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Deloitte: Real-Life Applications Of Blockchain To Rise, State-Sponsored Cryptocurrencies Could Be A Reality In 5 Years

Deloitte, the leading auditing and consulting firm, has released a latest report that examines how disruptive trends such as artificial intelligence and machine learning, blockchain technology, collaborative ecosystems, cryptocurrencies, demographics, and customer experience are coming together to influence the future of banking.

“[T]he banking industry will be significantly transformed in the next five to 10 years. Digitization, automation, and disintermediation will be the main drivers, and together with other disruptive forces, could alter how banking products are delivered and experienced", it said.

The report says that the most disruptive innovation is the blockchain technology – a distributed ledger concept, conceived originally for Bitcoin but now applied beyond the cryptocurrency ecosystem.

In particular, the payment ecosystem will be majorly transformed as a result of the blockchain innovations. The technology has the potential to bring vast efficiencies by speeding up transactions and diminishing transaction costs. The report says that it expects to see a number of real-life applications of blockchain applied to payments, beyond digital currencies, in the next five years.

“Private, permissioned blockchain-based payment systems will gain significant transaction volume by 2020. Whereas an uber-blockchain industry utility, on the scale of ACH, will likely be a reality closer to 2025”, it added.

The report says that distributed ledgers hold vast promise to radically transform many financial transactions. However, it added that while the promise is real, the path to actualizing the potential will not be easy and will take enormous effort on a collective basis to migrate to a blockchain-based trading and settlement infrastructure.

Speaking of digital currencies, it said that while bitcoin and other digital currencies will likely enter the mainstream (only with adoption of standards and compliance with global regulatory frameworks), many of the “coins” that exist today will vanish, for lack of any real demand. The report says that it expects to see the vision of state-sponsored cryptocurrencies becoming a reality in five years.

“Digital currencies will evolve and be more accepted in the mainstream, as usage increases and they become interoperable with other currencies. Direct payments will become more common, as the need for intermediaries diminishes. Meanwhile, with increasing digitization, fee margins will decline, but incumbents will remain dominant in the ecosystem. And corporate payments may in fact lead the way in blockchain innovation. Finally, advances in IoT and digital payments will ensure a more automated and seamless retail customer experience”, it added.

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