Market Challenges And Opportunities

Global Blockchain Technology Market- Drivers:

Rising incidents of identity and data theft are fueling the demand for cryptographic ledger solutions.

The BFSI (Banking, Finance, Service, Insurance) sector is increasingly embracing digital ledger technology to fortify the security of financial data and safeguard the identities of end-users. This technology is gaining traction in the industry and finding diverse applications, including facilitating cross-border transactions, streamlining clearing and settlements, empowering trade finance platforms, verifying digital identities, and enhancing credit reporting. The extensive adoption of these technologies is anticipated to drive the growth of the market.

For instance, in June 2021, Leading Indian banks, including the State Bank of India (SBI), HDFC, ICICI Bank, and others, joined hands to create Indian Banks' Blockchain Infrastructure Co (IBBIC), a private limited company aimed at establishing India's digital ledger infrastructure. The primary objectives of IBBIC are to ensure secure transactions, minimize transaction processing time, and expedite the letter of credit process.

Availability of secured medium to carry out truncations is expected to propel the global blockchain technology market growth over the forecast period

Online payments through blockchain technology are secure since there are no intermediaries and the data is decentralized. The chain of transition is completely automated from beginning to end and requires no documentation, thereby reducing the errors caused by duplication. Moreover, the availability of real-time tracking of transactions averts fraud caused by errors during online payment. This has enabled online transactions with large-scale payment. Hence, these factors are expected to propel the global blockchain technology market growth in the near future.

Government initiatives are on the rise, contributing to the increased demand for blockchain platforms and services.

In recent years, blockchain technology has garnered significant attention from stakeholders across various industries. As interest in this technology grows, governments worldwide are investing in research endeavors to develop blockchain solutions. Given the high volume of transactions and information exchanges within the government sector, ranging from disbursements and procurements to sales, fees, fines, certifications, and approvals, blockchain solutions are being adopted by government entities to enhance transparency, efficiency, and the overall delivery of public services. By leveraging distributed ledgers, blockchain technology offers numerous potential applications that can improve transparency, prevent fraud, and enhance operational efficiency for government agencies. Notably, the Estonian government stands as an early adopter of blockchain technology within the European region. China's notable efforts to establish dominance in blockchain technology are evidenced by the substantial number of blockchain-related patents filed, with approximately 33,000 filed by China and over 10,000 filed by the U.S. China is actively accelerating its applications of blockchain to secure a lasting, first-mover advantage.

On April 8, 2023, in an effort to advance the blockchain technology system, the Indian Union government initiated a research project. The project's main objective is to enhance the blockchain technology stack to facilitate comprehensive end-to-end development of blockchain applications. According to official sources, the project, titled "Design and Development of Unified Blockchain Framework for Offering National Blockchain Service and Creation of Blockchain Ecosystem," will also enable the integration of Open Application Programming Interfaces (Open APIs) to ensure seamless connectivity and enable the provision of blockchain-as-a-service (BaaS) over distributed infrastructure.

Automating loans

Smart contracts have the potential to enhance the efficiency of loan servicing and offer customers a smoother experience. One significant benefit is their enhanced capacity to streamline data and payment flows with greater efficiency through automation. For instance, a borrower could electronically submit a utilization request, and a smart contract-based facility agreement could verify the request's compliance with specific terms. One significant benefit is their enhanced capacity to streamline data and payment flows with greater efficiency through automation. Upon satisfying the conditions, the smart contract could execute instructions. This involves deducting participation from the open credit lines of lenders and initiating the corresponding payments accordingly.

On June 2, 2021, to fulfill a specific task, a smart contract may need to obtain information or data from an external source referred to as an "oracle." For instance, when calculating an interest payment, the smart contract may request a reference rate from an external entity, such as the sterling overnight index average (SONIA) displayed on the designated screen that provides access to that particular rate.

Market growth is expected to be hindered due to a shortage of skilled professionals.

The escalating digital transformation across industries has heightened the occurrence of threats and cyber attacks. However, organizations are confronted with a shortage of skilled professionals to effectively mitigate these risk factors. As a result, the adoption of advanced technological solutions is progressing slowly, impacting the market's growth prospects in the coming years. Additionally, developing countries like India, Peru, and Mexico face a lack of awareness regarding the risks associated with data protection. Consequently, the adoption of such technology is expected to remain stagnant in these regions for a few years.

Government Regulations Hindering the Market

The existence of an unpredictable regulatory and compliance landscape poses a substantial barrier to the expansion of the market. In certain instances, governments have taken steps to prohibit the utilization of initial coin offerings (ICOs). One of the key challenges in modernizing transaction systems lies in achieving regulatory acceptance, which acts as a hindrance to market expansion. As technology rapidly advances, regulatory agencies need to assess any gaps in existing regulations and their impact on overall technological applications. Financial institutions worldwide are collaborating to establish blockchain technology standards, aiming to address these challenges and foster market development.