With a rise in blockchain utilization in the current world, it is beneficial to be updated with the current scenario of the blockchain market. The Blockchain market size is expected to reach $67.4 billion by 2026 at a Compound Annual Growth Rate (CAGR) of 68.4% during the forecast period.
In the year 2021, North America was estimated to hold the largest share of the global blockchain market. During the forecast period, the APAC region is expected to grow at the highest CAGR.
Opportunities in the Blockchain Market
- The high growth rate of the blockchain market can be attributed to increasing venture capital funding, the convergence of blockchain with advanced technologies like AI, ML, and IoT, rising government initiatives, and the high adoption of blockchain-based solutions for various uses.
- It includes the platforms and services of which the services segment is expected to grow at the highest CAGR.
- The expansion into geographic regions like MEA (Middle East) and APAC (Asia Pacific) regions along with the large-scale implementation of the blockchain technology.
- The market is expanding with the major end-users of blockchain-like banking and financial services, retail and e-commerce, and government.
Let’s Have a Look at the Market Dynamics
1. The rise in Venture Capital Funding and Investments in blockchain technology - The Driver
Over the last 2-3 years, this industry has witnessed tremendous growth and massive popularity with the emergence of various business applications based on exchanges, payments, documentation, smart contracts, and digital identity. Names of some of such startups are Symbiont, Bitfury, CiveQ, Fetch.AI, and QubiTech. The investments in this industry were tripled by venture capitalists in 2018. With regular announcements both at the startup level and by the top players in the various industries, 2018 was a crucial year for both blockchain and cryptocurrency.
Example: A VC firm founded in 2015 which primarily invests in cryptocurrency, blockchain, and fintech companies - Digital Currency Group has completed approximately 197 blockchain and crypto deals till August 2021; with this one can easily figure out the increasing craze of this industry among the masses.
2. Regulatory uncertainty - The Restraint
In the current transforming transaction systems, regulatory acceptance is one of the biggest challenges, some countries have even banned the use of Initial Coin Offerings (ICOs). The regulatory bodies must understand what is absent in the current regulations and their impact on technological applications.
As the overall technology cannot be regulated and only the blockchain technology’s use cases can be, such as smart contracts, documentation, digital identity, and payments, which makes the regulators are doubtful about the potential of the Blockchain IoT technology. The common standards for blockchain technology are being worked upon by financial institutions. This market is highly impacted because of such uncertain regulations.
3. The amalgamation of IoT, Blockchain, and AI - The opportunity
It has great potential in various areas like banking, cybersecurity, and IoT. The IoT devices are rising at a large scale in several application areas of smart transportation, smart city projects, autonomous vehicles, smart grids, and smart homes, therefore many enterprises are introducing newer technology use cases through such devices.
By 2025, the total IoT connected devices are expected to reach $75.44 billion (according to Statista), making these devices to be victims of security vulnerabilities such as botnet attacks, insecure ecosystem interfaces, and others. With the inclusion of blockchain in such IoT devices, the data breach is prevented making IoT much safer and smarter.
4. Security, Privacy, and Control
The major reason for the lesser deployment of cryptographic solutions is the privacy problems in blockchain solutions. Though this technology has the potential to transform and revolutionize transactions, still these privacy challenges need to be overcome for experiencing the benefits.
For example, cryptocurrency assets worth $24 million were stolen by hackers from Harvest Finance, a web portal through which users invest in cryptocurrencies. In 2020, it was revealed by the CipherTrade cryptocurrency forensics and blockchain threat intelligence division that approximately $100 million had been stolen from Decentralized Finance (DeFi).
Such instances make this technology to be considered as vulnerable to security problems.
Segmentation of the Market
Based on Component
- Blockchain-as-a-Service (BaaS), is rising with the increase in the enterprise usage of cloud-based services like crowdfunding, crypto wallet development, smart contracts, and others.
- Platform/Solution, allows the application developers and digital ledger network to design customized distributed ledger (DLT) networks for the end-users.
Based on Type
- Private solutions and services enable businesses to change regulations and reverse transactions at a lower transaction cost.
- The public segment is expected to grow at the fastest CAGR.
- The consortium is also called a federated digital ledger. It offers collaborated platform to facilitate innovation across enterprises.
Based on Deployment
- Pilot
- Production
- Proof of concept
Based on Application
- Payments
- Digital identity
- Supply chain management
- Smart contracts, and others.
Based on Industry
- BFSI
- Government
- Energy & Utilities
- Manufacturing
- Healthcare and life sciences
- Travel and transportation
- Telecom
- Retail & consumer goods
- Media & entertainment, and others.
Conclusion
Among the emerging and growing markets, one of the booming markets is the Blockchain Market. It has its current expansionary plans in MEA (Middle East) and APAC (Asia Pacific) regions, in which the APAC region is expected to grow at the highest CAGR.
It's market dynamics that include the driver as the rise in VC funding and investments, the restraint as the regulatory uncertainties along with certain aspects of it that makes the regulators unsure of the prospects of the blockchain IoT technology, the opportunity as the amalgamation of IoT, Blockchain, and AI, and the drawbacks in the form of security problems.
With all of this knowledge, we can conclude that this market is growing and will flourish in the future keeping in mind the increasing fad.
Written By: Devangi Sharma
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