In 2021, blockchain is experiencing a new period of hype while the price of BTC is beating new records. On the one hand, this gives rise to a new round of speculative interest in blockchain technology in its narrowest form – cryptocurrencies. However, against the backdrop of growing interest in BTC- or crypto-related activities, interest in distributed ledger technology, in general, is growing as well. Interest from market leaders contributes to the adoption of DLT technology, especially to the development and widespread of corporate DLT-related solutions.
For example, Tesla bought $1.5 billion worth of BTC: the company plans to start accepting payments in bitcoin in exchange for its products. This makes market actors confident in the future of the technology, while the volatility of the crypto-market is still high.
The new hype era of BTC brings to Fintech-related streams of DLT development. Financial institutions agree crypto-assets like Bitcoin will become mainstream for financial institutions: traditional banks and brokers will start offering crypto-asset services under regulatory oversight. For now, about 50% of global financial companies view DLT as a strategic development priority and more than 80% believe DLT will be adopted mainstream. 1/3 of them are already in the development stage of their blockchain projects.
Finance and insurance remain the most developed areas of corporate DLT development. In 2020, the global finance-related blockchain market size exceeded EUR 2.9B and it is expected to reach EUR 19.5B by the end of 2025, with a CAGR of 47.8% during 2019-2025. Even in the financial sector, DLT not only contributes to the transactions (cross-border payments, assets management, etc.) but is also used to support specific business activities, such as customer identification and KYC, records sharing/storage, and so on.
Wholesale and retail remain one of the most interesting areas of corporate DLT-related solutions development. Blockchain brings transparency and efficiency for real-world use cases of retail companies from goods traceability and supply-chain management solutions to DLT-based advertising platforms and customer identification. The sector counts many business solutions based on DLT that are already developing or running in real-world conditions. Amazon is using DLT in the advertising business, Ikea is taking part in commercial transaction processes using Ethereum, Auchan is rolling out a food traceability application using DLT in France, Portugal, Italy, and Spain. The sector amounts significantly less than Fintech: EUR 180M in 2020, but the projected CAGR is great – 60%.
The sector is second next to Fintech in blockchain adoption, while the first in terms of the number and variety of ‘business’ or ‘industrial’ applications. Retail and CPG companies express the most bullish DLT outlook with 42% planning investment of at least $5M in the coming years.
Despite the disruption to the global market and international trade caused by the pandemic, DLT remains one of the competitive advantages for adopters. In an increasingly competitive environment amid declining business activity, disruptive solutions provide leadership advantages. Due to it, the share of retail companies currently using or planning to use DLT in their business has raised from 9% in 2017 up to 39% in 2020, while the share of companies denying the value of DLT dropped from 91% to 9%.
This article was writen by Alexey Petrov, Senior Analyst at CIVITTA, BlockStart consortium partner.