Blockchain

S T R AT E G I C I N T E L L I G E N C E B R I E F I N G
Curated with Korea Advanced Institute of Science and Technology (KAIST)
Generated for Shahzad Asghar on 17 January 2024
 Contents
3 Executive summary

4 1 Latest insights

4 1.1 Current perspectives

8 2 Strategic context

8 2.1 Blockchain and Leveraging Data

9 2.2 Blockchain Policy, Regulation and Law

9 2.3 Tokenization and Digital Assets

10 2.4 Blockchain, Security and Interoperability

11 2.5 Smart Contracts and Automation

11 2.6 Blockchain and Digital Identity

12 2.7 Decentralized Governance and New Models

12 2.8 Blockchain and Cryptocurrency Climate Impact

14 3 Further exploration

15 References

17 About Strategic Intelligence

19 Contributors

19 Acknowledgements

Disclaimer
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Economic Forum as a contribution to an
insight area. The findings, interpretations
and conclusions expressed herein are the
result of a collaborative process facilitated
and endorsed by the World Economic
Forum but whose results do not necessarily
represent the views of the World Economic
Forum, nor the entirety of its Members,
Partners or other stakeholders. Portions of
this document have been machine
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© 2024 World Economic Forum. All rights

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Blockchain 2
 17 January 2024 Curated with Korea Advanced Institute of Science and Technology (KAIST)

Executive summary
Blockchain can enable greater trust and transparency through decentralization, cryptography, and the
creation of new incentives. Best-known as the digital underpinning of cryptocurrencies, it has evolved into a
foundational technology with promise in many areas. While the financial sector is investigating it as a means
to replace expensive and inefficient payment systems, it could also reshape supply chains - particularly in
combination with the Internet of Things and artificial intelligence - while boosting the practical, day-to-day use
of smart contracts and digital identities. However, many questions remain about the best use of the
Explore the interactive version technology, its environmental impact, and its governance.
online
This briefing is based on the views of a wide range of experts from the World Economic Forum’s Expert
Network and is curated in partnership with Dr. Kibae Kim, Principal Researcher at Korea Advanced Institute
of Science and Technology (KAIST).

The key issues shaping and influencing Blockchain are as follows:

Blockchain and Leveraging Data Smart Contracts and Automation

The technology can provide infrastructure for data Blockchain has the potential to change everything
sharing, exchange, and ownership from production to lifestyles

Blockchain Policy, Regulation and Law Blockchain and Digital Identity

Places that have adopted relatively accommodating Current systems for identity management are siloed
stances, like Switzerland, have seen an influx of and inefficient, and call for new models
companies
Decentralized Governance and New Models
Tokenization and Digital Assets The distributed nature of blockchain can facilitate
Digital representations of value on blockchain open new ways of doing business
up new possibilities for finance and asset ownership
Blockchain and Cryptocurrency Climate Impact
Blockchain, Security and Interoperability Bitcoin’s considerable carbon footprint is
The technology’s unique aspects and vulnerabilities problematic, but it could ultimately boost the use of
must be considered during the design process renewables

Below is an excerpt from the transformation map for Blockchain, with key issues shown at the centre and
related topics around the perimeter. You can find the full map later in this briefing.

Blockchain 3
1 Latest insights
A synthesis of the most recent expert analysis.

Below are your latest updates on the topic of Blockchain spanning 13 different sources.

1.1 Current perspectives

and application sticking to core 2 with varied
Cities Today
priority. Based on the number of transactions
Baltimore to track vacant performed per second, the proposed system is
properties with blockchain compared with different existing consensus
11 December 2023 mechanisms working in various types of
Photo: Sabih Jafri | Dreamstime.com Blockchains. Also, a detailed discussion is
presented on the critical analysis of the adopted
Baltimore to track vacant properties with blockchain research mechanism. Overall, the proposed
systems outperforms to other systems in various
11 December 2023 parameters of blockchain network scalability.

by Sarah Wray
Kellogg School of Management
Baltimore is launching a pilot using blockchain Crypto Had a Brutal Year.
technology to record its vacant housing inventory. What Comes Next?
03 November 2023
Frontiers in Computer Science Finance & Accounting Nov 3, 2023
Enhancing computational
scalability in Blockchain by Crypto Had a Brutal Year. What Comes Next?
leveraging improvement in
consensus algorithm “There’s definitely more caution now, which might
07 December 2023 not be a bad thing.”

