Another fat, and expensive (US$650) report predicts massive growth for blockchain technologies. This time it forecasts the ‘overall’ size of blockchain expenditure four years out.
The Report has a snappy title: “Blockchain Market by Provider, Application (Payments, Exchanges, Smart Contracts, Documentation, Digital Identity, Clearing and Settlement), Organization Size, Vertical, and Region – Global Forecast to 2021.” Its primary claim is that blockchain adoption will grow from $210M to $2.3B by (presumably) the end of 2021. This represents a Compound Annual Growth Rate (CAGR) of 61.5%. This will be impressive, if it happens.
During the forecast period, the major growth drivers of the blockchain market are expected to be:
- faster transactions.
- reduced total cost of ownership.
To support the growth figures the Report segments by:
- organization size.
- industry vertical.
Where will blockchain growth come from?
Predictably, the infrastructure and protocols provider segment will likely dominate blockchain growth during the forecast period. Yet it is the application and solution provider arena which will witness the highest growth rate. The report ascribes this to increased demand for fast processing applications for payments and transactions.
Payments applications hold the largest share of the blockchain market in 2016. The need for banking and financial transactions has evolved. There is a move away from the traditional (silo-ed) payments systems. The latest generation solutions must seamlessly integrate into the ‘new’ and increasingly connected lifestyle. This provides the demand that Blockchain-based payment solutions can address.
The digital identity market is expected to grow at the highest rate. Blockchain should make digital identities more secure and efficient. In turn, this should result in seamless sign-ons and a reduction in identity frauds.
The Banking, Financial Services, and Insurance sector will all dominate the market with the largest market share during the forecast period. With the largest pockets and with fraud a major cost, this is unsurprising.
In contrast, the Report expects the media and entertainment vertical to grow, with it delivering the highest CAGR during the forecast period. The reason? Rising blockchain adoption across:
- smart contracts.
- document management.
- digital identities.
- copyright (by assigning rights, usage tracking, and distribution of all the content creators and owners using blockchain).
The leading rights management solutions in the music industry are already deploying blockchain-based solutions. They see this as an opportunity to speed up payment of royalties and to ensure fairer payments.
Companies mentioned in the Report include: 21, Abra, Alphaphoint, Blockchain Tech, Bitfury, Chain, Circle Internet Financial, Coinbase, Deloitte, Digital Asset Holdings, Digitalx, Earthport, Global Arena Holding, IBM, Intelygenz, Microsoft and Ripple.
What does it mean?
According to the report both SMEs and large enterprises are rapidly deploying blockchain solutions. This suggests there is broad-based blockchain growth with increasing demand for blockchain-based solutions. In turn the market will expand as cost-effective, and time-efficient, features appear. In this context, SMEs become ever more interested as lower cost solutions become available.
When you have digested all the above, and even the report, wariness is applicable. Growth rates, like >60% CAGR, tend to happen only when a specific solution becomes broadly applicable and enterprises adopt it in large numbers. Analysis of the blockchain market suggests there is much going on but little convergence or adoption on such an agreed product or service.
In the absence of such a product or service, Enterprise Times ‘forecasts’ (using its ‘gut’ instinct) a blockchain market of around $1B by the end of 2021. $2.3B is a reach too far if no ‘breakout’ product or service appears by 2019.