Blockchain: the 2018 disruptor of the year
For Bitcoin, 2017 was an extraordinary year as it documented the cryptocurrency’s stratospheric rise and unprecedented entry into mainstream dialog. Regardless of which side of the bubble debate you are on, the implications that blockchain technology may have on many industries are impossible to ignore. In technical terms, blockchain is a decentralized database that enables trustless peer-to-peer transactions without the need for any intermediaries. In concrete terms, it means that businesses are able to pay one another and exchange assets directly without a trusted third-party. It also means that legal contracts can be established and automatically executed through what are known as “smart contracts,” which can manage agreements between two parties without the need for an outside arbitrator.
The implications of blockchain technology are far reaching, with the potential to change many aspects of business across a variety sectors. Procurement departments are poised to benefit from many of the advantages blockchain technology brings, such as cost savings, greater data transparency and shorter lead times. What that also means, and what comes with every ground-breaking technology, is that many markets are put at risk of being displaced. Here are a few industries IBISWorld has identified that may have the most to worry about as blockchain start-ups begin to introduce working products to the market during 2018.
Several markets within the financial services sector, including commercial banks, credit card payment processors and clearinghouses, are at risk due to innovation stemming from blockchain technology. One of the most disruptive aspects of blockchain technology lies in the possibilities that arise through the use of cryptocurrencies. Cryptocurrencies, such as Bitcoin, allow businesses and procurement departments to perform several useful functions that were not possible before. For example, with cryptocurrencies, businesses can make payments to employees, customers and vendors anywhere in the world instantly without any fees. In turn, businesses can avoid the delays and added costs that occur when moving money through banks, credit card payment processors and clearinghouses. Particularly, this can save a lot of time and money for businesses operating internationally.
Currently, the number of businesses dealing in cryptocurrencies is small, but growing rapidly. This increase could start to slow the amount of money flowing through traditional banking channels over the next few years, which could in turn decrease demand and prices for those types of financial services.
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Logistics & Trade
Another advantage of blockchain technology is the incorruptible distributed ledger that is established with every transaction. This feature has important implications for sourcing departments and puts markets such as bookkeeping, document storage and inventory accounting services at risk. Blockchain allows businesses to track assets along the supply chain, introducing increased transparency and cost savings. For instance, Walmart is currently piloting a blockchain program that tracks produce from farm to shelf. This tracking process not only helps keep consumers informed about where their food comes from, but can also help businesses ensure a greater level of accountability from their suppliers. Furthermore, IBM and Maersk are testing a similar program using blockchain to track and streamline shipping of a myriad of other products, which has been significantly cutting costs and eliminating delays that come with the logistics of global trade.
As blockchain technology becomes more widely implemented, IBISWorld expects that several services, like the ones mentioned above, may experience decreasing demand due to the innovation in data tracking that blockchain brings. For procurement departments, it may mean cost savings, faster lead times and more transparent suppliers. Sourcing professionals should look to work with companies that are implementing blockchain into their processes.
Blockchain technology is poised to have a lasting effect in the real estate sector, as well. IBISWorld expects escrow services, notaries and title companies to feel the greatest impact. As many business owners know, real estate transactions can be incredibly lengthy and expensive. There can be brokers, escrow companies, title companies, inspectors, notaries and local government agencies involved in a single real estate deal. Blockchain technology offers a way to speed up that process and potentially eliminate the need for certain parties. For instance, by utilizing smart contracts, money can be securely held until certain conditions are met, essentially performing the same service as escrow companies for only a few cents. Furthermore, the distributed database of blockchain offers a way for information such as title history, occupancy and insurance records to be more accessible and verifiable, which will help deter fraud and theft. Another revolutionary aspect that blockchain brings is the possibility to digitally transfer ownership of property. Securing a title now requires a piece of paper to be signed by a notary and delivered to a county database to be held. Through blockchain, property can be digitized and stored publicly, avoiding unnecessary fees and delays while also creating a more secure way to record ownership.
As such, service providers in this sector will likely also experience a drop in demand, which would translate to lower prices. Procurement departments, however, may be able to skip these services altogether as new blockchain real estate services become available, allowing buyers to stack up substantial savings in the process.
A Telling Year Ahead
Overall, blockchain technology and its effect on different sectors is still in its infancy. However, the blockchain industry is growing exponentially. While many decades-old companies race to implement the technology in their own operations, blockchain start-ups in every industry are also working to dislodge them. 2018 will be one of the first real tests to see how legacy businesses hold up against their native blockchain challengers. Without a doubt, the landscape of many markets will change over the next few years, including healthcare, advertising and even social media. Regardless of the price of Bitcoin, blockchain technology is here to stay, and which businesses are left standing will likely come down to how well companies are able to adapt. Procurement departments that are able to implement blockchain in their own processes and are actively seeking out vendors utilizing the technology will be able to reap the revolutionary benefits.
