The global blockchain technology market size was valued at USD 3.67 billion in 2020. It is expected to expand at a compound annual growth rate (CAGR) of 82.4% from 2021 to 2028. Blockchain has emerged as a highly promising technology in the IT domain. It is an open, immutable, distributed public ledger that can be accessed by several parties involved in the transaction and acts as a universal depository of all transactions between the involved parties. The increasing acceptance of cryptocurrency worldwide is one of the major factors driving the market growth. Commercial and central banks across the world are now using blockchain technology for payment processing and issuing of their digital currencies. The technology enables cross-border payments that are less expensive and faster as compared to traditional systems.
The remittance cost within the blockchain is 2% to 3% of the total amount as compared to other third parties as blockchain does not require third-party authentication. Various financial service and solution providers are entering into partnerships with blockchain solution providers to enhance their cross-border payment processes. For instance, in September 2019, Mastercard announced its partnership with R3, an enterprise blockchain software provider, to develop a blockchain-enabled cross-border payment solution.
The traditional stock exchange involves a lot of bureaucracy and stages and thereby, requires three days for processing. However, blockchain technology’s decentralization nature in banking removes unnecessary intermediates and enables trade to be run on computers globally. At the same time, blockchain helps improve performance by reducing the redundancy of information in trading transactions. Various financial service providers use blockchain technology for enhancing their stock exchange processes. For instance, in January 2021, SBI Holdings, based in Japan, partnered with Sumitomo Mitsui Financial Group to launch a digital stock exchange in the country by 2022.
The increasing global demand for digital payment systems is driving market growth in the current days. Digital payment relies on multiple parties to process transactions, including merchant banks, retail banks, card issuers, and payments software companies, which creates the demand for blockchain technology to secure the transactions. Simultaneously, the reliability of users on trusted institutions to complete their day-to-day electronic transactions is also creating the demand for blockchain technology.
The blockchain technology market has witnessed growth during the COVID-19 pandemic. Blockchain technology plays a vital role in developing a platform for managing the COVID-19 pandemic. Various hospitals are using blockchain technology for tracking the COVID-19 vaccine. Two Hospitals, in Warwick (London) and Stratford-upon-Avon, are using blockchain technology to monitor the storage of the temperature-sensitive COVID-19 vaccine. However, the absence of dedicated regulations to regulate the use of blockchain for fin-tech applications is restraining the market growth.
The public cloud segment dominated the market in 2020 and accounted for more than 60.0% share of the global revenue. A public cloud blockchain is a multi-tenant environment where the computing space is shared with several other clients. Various government bodies across the world are integrating conventional systems with cloud technologies in the current days. The demand for public cloud is high as it provides cost competitiveness to enterprises.
The private cloud segment is anticipated to register the highest CAGR over the forecast period. Private cloud services include the provision of dedicated infrastructure and resources exclusively for organizations. A private cloud enables companies to reverse the transactions at cost-effective transaction rates. This is driving the growth of the segment. Furthermore, the rise in the adoption of private cloud by large enterprises and small and medium enterprises is one of the major factors driving the segment growth.
The infrastructure and protocols segment dominated the market in 2020 and accounted for more than a 62.0% share of the global revenue. The increasing demand for blockchain standards and protocols such as Ethereum, Openchain, and Hyperledger is driving the segment growth. Protocols enable blockchain developers to develop distributed and customized networks for their customers. Thus, the benefits offered by the infrastructure and protocols are contributing to the segment growth.
The middleware segment is expected to register the highest CAGR over the forecast period. A middleware tool is mainly used in the healthcare sector to automate the authentication of clinical data. Growing investments in the healthcare sector are expected to drive the segment growth. Middleware tools track the laboratory performance metrics, which is also one of the factors driving the growth of the segment.
The payments segment dominated the market in 2020 and accounted for more than 44.0% share of the global revenue. Blockchain technology improves payment system efficiency, minimizes operating costs, and offers transparency. These benefits provided by blockchain technology are increasing its use in payment solutions, thus, driving the segment growth. At the same time, blockchain reduces the need for middlemen in payment processing, which is also a major factor driving the segment growth.
The smart contracts segment is anticipated to register the highest CAGR over the forecast period. The terms and conditions of smart contracts deployed over a blockchain network cannot be altered. Blockchain technology makes it difficult for third parties to tamper or hack the data in contracts. Thus, companies across different industry verticals are adopting blockchain-based smart contracts to reduce the costs of execution, verification, fraud prevention, and arbitration.
Enterprise Size Insights
The large enterprises segment dominated the market in 2020 and accounted for more than 68.0% share of the global revenue. Large enterprises operating in sectors such as insurance, financial services, healthcare, and supply chain are using blockchain technology to improve their efficiency in operations. Various large enterprises such as BBVA, Intesa Sanpaolo, Barclays, and HSBC are using blockchain technology to streamline their KYC and fund processes. Large enterprises have access to adequate capital and different assets to adopt new technologies introduced in the market.
The small & medium enterprise segment is anticipated to register the highest CAGR over the forecast period. Small and medium enterprises face difficulties in scaling their tasks such as financing, processing payments, and selecting ancillary services essential for global expansion. Blockchain technology helps them reduce issues in the areas of subsidizing and exchanging accounts. At the same time, secure and safe information exchanges and smart contracts offered by blockchain technologies help small and medium enterprises streamline supply chains, thus, driving the segment growth.
The financial services segment dominated the market in 2020 and accounted for more than 38.0% share of the global revenue. Financial services use blockchain technology for managing financial transactions taking place in businesses. Blockchain technology provides secured and efficient transactions and this is driving the demand for the technology in financial services. The technology is expected to be widely adopted in this vertical owing to factors such as rising cryptocurrencies, high compatibility with the industry ecosystem, rapid transactions, Initial Coin Offerings (ICOs), and reduced total cost of ownership.
The healthcare segment is anticipated to register the highest CAGR over the forecast period. The increasing number of regulations for protecting consumer data is increasing the adoption of blockchain technology in the healthcare sector. Governments across the globe are implementing strict regulations to protect consumer information owing to the growing incidents of data theft and breach. For instance, the European Union data protection law, “General Data Protection Regulation (GDPR)”, became effective in May 2018. GDPR aims to safeguard EU citizens from privacy and data breaches. Such regulations are impelling companies across the globe to make investments for enhancing data security.
North America dominated the market in 2020 and accounted for over 38.0% share of the global revenue. The increasing adoption of blockchain technology by organizations in the region is driving the regional market growth. Industries such as government, retail, and BFSI are implementing payment and wallet solutions, smart contracts, and digital identity detection solutions, which is creating the need for blockchain technologies. Furthermore, the presence of a large number of players in the region is also accentuating the regional market growth.
The Asia Pacific is expected to witness significant growth over the forecast period. The governments of countries such as China, Japan, and India are promoting the use of blockchain technology in recent days. The governments of these countries are promoting the use of blockchain owing to its benefits such as high transparency, increased efficiency, among others provided to multiple industries. For instance, in 2019, the South Korean government announced an investment of USD 880 million in blockchain development projects.
Key Companies: IBM Corporation, Microsoft Corporation, Linux Foundation, BTL Group Ltd., Chain, Inc., Circle Internet Financial Limited, Deloitte Touche Tohmatsu Limited, Digital Asset Holdings, LLC, Global Arena Holding, Inc. (GAHI), Monax, Ripple.