a keen awareness that firms could lose competitive advantage if they fail to jump on the blockchain bandwagon quickly.

“Blockchain is solidly entrenched in the strategic thinking of organizations across industries, sectors, and applications.”

Linda Pawczuk, DELOITTE

About 40% of participants said their organizations have already incorporated blockchain into production—a marked rise from the 23% reported a year earlier. The number of respondents who described blockchain as a top strategic priority stood at 55%, a modest increase of two percentage points compared with 12 months ago.

Companies are also starting to put their money where their mouth is, with 82% confirming they are hiring staff with blockchain expertise, or plan to do so by mid-2021. In last year’s report, this figure stood at just 73%.

While large-scale projects such as Facebook’s Libra tend to garner the most media attention, the Deloitte report argued “smaller-scale examples of blockchain adoption are proving to be just as transformational in the way people live and the way work gets done.” The authors noted how platforms are being built that make voting easier and more secure, or revolutionize the way patient data is stored and retrieved. Food safety is another area where blockchain is coming into its own—and as Modern Consensus has reported, this technology is being utilized by major brands such as Walmart, Dole and Unilever.

Digital assets could replace fiat
Mainstream adoption? Check. Competitive advantage? Check. Overhyped? Also check? (Photo: Deloitte)

Describing blockchain is a true agent of change, Deloitte’s Linda Pawczuk said: “Like many disruptive technologies, it has evolved from a merely promising and potentially groundbreaking approach to a now-integral solution to organizational innovation. This year’s survey suggests that blockchain is solidly entrenched in the strategic thinking of organizations across industries, sectors, and applications.”

Interestingly though, while 86% of the executives surveyed said company leaders felt there is a “compelling business case for the use of blockchain technology” within their firm, more than half called blockchain “overhyped.” That hype concern is up a full 11 points from the 43% who said it in 2019.

A crucial stumbling block that appears to be preventing greater numbers of organizations from adopting blockchain is cybersecurity, with 21% of respondents warning that this alone prevents them from proceeding with their strategies. A further 58% described cybersecurity concerns as one of several issues that affect their progress.

“Unfortunately, organizations’ efforts to solve these issues remain a work in progress, and cybersecurity remains a problem in search of a viable solution at the moment,” the report warned.

Doing, not planning

According to Deloitte, there has been a substantial shift in sentiment among industries since its first blockchain survey was performed in 2018—as the authors said, “blockchain has already pivoted from the realm of the possible into the world of the practical.”

But there are certain use cases that firmly remain a pipe dream, Deloitte asserts. Among these is global digital identity. Although 90% of respondents believe they will form an important part of their blockchain and digital asset strategies in the future, Deloitte warned such innovation is “based on theory and likely not ready for full-scale implementation”—and until the wider population develops greater understanding and acceptance, the full benefits provided by this technology will “likely remain untapped.”

When respondents were asked about where global digital identities could have the greatest impact, 29% said global financial transactions, and 27% said data privacy and ownership. The authors expressed surprise that far less importance was attached to other areas such as law enforcement, healthcare and international travel, adding: “Eventually, we believe these areas will take on greater importance, both for businesses and end users, and play an increasingly important role on the impact that digital identity could have on people’s daily lives.”

Overall, the report offers an upbeat perspective when it comes to the option of blockchain technology and digital assets. However, while the report was published in June, the survey itself closed on March 3—when few understood the full impact that coronavirus would have on the global economy.

“Only time will tell, of course, what long-term effect, if any, the current global health crisis will have on blockchain and digital asset adoption practices,” the report’s authors warn.

C Sephton is a journalist with an interest in cryptocurrencies, personal finance, and financial inclusion—as well as the challenges the crypto industry faces in achieving mainstream adoption. He owns cryptocurrencies.