Accommodating an increasing number of users in Jesús Escudero

the Blockchain network has moved to the forefront
of discussion. It is also evident that without LSE Business Review
jeopardizing the data security in Blockchain, it is of Four solutions from football
indispensable need to devise an appropriate for novel brand experiences
method for improving the scalability trait of with non-fungible tokens
Blockchain. In this article, we have proposed a (NFTs)
consensus method that is having the potential to 08 January 2024
improve the scalability of the Private Blockchain.
The system, at first, mitigates latency arising from Non-fungible tokens (NFTs) are revolutionizing the
kernel schedulers, ensuring that the application concept of ownership by providing a secure record
consistently has access to an available core for of digital assets. However, many companies are
transaction processing. Secondly, the committee unsure of how to approach this technology and
system alleviates the network’s workload, may miss out on brand-building opportunities. To
preventing spurious transactions from monopolizing address this, the football industry offers four
network resources and impeding its efficiency. solutions for using NFTs as a marketing tool. These
Extensive experimentation is made by considering solutions include educating stakeholders about
various scenarios of transaction with CPU isolation NFTs, framing them as collectibles rather than

Blockchain 4
financial assets, leveraging influencer marketing, There is around £6,113 billion (or $7,969 billion)
and utilizing NFTs for fan engagement. With these worth of money in the world when you add up all
strategies, companies can navigate the challenges the coins and notes in circulation. However, this
and unlock the potential of NFTs in their marketing amount is constantly changing due to factors such
campaigns. as countries printing more money and fluctuations
in exchange rates. Additionally, a significant portion
Royal United Services Institute (RUSI) of money exists only in electronic form, with
Central Bank Digital approximately 96% of money in the UK existing in
Currencies and National this way. When you include electronic money in
Security: Policy bank accounts, the total comes to roughly £46,557
Considerations billion. However, it is important to note that wealth
cannot be solely measured by the amount of money
18 December 2023
in circulation, as there are many valuable assets and
Central bank digital currencies (CBDCs) have resources that do not translate directly into money.
become increasingly prominent, but there are
concerns about their potential risks and impacts on World Economic Forum
national security. CBDCs offer a digital form of How are CBDCs different from
central bank-issued fiat currency and can be retail cryptocurrencies and
or wholesale. This paper examines the international stablecoin?
security risks posed to the UK by foreign CBDCs,
09 November 2023
focusing on China’s dominance in the market, the
implications of first-mover advantage, the role of How are CBDCs different from cryptocurrencies
CBDCs in international sanctions, and the effect on and stablecoin?
the UK as a financial center. The paper
recommends increased awareness, advocacy, and CBDCs are direct liabilities of the central bank.
research to address these security threats. Image: Pexels/David McGee

Explore and monitor how Financial and Monetary

The Conversation (Spanish) Systems is affecting economies, industries and
Bitcóin, el principal activo global issues.
digital, no existe
17 December 2023 SpringerOpen
El bitcoin es un activo digital que existe en forma de The nexus between the
anotaciones en un libro de contabilidad llamado volatility of Bitcoin, gold, and
blockchain. A diferencia de las transacciones American stock markets
tradicionales, el blockchain permite mantener un during the COVID-19
registro público y seguro de las transacciones de pandemic: evidence from
bitcoin, evitando la necesidad de confiar en VAR-DCC-EGARCH and ANN
terceros. Esto ha llevado a que el bitcoin se models
considere una revolución en el mundo financiero. El 15 January 2024
sistema de blockchain utiliza un mecanismo de
This study examines the relationship between the
prueba de trabajo para evitar la falsificación de
volatility of Bitcoin, gold, and American stock
transacciones, lo que lo hace seguro y resistente a
markets during the COVID-19 pandemic. The
la manipulación. Sin embargo, también ha
findings reveal a strong correlation between Bitcoin,
generado críticas debido al alto consumo de
gold, and stock markets, with Bitcoin offering better
energía que requiere.
diversification opportunities to reduce risks in key
Try translating with Google stock markets during the pandemic. The study
The Conversation (French) suggests that investors should consider investing in
Transport aérien, croisières… secure assets like real estate property, cash, gold,
La piste des « passeports and crypto assets for risk management and
carbone » pour limiter l’impact portfolio diversification.
du tourisme
06 December 2023 Global Solutions Initiative
Improving G20+ Monetary
Si rien n’est fait pour changer nos habitudes de Cooperation In The Era of
voyage, le temps de l’industrie du tourisme pourrait CBDCS
être compté. Des « passeports carbone »
11 December 2023
pourraient-ils faire partie de la solution ?
Try translating with Google CBDCs are still a project in the making, but there
are many doubts about the economic, political, and
The Conversation societal implications of this dramatic change in the
Curious Kids: how much representation of money. These uncertainties stem
money is there in the world? from the various policy goals, operational models,
11 January 2024 design features and technology choices available to

