Using Blockchain More Broadly Across Asia

Blockchain is valued for its ability to validate, record, and distribute transactions in immutable, encrypted ledgers. Most importantly, the technology facilitates the secure sharing of information. 

Even though blockchain technology was invented to support transactions in digital cryptocurrencies, it must not be confused with Bitcoin, Ethereum, and other cryptocurrencies. The technology has myriad applications across business functions. 

Blockchain is tipped to transform global supply chains, manufacturing, and governance. The versatile and decentralized nature of blockchain has helped it garner significant importance among governments evaluating the prospects of leveraging the technology in business and the public sector. 

The Asia Pacific blockchain technology market was valued at US$2.6 billion in 2023 and is forecasted to grow at a CAGR of 56.8% over 2024-32. The blockchain market is being driven by adoption of the technology by innovative business models, increasing digitalization, and greater access to technological advancements. 

With greater than normal returns in recent years, the cryptocurrency market has attracted significant attention with traders rushing to seize opportunities in stable coins such as Bitcoin and Ethereum. Similar to stock markets, cryptocurrencies are linked to market risks and subject to fluctuations. Even as coinages experience fluctuations in value, blockchain offers unbreakable end to end security along a supply chain.

The decentralized nature of blockchain is a catalyst for transforming industries from supply chain to finance, retail to transportation and beyond. Businesses adopting blockchain technology are experiencing benefits such as enhanced transparency, greater trust, and efficiency. 

One of the greatest advantages of blockchain in SMEs can be experienced in supply chain management. Blockchain provides a transparent and immutable ledger ensuring every transaction within the supply chain is recorded and verified. Greater visibility across the supply chain helps SMEs ensure product authenticity, fraud reduction, and timely deliveries leading to enhanced trust between manufacturers, suppliers, and customers.

Introducing SMEs to the Advantages of Digitalization 

Even as digitalization provides SMEs with numerous benefits such as improved productivity, greater efficiency and positions them to compete with larger organizations, SMEs continue to lag in digital transformation. This is attributed to financial constraints, lower awareness, skill gaps, and insufficient resources.

In recent times, SMEs have been significantly impacted by economic shocks and volatility often testing limits and adaptability. Embracing digitalization and leveraging benefits offered by cloud computing, software solutions, and blockchain technology across supply chains can help SMEs respond better and increase resilience in the face of economic uncertainties. 

SMEs can leverage blockchain enabled smart contracts to automate and streamline processes, payments, and records. Smart contracts offer benefits such as reducing costs, eliminating intermediaries, and increased efficiency. Blockchain technologies offer a range of benefits to SMEs such as intellectual property rights protection, supply chain management, transparent payments, solutions for identity management, and access to funding through issuance of digital tokens. 

Successful digital transformation will require greater broadband connectivity, physical infrastructure, and digital literacy. Ensuring affordable and reliable internet connections is crucial in promoting participation and bridging the divide between smaller and larger organizations. Imparting digital skills and learning opportunities is essential in gaining greater awareness of digitalization. SMEs also require targeted policy measures to aid them in the digitalization journey through digital financial services and business support.

Adopting Blockchain Across the Supply Chain 

Despite offering numerous benefits, businesses face challenges and risks associated with the adoption of blockchain technology across the supply chain. Two common themes emerging are a lack of regulatory clarity and the speed at which blockchain products reach markets. 

The widespread adoption of blockchain across the supply chain is deterred by challenges such as partner hesitation, limited skills, and financial issues. Limited interoperability with necessary systems and performance are technical challenges. 

Even though adoption of blockchain technology is high, it remains an emerging and rapidly evolving technology. Blockchain skills are highly competitive and remain short in supply. The costs associated with talent acquisition and difficulty in developing skills are another obstacle to blockchain adoption. Blockchain vendors have expressed concerns over lack of clarity about regulatory requirements in certain parts of processes, posing risks to businesses and customers. 

Adopting blockchain across the supply chain will require greater trust among all stakeholders in the system. However, lack of trust is a two-dimensional challenge with organizations reluctant to trust the technology and trusting other parties on the network.

This topic was discussed at the Horasis Asia Meeting in UAE, being held from 18-19 November 2024. This year’s meeting focuses on Dubai as a new economic hub, connecting Asia to the Middle East, Europe and African regions.

Given the myriad benefits blockchain technology offers, adoption across the supply chain by all stakeholders will require addressing regulatory, technical, and financial challenges. If adopted successfully, the benefits will be many.

Photo Caption: The decentralized nature of blockchain is a catalyst for transforming industries.