Blockchain Market Trends

Growth Drivers

• Regulatory advancements and government initiatives: Government bodies are harnessing the potential of the blockchain and making a regulatory framework to increase its growth while ensuring its responsible usage. For instance, the Emirates Blockchain Strategy in 2021 endeavors to capitalize on blockchain technology to transform more than 51% of the government transactions through a blockchain platform. Such initiatives are validating the usability of blockchain technology and boosting the deployment and investment. Other countries, such as Switzerland and Estonia, have also introduced supportive policies for blockchain technology and plan to incorporate it in tax collection and public administration.
• Integration of blockchain with emerging technologies: As the adoption of advanced technologies, such as AI, is burgeoning, the demand for tamper-proof data has also become pivotal. AI systems are dependent upon humongous data sets for automation and training, and AI ensures provenance tracking. For instance, in September 2024, the Department of Energy announced USD 68 million in funding for AI to help scientific research. The integration of AI makes a complex ecosystem to manage; however, the amalgamation of blockchain secures the tools and strengthens the process.
• Rising need for cybersecurity and data integrity requirements: With the mushrooming digital ecosystem, there has been an increasing concern about identity theft and the manipulation of data. Conventional databases are becoming susceptible to breaches and system failures. The incorporation of blockchain helps in mitigating the challenges through consensus validation and decentralized storage of the data. Blockchain has the capability that once the data is written to a blockchain, it cannot be further changed or removed without consensus. It adds a crucial layer of protection for sensitive data, especially in legal services and healthcare. Snack Health in Kenya and Medicoonect in Uganda have illustrated the capability of the blockchain to enhance the delivery of healthcare and lower the cases of fraud.

Challenges

• Fragmented regulatory landscapes and cross-border conflicts: The cross-border nature of the blockchain does not align with the country-specific regulations. The World Trade Organization showcases that, lacking any coordinated regulatory policies, blockchain is used in international trade faces hurdles in transparency and crime prevention. Manufacturers are tailoring solutions as per the country’s jurisdiction to lower the compliance costs.
• High upfront investment and economies of scale: The deployment of the blockchain needs significant investment in developing adequate infrastructure and a proficient workforce. The adopted solutions tend to focus on the high-value customers owing to the higher ROI, making them less accessible for various businesses operating on a smaller level. These small suppliers are now finding the adoption of blockchain economically infeasible without any collective initiatives.