Blockchain 5
monetary authorities. Beyond the domestic
Try translating with Google
challenges of designing and ... Read more
World Economic Forum
The post Improving G20+ Monetary Cooperation In Privacy concerns around
The Era of CBDCS appeared first on Global CBDCs – are they justified?
Solutions Initiative | Global Solutions Summit . 07 November 2023

Privacy concerns around CBDCs – are they

McGill University
justified?
How to (and not to) Regulate
Crypto Any change in technology in any industry inevitably
31 October 2023 creates new concerns. Image: Unsplash/Eduardo
Soares
Cryptocurrency can transcend borders. That’s part
of its promise, and one reason it’s so challenging to Explore and monitor how Financial and Monetary
regulate. But the notion that crypto is completely Systems is affecting economies, industries and
unregulated isn’t accurate either. global issues.
“Despite the rhetoric, most jurisdictions do
somehow regulate crypto assets, though it’s not Bruegel
always clear how,” says Ananya Kumar, associate Web3: the next internet
director at the Atlantic Council in Washington, DC. revolution
01 December 2023
“There are some glaring gaps, but experimentation
with regulation is happening in real-time, and it’s Web3 is a new paradigm that could define a new
happening everywhere.” internet era. It is based on blockchain, a technology
through which a network of computers – called
At the 2023 Cryptocurrency Conference at nodes – can execute and validate changes to a
Desautels, Kumar led a session on the state of the public ledger. Blockchains can be used to record
regulatory landscape. The theme of this year’s ownership of goods and claims to services, and
event was ‘How to (and not to) regulate crypto’, because this information is public, ownership can
and with the high-profile collapse of cryptocurrency be verified by anyone. This could mark a shift that
exchange FTX still headline news, it spoke to the will disrupt current digital business models by
zeitgeist. Staged on September 29 and organized offering firms and consumers new types of
by Desautels professors Katrin Tinn and David opportunities. To get the most out of this upcoming
Schumacher, the conference brought together digital revolution, however, new rules, legal
participants from twenty-eight different guidelines, marketing strategies and user
organizations, including universities, regulatory awareness need to be established.
public policy institutions, and the private sector.
The Conversation (Spanish)
Royal United Services Institute (RUSI) El mundo es un pañuelo
Too Fast, Too Furious? 09 November 2023
Cryptocurrency as Legal
Tender Es posible conocer la distancia que nos separa de
04 December 2023 cualquier persona del mundo. Las redes sociales
han acortado distancias, y ya podemos hablar de
Too Fast, Too Furious? Cryptocurrency as Legal menos de seis grados de separación.
Tender
Try translating with Google
Main Image Credit Not without risk: attempts to SpringerOpen
adopt cryptocurrency as legal tender hold lessons Have the extraordinary
for other countries contemplating such a move. circumstances of the
Image: jd-photodesign / Adobe Stock COVID-19 outbreak and the
Russian–Ukrainian conflict
What can countries learn from recent experiments
impacted the efficiency of
in adopting cryptocurrency as a legal tender?
cryptocurrencies?
04 January 2024
The Conversation (French)
Contenu des médias sociaux Cryptocurrencies have been found to be weakly
en temps de guerre : un guide efficient but exhibit varying levels of efficiency
d’experts sur la manière across different currencies. The COVID-19
d’éviter la violence sur vos fils pandemic and the Russian-Ukrainian conflict play a
d’actualité role in the degree of efficiency, with a trend towards
08 November 2023 inefficiency in most cryptocurrencies except for
Ethereum Classic and Ripple. The degree of
Quelle que soit l’approche que vous adoptez pour inefficiency was higher during the COVID-19
gérer vos flux, restez prudents et sceptiques. pandemic compared to the Russian-Ukrainian

Blockchain 6
conflict. This study highlights the importance of Continued
adjusting asset allocations during normal and
stressful market periods for investors and portfolio The Conversation
diversifiers.
Bitcoin: four reasons why the
price should surge in 2024
LSE Business Review 05 January 2024
Non-fungible tokens pose
new challenges to art and Bitcoin’s price is expected to surge in 2024 for
media law several reasons. Firstly, the US Securities Exchange
10 October 2023 Commission (SEC) may approve spot bitcoin
exchange-traded funds (ETFs), making it easier for
The arrival of non-fungible tokens (NFTs) is mainstream investors to enter the market.
empirically democratising art. The technology is Additionally, potential interest rate cuts could make
being adopted quickly. Even elements of video bitcoin more attractive as a hedge against
games, lines of code, images, GIFs, etc., are traditional currencies losing value. Furthermore, the
undergoing a new form of commercialisation and upcoming ”halving” event in 2024, where the
can be considered art. Isabelle Beyneix writes that reward for miners is halved, could lead to a supply
NFTs present a challenge for legal experts, in a shortage and drive up prices. Overall, these factors
context where copyrights are difficult to … point to a bullish outlook for bitcoin in 2024.

