Blockchain is on the McKinsey 2024 Top Tech Trends list.

In its latest report, “Technology Trends Outlook 2024,” McKinsey & Company includes significant technological developments as one.

The report highlights the transformative potential of blockchain in the digital space and explores its role in tokenization.

Exploring the potential of the intersection of AI and Blockchain

The consultancy closely links blockchain's popularity to the report's broader theme of digital trust and cyber security. Real-life artificial intelligence (AI) and blockchain applications are specific points in McKinsey's analysis.

When analyzed separately, some points in the report point to the potential of AI and blockchain disruption. For example, blockchain can enhance the capabilities of AI by providing secure, transparent data storage and facilitating complex transactions. This synergy can be seen in a variety of applications, from AI-driven financial analytics to securing data sharing in healthcare.

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Moreover, integrating blockchain with generative AI technologies is driving innovation across industries. Companies like IBM are developing tools to help mitigate AI risks, such as bias and privacy concerns, by leveraging blockchain's secure infrastructure. This collaboration ensures that AI technologies can operate with greater transparency and accountability.

Nuro Serafim, Managing Partner at 3 Comma Capital, also supports the potential of AI and blockchain integration. He added that the collaboration between these technologies will improve the smart grid and impact the energy sector.

“However, there is a clear challenge for entrepreneurs, VC investors, to force an unrealistic integration of these two technologies with the capital needed to be at the forefront of developments. Therefore, investors, i.e. professional investors, need to be equipped with the knowledge to sift through all these complexities and do due diligence.” Seraphim explained to BeInCrypto.

From Pilot to Mainstream: Tokenization's Journey to Financial Integration

Additionally, the report highlights that tokenization is one of the real-life blockchain applications. Tokenization, which involves creating digital representations of real-world assets (RWAs) on the blockchain, is moving from pilot projects to widespread distribution.

McKinsey's report looks at how a number of financial firms are making key advances in this sector. For example, Citibank's Citi Token services convert customer deposits into digital tokens, enabling instant cross-border payments and liquidity management.

In addition, Franklin Templeton Stellar and Polygon used public blockchain to create the first US-registered mutual fund – Franklin OnChain US Government Fund (FOBXX). Likewise, Societe Generale's issuance of tokenized green bonds on the Ethereum network is a major milestone. These products offer blockchain's potential to transform traditional financial instruments.

“Tokenization enhances transparency, integration and programmability, allowing financial institutions to improve operational efficiency, increase market liquidity and create new revenue opportunities. […] Increasing consumer awareness and investor interest will further accelerate this trend,” said Matt Higginson, McKinsey's value partner leader in Boston.

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While the potential of blockchain is enormous, the report acknowledges the challenges associated with its adoption. These include integration with existing systems, regulatory uncertainties and the need for robust cyber security measures. However, McKinsey emphasizes that organizations can overcome these hurdles with top-down leadership and strategic investments to take full advantage of blockchain.