What is blockchain?
Blockchain is a data structure whereby information is grouped into ‘blocks’, which hold a set information. Once a block is filled with data, a new block is created which is attached to the previous block, thus creating a chain. When a new block is added to the chain it is given a timestamp and so each blockchain can reveal a chronological history of data. Normally, a blockchain is held by thousands of computers (which are referred to as nodes). Each node holds a copy of the entire blockchain, and so if a data error occurs in one then the other nodes act as a point of reference to pinpoint the error and correct it. In this way, blockchain is very secure, protected against hackers and fraud.
Blockchain became well-known with the cryptocurrency Bitcoin, which uses Blockchain to transparently record all its transactions.
Market challenges
Despite its wide application, the blockchain market faces challenges. Firstly, as a new and quickly changing technology, it faces regulatory difficulties from governments and financial market entities. For example, the European Commission has been criticised for its regulatory proposals, entitled ‘Markets in Crypto Assets’ for not truly benefitting blockchain and crypto companies.[1] In addition, transactions involving blockchain can be slow as longer blockchains need a longer processing time.[2]
Market drivers and applications of blockchain
Blockchain can be used in a variety of sectors including financial, social, health and technological. Its verification process means that Blockchain is incredibly secure – hacking into a Blockchain is inviable in terms of the finances and resources that it would require. Security is one of the major challenges faced by many sectors, therefore blockchain may be the key for growth in many sectors.
Blockchain’s greatest application currently, due to its security and transparency, is in the financial sector. Blockchain in the banking sector was valued at US$759.5 million in 2019 and is expected to grow with a CAGR of 28.4% to $4112.5 million by 2029 and in the Insurance industry blockchain is forecasted to grow with a CAGR of 57% between 2021 and 2026. [3] [4]
Blockchain is being increasingly applied to IoT, an area of technology with around 20 billion associated devices, of which over 4.5 billion are used in Europe. The application of blockchain to IoT devices increases their security, interoperability and privacy. [2]
As with the other sectors discussed, Blockchain is being increasingly used also in the healthcare sector in order to verify healthcare, pharmaceutical and medicine providers and to protect the security of medicines. Whilst the blockchain market in healthcare was valued at $2.12 billion in 2020, it is forecasted to register a CAGR of 8.7% from the period 2021-2026, reaching a predicted market value of $3.49 billion. [5]
As blockchain technology (and its market) develops and grows, its application is expected to become far more widespread. For example, it may be used to secure food supply chains from contamination by making it easier to find the point where the contamination occurred. Blockchain technology could also protect voting systems from fraudulence or tampering, and it seems certain that blockchain technology will continue to be implemented in even more sectors as diverse as those discussed here.
[1] Article: ‘INATBA renews criticism of planned EU crypto regulation’
Source: The Paypers
[2] Article: ‘Blockchain Internet of Things Market to Witness Huge Growth by 2025 | Ethereum Foundation, Filament, KrypC’
Source: iCrowdNewswire
[3] Article: ‘Global Blockchain Market in the Insurance Industry (2021 to 2026) – Growth, Trends, COVID-19 Impact, and Forecasts’
Source: Businesswire
[4] Article: ‘Global Blockchain in Banking Sector Market – Internet of Things (IoT) devices, Blockchain-as-a service boosting market growth – by PMI’
Source: GlobeNewswire
[5] Article: ‘Worldwide Blockchain Market in Healthcare Industry to 2026 – North America to Witness the Highest Growth’
Source: Businesswire