Blockchain 7
 2 Strategic context
The key issues shaping Blockchain.

The following key issues represent the most strategic trends shaping the topic of Blockchain. These key
issues are also influenced by the other topics depicted on the outer ring of the transformation map.

FIGURE 1 Transformation map for Blockchain

2.1 Blockchain and Leveraging Data

The technology can provide infrastructure for data sharing, exchange, and ownership

Data is the lifeblood of the Fourth Industrial Revolution, with 2.5 quintillion bytes of data now being produced
daily amid some of the most profound technological change in history. To date, many large, centralized
companies have been able to leverage data to target online advertising, sell products, or to simply
re-package data (including personal internet user data) for sale to other companies - which calls for serious
ethical considerations. Many prohibitive siloes remain in critical areas - for example, in the application of
genomic data to attempt to treat rare diseases - due to a combination of regulation and proprietary oversight.
The features that make blockchain technology unique may enable entirely new models for the valuation of

Blockchain 8
 data, its consumption, and means of compensating others for it. The DataNet project hosted at University
College London, for example, is exploring related technical specifications for addressing, data tagging,
permissioning, and more. These aspects are all key to facilitating data marketplaces and exchanges, where
entities can freely share data and people can potentially be compensated for its use.

Blockchain can be especially powerful in this regard when combined with other Fourth Industrial Revolution
technologies. Ant Group, the large Chinese financial services company, is for example combining the Internet
of Things, artificial intelligence, and blockchain in order to try to provide secure, integrated services in diverse
markets around the world; while Internet of Things devices are able to provide large amounts of valuable
data, artificial intelligence is used to process that data, and blockchain serves as a trust-enabling layer of
infrastructure. However, using blockchain for data transactions can create technological, institutional, and
ethical problems. In terms of technology, privacy can be breached during “off-chain” data integration and
analysis (even if data “on-chain” is safe). From an institutional point of view, containing data in a blockchain
might be technically impossible if it has been collected from multiple, non-standardized platforms or
countries. And, in terms of ethics, a social consensus is required on what constitutes adequate privacy
protections, fair access for both people and companies aiming to exploit their data, and just rules to dictate
sharing.

Related topics: Values, Data Science, Health and Healthcare, Internet of Things, Media, Entertainment and
Sport, Artificial Intelligence, Fourth Industrial Revolution, Precision Medicine, Future of Consumption, Internet
Governance

2.2 Blockchain Policy, Regulation and Law

Places that have adopted relatively accommodating stances, like Switzerland, have seen an influx of
companies

The decentralized nature of blockchain technology can easily come into conflict with regulations requiring
centralized monitoring, evaluation, and decision-making - especially when it comes to sensitive financial
transactions. In recognition of this potential conflict, some countries have been creating regulatory sandboxes
that enable experimentation and, potentially, more agile policy-making. For example, the Financial Conduct
Authority (FCA) in the United Kingdom launched a regulatory sandbox in 2017 in order to enable more
innovative businesses to test their products with real people albeit with safeguards in place. This created an
opportunity for the authority to learn about policy and regulatory needs in an experiential, real-time way, and
adapt accordingly (other countries including Singapore, South Korea, and India have since emulated this
sandbox model). In the 2020 cohort of the FCA Sandbox, six were participants focused on distributed ledger
technology (a category that includes blockchain) and digital assets. However, particularly given the borderless
and distributed nature of distributed ledger technology, which enables the simultaneous recording of
transactions in in multiple places, greater international cooperation with such government efforts is called for.

In a repeat of the current situation when it comes to the global regulation of financial and monetary systems,
fragmentation has created several barriers for blockchain-focused companies. This can exist even within a
single country; many different states across the US, for example, taking varying approaches to regulating the
use of the technology. And, beyond the technology itself, blockchain’s introduction and enabling of entirely
new business models has brought regulators in charge of overseeing a functioning private sector into
unchartered territory. Those places that have adopted relatively crypto-friendly stances, such as Switzerland,
have attracted an influx of companies - a “Crypto Valley” has formed around the Swiss city Zug, for example,
and many consortia including the Libra Association have incorporated as Swiss-based entities. Ultimately,
the foundational nature of blockchain technology means that it intersects with an array of industries, like
payments and supply chains, each of which has its own intricate set of policies and regulations. It remains to
be seen whether these industries will be able to adapt sufficiently to make the best use of the technology.