- Blockchain technology allows companies to directly exchange assets and engage in contracts without the need for a third party.
- Middlemen across many industries are put at risk and will likely experience a decrease in demand, including those in markets such as credit card payment processing, inventory accounting services and escrow services.
- Sourcing professionals should look to work with vendors that are implementing blockchain into their processes to shorten lead times, save money and build more transparent supply chains.
- In 2018, the first real effects on markets will begin to be seen as blockchain start-ups face off with legacy businesses for the first time.
IBISWorld Analyst, Connor DiGregorio
Ireland is key launchpad for US expansion into Europe
The first transatlantic cable was laid between Newfoundland and Valentia Island in County Kerry, Ireland, in 1858. It was a flawed effort; the connection was poor, causing enough issues with efforts to send telegrams along it that major repair efforts were set underway immediately - efforts which ended up further damaging the cable line, severing the connection just three weeks later.
This first step towards transatlantic subsea communication, shaky as it was, laid the foundations of more than a century and a half of information exchange across the ocean, between the East Coast of North America and Western Ireland.
It’s been 163 years since the completion of the first transatlantic cable, an event which cemented Ireland’s position as the landing stage for subsea connections between Europe and the Americas. That position has, in no small way, been a driving force behind the country’s modern role as a landing stage for US and Canadian firms looking to do business in Europe.
Today, some of the largest firms in the world, like Pfizer, Janssen, Zurich, Metlife, Google and VmWare use Ireland for their European Headquarters. The combination of an English-speaking workforce (a boon made all the more important as Brexit makes the UK and the north of Ireland an increasingly complex environment that provides diminishing opportunities to access the rest of Europe), a cultural and regulatory landscape that welcomes foreign investment, and world-class connectivity makes the country an unparalleled choice for firms looking to establish a foothold in the EU.
As a result, Ireland has become one of the world’s leading data centre hubs.
Based on leading data centre firm Interxion’s Data Gravity Index, Dublin will be among the top five European cities that will contribute to Europe’s growth in data in the coming years, following London, Paris, Frankfurt and Amsterdam. The amount of data generated in Dublin itself is expected to grow alongside its economic expansion, with the Data Gravity Index also predicting that Dublin will outpace cities and data centre hubs like Mexico City, São Paulo, and even Shanghai, to be among the top 20 cities to experience annual data growth by 2024.
Ireland ranks 6th in the 2020 EU Digital Economy and Society Index (DESI), meaning that it is among the leading ranks of EU Member States in terms of the uptake and use of digital technologies. Likewise, the trend to locate data centres in Ireland serving overseas clients will continue to generate increasing amounts of international traffic
Managing the Dublin Data Boom
According to Interxion, subsea connectivity will continue to play a massive role in helping both international and domestic organisations digitally transform themselves to meet the challenges of changing markets post pandemic.
As the pace of global digital transformation - and the subsequent need for more connectivity - accelerates like never before, this rapidly developing world is driving urther demand for these cables as individuals and organisations become increasingly reliant on subsea cable’s exceptional data speed and capacity.
According to experts at Interxion, this connectivity will be pivotal to Ireland’s continued success in attracting international companies in the technology, pharmaceutical and financial sectors.
The subsea cable industry is a key contributor to the Irish economy across many sectors. The draft National Marine Planning Framework reported that subsea international networks make Ireland an attractive region for investment for the technology and digital sectors. Telegeography states that there are twelve existing subsea cables connecting Ireland to the US and UK, and a further four systems are under development. The Iish government’s statement on the Role of Data Centres in Ireland’s Enterprise Strategy identified Ireland as a location of choice for many different sectors reliant on digital and telecommunications capabilities, all of which in turn rely on subsea cable interconnectivity.
Subsea cables are of strategic importance to Ireland’s future as a catalyst for economic and societal prosperity. Ireland can be the ideal location for your company’s expansion plans. To find out how, you can hear from leading experts throughout the data centre and digital infrastructure industries on June 15, 2021, as speakers from the IDA, Aqua Comms, GTT Communications, euNetworks and Interxion discuss subsea cabling, digital transformation, Data Gravity and the fate of Ireland’s digital economy.
Key topics will include:
- Key facts about existing subsea infrastructure,
- Future plans,
- Challenges (including Marine Maintenance) and opportunities,
- Terrestrial networks (demand vs supply);
- Ireland's role as a gateway to Europe
The virtual panel (which is taking place between 10:30 PM - 11:30 PM JST on June 15, 2021) will conclude with a 20 minute Q&A. Mike Hollands, Senior Director of Market Development at Interxion, will moderate the event.