Sunday, 5 November 2017

THE BLOCKCHAIN MARKET by Marcus Wade, Founder and Owner, Trade Asset Exchange

A term new to me is "the Blockchain market" now being used by analysts and commentators. This seems to describe the market for Blockchain based solutions Payments, Exchanges, Smart Contracts, Documentation, Digital Identity, Clearing and Settlements.  This is very well described in the new Markets and Markets report. According to their estimation the USD 210 million Blockchain market (2016) will experience such rapid growth that it may even exceed USD 2,300 million by 2021 with compounded annual growth rate of 61.5 per cent. This can be further segmented via sector, e.g. Financial (where a lot of start ups are focussing), and by the type of chain, i.e. private, consortium, or public.

Companies like First Bitcoin Capital, whose shares has risen from USD 0.03 (Dec. 2016) to USD 1.79 by the end of August and has fallen back to USD 0.53 due to recent market shocks (Chinese legislation changes) in less than a month, are benefiting from this trend. This is a perfect example of how volatile this market is, and that the rapid gain can fade away at any moment.

It is also worth to mention that the Blockchain Market growth is independent from the wild fluctuation of the  cryptocurrency prices (e.g.Bitcoin price), and mainly driven by the hope of future profit generation mostly through reduced costs of existing processes, that a shared, immutable ledger for recording the history of transactions can bring.

Hype in a "new" market it is not a unique phenomena, and at first glance seems somewhat similar to the .com bubble developed  in the late 90's, where some innovators successfully monetised their ideas and  survived, many did not. Innovation will not bring lasting profits if it can be easily replicated and the entry barriers are otherwise low. Is this the case with the Blockchain market? Are Blockchain based solutions easily replicated once the idea is public domain? 

It is not surprising that the Financial Sector is expected to dominate the market. Apart from them, SMEs are also rapidly introducing blockchain based services because of its cost-effective and time-saving features.

Blockchain Market, by Region, 2021 (USD Million)

As seen on the above figures the Asia-Pacific region is expected to grow the fastest, while the largest revenue generating region will be North-America (USA, Canada) and Europe. This is not surprising as currently most of the major blockchain solution providers are all based in the US: Microsoft Corporation (U.S.), IBM Corporation (U.S.), Deloitte (U.S.), Ripple (U.S.), Chain, Inc. (U.S.), Abra, Inc. (U.S.), BitFury (U.S.), Coinbase (U.S.), Circle Internet Financial Limited (U.S.), Digital Asset Holdings (U.S.), Global Arena Holding, Inc. (U.S.), Digital CC Ltd (Australia), 21 Inc. (U.S.)

According to IBM, on the financial sector side, banks are adopting the technology dramatically faster than initially expected. Even by the end of this year, 15% of Larger Banks are likely to implement blockchain. The most effected areas to use blockchain are retail payments, consumer lending and reference data. By 2021 IBM expects more than 65 per cent of all banks to have blockchain in commercial production and at scale.

An interesting example of that is the blockchain powered bond transaction platform of HSBC and R3. The platform is featuring smart contracts technology enabling matching, trading and settlement of U.S. treasury bonds.

"Our goal at R3 is to bring our members together with the strongest technology players and work collaboratively to evaluate and accelerate this technology to production using real-world use cases," said Tim Grant, chief executive officer of R3's Lab (source:

In the Government sector, the Dubai Land Department has created a world-first Blockchain system using a smart and secure database that records all real estate contracts and lease registrations. It is one of the few governments to specifically level serious resources to developing its own Blockchain based solutions. Perhaps established players need to take note that the Blockchain Services market is going to be hotly contested globally and new unexpected players will emerge.

As a conclusion we can see that the blockchain market is going to grow in even greater steps in the financial sector, as it could help to solve many current problems, like fraud and lack of information by providing an open ledger, nevertheless we also have to be careful about which services to use and also being cautious is inevitable at this stage even when we decide about our future investments.

However, in our view it is essential to address real business needs in a scalable, efficient and simple way and treat blockchain based solutions as a potential tool only, not as an ultimate solution for all of our existing business deficiencies (one size fits all does not work), in order to ensure the long term sustainability of the Blockchain Market growth.

Trade Asset Exchange enables its customers to list trade finance transactions to be settled in the blockchain-powered currency, Bitcoin. The platform provides a transparent and rapid negotiation of price and terms and conditions with financial institutions, both in the traditional trade as well as in the supply chain finance space.

To find out more about Trade Asset Exchange please visit the website

No comments:

Post a Comment