Related topics: Financial and Monetary Systems, Justice and Law, Banking and Capital Markets, Innovation,
Internet Governance, Insurance, Switzerland, Global Governance, The Digital Transformation of Business,
Agile Governance

2.3 Tokenization and Digital Assets

Digital representations of value on blockchain open up new possibilities for finance and asset ownership

Digital currency - perhaps the best-known application of blockchain technology - has a wide variety of

Blockchain 9
 potential uses. Bitcoin, for example, is viewed by many as a potentially critical store of value; the payments
company Square said it invested $50 million in the cryptocurrency in 2020 “as in instrument of economic
empowerment,” around the same time that Fidelity Investments launched its first Bitcoin fund. Central Bank
Digital Currencies (CBDCs) are meanwhile being explored for everything from consumer payments to
inter-bank settlements. It is estimated that more than 40 central banks have or are exploring CBDC issuance,
with China’s on track to be the first. One particular form of digital currency, “stablecoins,” is pegged to a fiat
currency and is being closely watched not least due to Facebook’s announced plans to issue stablecoins
including a “Libra” coin that is a composite of others. In addition, a completely new funding model, initial coin
offerings (ICOs), has increased the public visibility of blockchain and digital assets as people have become
able to buy into companies via coins representing different entitlements.

The intersection of automation and digital assets has enabled a so-called decentralized finance, or “DeFi,”
ecosystem - which can potentially automate many of the processes deployed by centralized (and often
costly) financial intermediaries for the purposes of lending, exchanges, and derivatives. Blockchain
technology can also introduce new asset management models, if and when tangible and movable properties
are registered and tokenized - that is, mapped with digital references to valuable or sensitive elements for
security purposes. For example, fine art and real estate could each theoretically be tokenized, making the
management and ownership of these potentially pricey assets possible “on-chain.” In such a system,
professional agencies could be relied upon to oversee the digital management of properties and shape
specialized markets for their trading, which could function much like existing financial markets. However, new
and sophisticated rules are needed for the next-generation, blockchain-based economy - and they will have
to be adequately enforced - in order to help ensure the stability of digital markets and to bolster the legal
protection of consumers.

Related topics: Banking and Capital Markets, Internet of Things, Financial and Monetary Systems, Arts and
Culture, Internet Governance, Civic Participation, Agile Governance, Cybersecurity, The Digital Economy,
Innovation, Fourth Industrial Revolution, Real Estate

2.4 Blockchain, Security and Interoperability

The technology’s unique aspects and vulnerabilities must be considered during the design process

One of the major selling points of blockchain is the ability to converge it with other core technologies of the
Fourth Industrial Revolution in creative ways. Starbucks, for example, announced plans to develop an
artificial intelligence-based demand forecast and logistics management system called Deep Brew. The
artificial intelligence aspect of the system relies on data aggregated through the Internet of Things from the
coffee company’s equipment and products, which can then be traced transparently through blockchain.
Many governments have begun lending support to businesses to pursue such efforts by funding and
developing the infrastructure necessary for smart cities and smart factories. As with most other technologies,
the ultimate level of security that is afforded by blockchain technology boils down to decisions made during
the design process. While many aspects of blockchain design, such as evaluating trade-offs among the
confidentiality, integrity, and availability of data, are similar to or the same as those that apply to other
cybersecurity evaluations, blockchain also involves often unique, added elements such as decentralization,
consensus mechanisms, cryptography, and smart contracts.

Given the relatively early stage of the technology’s development, our understanding of blockchain’s
vulnerabilities and related best practices grows every day. Its nascent state of development is an important
consideration when it comes to scaling applications built on top of blockchain - especially those containing
sensitive data. Another important technical consideration where blockchain is involved is interoperability.
Currently, the options for communicating between blockchain systems are limited - which means often
replicating or creating new siloes for information-sharing. There are several efforts underway to explore
potential new commercial interoperability solutions, such as such as the open-source project Polkadot, the
decentralized Cosmos network, and the Interledger network of exchanges, though they are all still at relatively
early stages. Meanwhile standardization efforts, which are key to achieving cross-protocol information
sharing, are also relatively immature when it comes to blockchain - and so far suffer from both limited
coordination and uptake. In addition, blockchain interoperability needs to be envisioned beyond the
infrastructure layer, and should involve platform considerations, like consensus mechanisms and
authentication, in addition to business aspects like commercial models and legal frameworks.

