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According to leading retail news publication, Retail Dive, blockchain will drive $164 billion in efficiencies for retail by 2030. The press release by IHS Markit defines business value as the cost savings and efficiencies resulting from incorporating blockchain into business strategies.
According to a Spring 2018 report by Deloitte, blockchain’s adoption in retail will also be at a tipping-point in the next five years. Deloitte sees this occurring especially in three main pillars of adoption:
- Consumer — Improving and protecting the consumer experience
- Supply chain — Improving process efficiencies across the supply chain
- Payments and contracts — Improving transaction processes and ensuring the validity and implementation of contracts
While this provides a nice overview of mainstream adoption, it doesn’t take into consideration all the specialized blockchain startups that are seeking to impact a particular niche.
Recently, a corporate startup called Bakkt was announced where the likes of even Starbucks is a major partner. This has the retail and crypto community buzzing over if we’ll be able to pay for a Starbucks drink with cryptocurrencies such as ETH (Ethereum), XLM (Stellar), XRP (Ripple) or another crypto.
What makes this news noteworthy is since Bakkt is being formed by Intercontinental Exchange — the trading colossus that owns the New York Stock Exchange and other global marketplaces, namely Jeffrey Sprecher and his partner Kelly Loeffler. With the likes of Microsoft and Boston Consulting Group involved, the retail applications here could be enormous.
This could be a “Bakkt to the future” story for crypto in retail, where Starbucks on ICE (Intercontinental Exchange) combine forces. However, for blockchain in retail, the patents are where the real action is occurring, where the likes of Alibaba (the e-commerce giant) is a leader for blockchain patents with long-term implications in retail.
Deloitte’s report suggests that for blockchain’s future in retail, before 2020 many large retailers and businesses are quickly determining what value blockchain might hold for them, and have —or will begin—testing it soon, to benefit greatly while others will surely miss out and fall behind. Major retail chains now need not only to think about e-commerce, but the next layer of the internet, blockchain.
According to the forecast by IHS Markit, in the worst “downside” case scenario for the future of blockchain in retail, still sees this value increasing to $49 billion by 2030. To put this figure in perspective, the business value of blockchain in 2017 for retail and e-commerce was only $38 million.
Bakkt’s CEO describes it as the following:
“Bakkt is designed to serve as a scalable on-ramp for institutional, merchant, and consumer participation in digital assets by promoting greater efficiency, security, and utility.”
Merchant and consumer participation definitely sounds like retail. Many analysts believe Bakkt is an example of—and which the ICE can offer— something the crypto world currently lacks and that many crypto enthusiasts steadfastly reject: a trusted third party. How cryptocurrencies might integrate into retail will require these trusted and centralized businesses to get involved to help spur innovation in the space.
This signals Wall St. and larger investors that are starting to enter the cryptocurrency and blockchain landscape and while retail has been slow to follow; in the 2020s this movement could accelerate considerably as more use cases come into being including IBM’s private blockchain consortium. In 2018 a rapid rise of crypto funds and Wall St.’s more active involvement means it will spur on the retail sector to integrate with blockchain solutions that ultimately won’t just decrease costs and improve efficiencies, but improve customer experiences.