Related topics: The Digital Transformation of Business, Supply Chain and Transport, Internet of Things,
Cybersecurity, Cities and Urbanization, Advanced Manufacturing, Justice and Law, Electricity, Infrastructure,
Artificial Intelligence, Energy Transition

Blockchain 10
2.5 Smart Contracts and Automation
Blockchain has the potential to change everything from production to lifestyles

“Smart” contracts are blockchain technology-based and self-executing. That means that they have
conditions embedded within their underlying code - formulated as ‘if X happens trigger Y,’ for example - which
makes the resulting interactions immutable and censorship-resistant, some of the primary characteristics that
have helped to make blockchain distinct and desirable. This ability to automate has shown particular promise
in a variety of areas, from the functioning of supply chains to providing insurance. When combined with
Internet of Things (IoT) devices, for example, self-executing contracts can facilitate the automation of tasks
that were previously manual, such as receiving a series of necessary signatures and verifications. One
specific potential example is travel insurance that guarantees a refund for a cancelled flight - currently, this
can be a lengthy process that involves multiple phone calls, filing a claim, and other time-consuming tasks.
By using smart contracts, however, a reimbursement could theoretically be automatically issued once
pre-populated data provided by the airline reflects that the flight in question was indeed cancelled.

Smart contracts are a critical element of “decentralized applications,” or DApps, which by virtue of running
on blockchain can be free from the interference of a single authority or entity (as opposed to an application
like Uber, for example, which is run by one company). They are also core to decentralized autonomous
organizations (DAOs), which are controlled by members without a hierarchical structure, and to the
decentralized finance movement (DeFi) - which advocates for a system that is not reliant on intermediaries
like banks, and could play a significant role in the future of smart factories and smart cities. However,
technical and governance gaps remain. For example, the minimization or potential elimination of human
involvement makes data integrity crucial, though a large amount of data entry remains subject to error -
especially when it comes to cataloguing “off-chain” activities. Until there can be absolute confidence in the
underlying data, automation can lead to costly mistakes. In addition, the legal enforceability of smart
contracts remains in question, particularly given regulatory fragmentation on the subject.

Related topics: Cybersecurity, Trade and Investment, Advanced Manufacturing, Future of Computing,
Supply Chain and Transport, Banking and Capital Markets, Global Risks, Innovation, Artificial Intelligence,
Insurance, Sustainable Development, Fourth Industrial Revolution, Mobility

2.6 Blockchain and Digital Identity

Current systems for identity management are siloed and inefficient, and call for new models

About one billion people around the world remain without the official proof of identity often crucial for
receiving services and benefits - and those with official proof often have little-to-no control over how it is
being managed. The concept of digital identity has therefore become increasingly important for many
governments and institutions, given the ways it can potentially help knock down barriers when it comes to
everything from property ownership, to political participation, to receiving fair access medical care and
services. The COVID-19 pandemic has only brought issues related to identity management further into focus
- as pandemic relief and stimulus payments, medical records, and address information all generally reside in
separate systems with no means of interoperating. Many governments are therefore now exploring the use of
blockchain technology to enable more seamless and secure systems for identity management. Some
countries, such as Estonia, had already become leaders in the use of blockchain-based digital identity; an
estimated 98% of Estonian residents have a national ID-card that functions as a travel ID, health insurance
card, proof of identification for banking, and more.

In Canada, blockchain technology has been used to credential over 500,000 businesses through its
“Verifiable Organizations Network.” In any country, adequate oversight and management are central to the
use of blockchain - not least because unique and consistent identifiers are prerequisites for decentralized
services. For example, blockchain-based currency transactions are routed via public addresses that
represent a transacting entity, and signed off on via a unique private key (a cryptography tool used to encrypt
and decrypt code). However, the anonymity this enables may come into conflict with regulations related to
identification that are designed to minimize illicit transfers of funds. As a result, blockchain-based digital
identity systems still face considerable technological, managerial, and regulatory issues. In addition to the
scalability considerations first required in order to support billions of individual users, data integrity will be
critical - especially given the potential for administrators to interact with a large volume of relatively unsecure,
“off-chain” data. Regulatory models will likely need to adapt, in order to accommodate new models of
identity and prevent adverse related consequences such as social exclusion or widening digital divides.

Blockchain 11
 Related topics: Corruption, Internet Governance, Fourth Industrial Revolution, Future of Computing, Global
Health, Retail, Consumer Goods and Lifestyle, Financial and Monetary Systems, Innovation, The Digital
Economy, Digital Identity

2.7 Decentralized Governance and New Models

The distributed nature of blockchain can facilitate new ways of doing business

In order to make the most of blockchain technology, organizations will have to collaborate. In an
acknowledgement of this fact, there has been a proliferation of industry consortia dedicated to blockchain
exploration and implementation. These groups are often collaborating to an unprecedented degree, even
drawing together rival businesses determined to cooperate in order to truly unlock the full potential of
technology through new governance models. To-date, almost 400 such organizations have been registered,
with several seeming to appear every month. The Blockchain Insurance Industry Initiative (b3i), for example,
has brought together 20 key industry players such as Allianz, Liberty Mutual, and the China Pacific Insurance
Company in order to explore and deploy the technology in different ways. The consortium’s core activities
include developing the standards and infrastructure necessary to facilitate data-sharing across separate
organizations. However, collaborative models also raise new questions about intellectual property ownership,
shared liability, data sharing, and more. To address such questions, consortium models generally require
clear communication and alignment on roles and responsibilities.

Blockchain technology can enable decentralized autonomous organizations, also known as “DAOs” - which
operate on code-based rules and are intended to be controlled by members without a hierarchical structure.
These organizations are designed to provide a secure, digital ledger in a way that eliminates the need for a
third party to approve or warehouse a transaction or agreement - so that parties could securely sign and
execute a contractual work agreement, for example, without even necessarily knowing one another’s identity.
By enabling the re-thinking of the foundations of businesses and organizations from the ground up, there
may be opportunities to consider new incentive structures. For example, traditional organizations have faced
the “principal-agent” problem, where the decisions of front-line workers may not align with the interests of
top-level decision-makers. Decentralized autonomous organizations present the opportunity to integrate
demand, decision-making, and production in ways that enable an organization to adapt in a more nimble and
aligned manner. However, the anonymity provided by this decentralized means of decision-making can come
into conflict with corporate governance rules and regulations.

Related topics: Education, Corporate Governance, Justice and Law, Global Governance, Social Protection,
Future of Work, Civic Participation, Innovation, Agile Governance, The Digital Economy

2.8 Blockchain and Cryptocurrency Climate Impact

Bitcoin’s considerable carbon footprint is problematic, but it could ultimately boost the use of renewables

When the price of Bitcoin increases, it tends to do two things: buoy interest in the blockchain-based
cryptocurrency, and raise concerns about its carbon footprint. The process of “mining” cryptocurrencies and
maintaining them on a public ledger generally involves intensive, around-the-clock computing - which
consumes considerable amounts of electricity. As a result, according to one frequently-cited estimate, each
Bitcoin transaction accounts for a carbon footprint equivalent to more than 750,000 swipes of a Visa card.
The technology’s reliance on copious amounts of electricity makes the source of that electricity crucial. Given
that many cryptocurrency mining networks are based in China, an economy that accounts for much of the
world’s coal consumption, critics and sustainability-focused investors have become wary. That means even
those mainstream institutions that might want to invest in Bitcoin may be dissuaded, given the increasing
importance to many investors of sustainability. As Bitcoin and the notion of cryptocurrencies generally
become more popular (Bitcoin’s price rose by 300% in 2020), it generates increasingly heavy energy use.

In response to these concerns, some have pointed out that a significant amount of Bitcoin is mined using
more environmentally-friendly energy sources such as hydro or nuclear. In addition, the argument has been
made that if the same investors eager to add something like gold to their portfolios are avoiding Bitcoin, that
is somewhat hypocritical - and that there is a relative lack of equivalent scrutiny of other, arguably even more
wasteful applications that consume large amounts of energy. Even some of the staunchest critics have
acknowledged that if its energy sources become greener, Bitcoin could become far less of a sustainability
problem. In late 2020, the payments technology company Square announced a “Bitcoin Clean Energy

Blockchain 12
Initiative,” which has $10 million in backing to support companies that help drive the adoption of renewables
related to the cryptocurrency. As part of that announcement, Square CEO Jack Dorsey said his company
believes the cryptocurrency will eventually be powered completely by clean power in a way that eliminates its
carbon footprint, and helps drive the global adoption of renewables.

Related topics: Future of the Environment, Sustainable Development, Economic Progress, Banking and
Capital Markets, The Net Zero Transition, Financial and Monetary Systems, Climate Indicators, Climate
Change, Mining and Metals, Electricity

Blockchain 13
3 Further exploration
Explore the latest World Economic Forum reports related to Blockchain.

19 October 2023

Evolution of Non-Fungible Tokens

25 April 2023

Blockchain for Scaling Climate Action

Blockchain 14
 References
1. Cities Today, ”Baltimore to track vacant properties with blockchain”: cities-today.com

2. Frontiers in Computer Science, ”Enhancing computational scalability in Blockchain by leveraging

improvement in consensus algorithm”: www.frontiersin.org

3. Kellogg School of Management, ”Crypto Had a Brutal Year. What Comes Next?”:
insight.kellogg.northwestern.edu

4. LSE Business Review, ”Four solutions from football for novel brand experiences with
non-fungible tokens (NFTs)”: blogs.lse.ac.uk

5. Royal United Services Institute (RUSI), ”Central Bank Digital Currencies and National Security:
Policy Considerations”: rusi.org

6. The Conversation (Spanish), ”Bitcóin, el principal activo digital, no existe”: theconversation.com

7. The Conversation (French), ”Transport aérien, croisières… La piste des « passeports carbone »
pour limiter l’impact du tourisme”: theconversation.com

8. The Conversation, ”Curious Kids: how much money is there in the world?”:
theconversation.com

9. World Economic Forum, ”How are CBDCs different from cryptocurrencies and stablecoin?”:
www.weforum.org

10. SpringerOpen, ”The nexus between the volatility of Bitcoin, gold, and American stock markets
during the COVID-19 pandemic: evidence from VAR-DCC-EGARCH and ANN models”:
jfin-swufe.springeropen.com

11. Global Solutions Initiative, ”Improving G20+ Monetary Cooperation In The Era of CBDCS”:
www.global-solutions-initiative.org

12. McGill University, ”How to (and not to) Regulate Crypto”: delve.mcgill.ca

13. Royal United Services Institute (RUSI), ”Too Fast, Too Furious? Cryptocurrency as Legal
Tender”: rusi.org

14. The Conversation (French), ”Contenu des médias sociaux en temps de guerre : un guide
d’experts sur la manière d’éviter la violence sur vos fils d’actualité”: theconversation.com

15. World Economic Forum, ”Privacy concerns around CBDCs – are they justified?”:
www.weforum.org

16. Bruegel, ”Web3: the next internet revolution”: www.bruegel.org

17. The Conversation (Spanish), ”El mundo es un pañuelo”: theconversation.com

18. SpringerOpen, ”Have the extraordinary circumstances of the COVID-19 outbreak and the
Russian–Ukrainian conflict impacted the efficiency of cryptocurrencies?”:
jfin-swufe.springeropen.com

Blockchain 15
19. LSE Business Review, ”Non-fungible tokens pose new challenges to art and media law”:
blogs.lse.ac.uk

20. The Conversation, ”Bitcoin: four reasons why the price should surge in 2024”:
theconversation.com

21. World Economic Forum, ”What the GDPR can teach us about AI regulation”: www.weforum.org

22. World Economic Forum, ”Central banks’ rate push a risk to growth, and other economy stories
to read this week”: www.weforum.org

23. World Economic Forum, ”Is your industry at risk of a cyberattack?”: www.weforum.org

24. London School of Economics and Political Science, ”Global Governance in an Age of Fracture –
LSE Phelan US Centre Event Review”: blogs.lse.ac.uk

25. The Conversation, ”US regulators continue crypto crackdown – but here’s why the latest
charges are different”: theconversation.com

Blockchain 16
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↓ A leading expert presenting

a transformation map at our
Davos Annual Meeting

Blockchain 17
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Blockchain 18
Contributors
World Economic Forum Korea Advanced Institute of Science and
Clarisse Awamengwi Technology (KAIST)

Claire Buonocore Kibae Kim,

Senior Researcher
Abhinav Chugh,
Content and Partnerships Lead

Bryonie Guthrie,
Practice Lead, Foresight and Organizational
Transformation

James Landale,
Head of Content and Partnerships

John Letzing,
Digital Editor

Dhwani Nagpal,
Content and Partnerships Specialist

Sandra Waliczek,
Lead, Blockchain and Digital Assets

Acknowledgements
Content Providers featured in this briefing

Bruegel

Cities Today

Frontiers in Computer Science

Global Solutions Initiative

Kellogg School of Management

LSE Business Review

McGill University

Royal United Services Institute (RUSI)

SpringerOpen

The Conversation

The Conversation (French)

The Conversation (Spanish)

World Economic Forum

Blockchain 19
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