IT vendors seeking to convince CIOs and CTOs about their blockchain-related solutions have been challenged by an apparent shift in market perception. Distributed ledger technology hype reached a peak and as a result, the upside growth potential had fallen significantly.
Global blockchain revenues fell by 35 percent between 2018 and 2020. According to the latest worldwide market study by ABI Research, the potential loss could have reached $2.8 billion.
Moreover, the reported ‘crypto winter’ of 2018 removed 80 percent of the aggregate market cap, and more than 2,000 cryptocurrencies collapsed. However, that market correction was enlightening.
Blockchain market development
This dampened overall blockchain adoption significantly in other markets, with many startups folding and different verticals showing a distinct lack of market adoption. Furthermore, the COVID-19 pandemic had a significant impact on investment opportunities and appetite for new blockchain applications.
That said, according to the ABI assessment, this dramatic dip in revenue will likely be short-lived. These adverse events culled much of the IT vendor hype and effectively ended the prior blockchain market speculation.
“Many speculative offerings were purged from the marketplace. However, this will be relatively beneficial for the blockchain ecosystem overall, strengthening existing startups and ensuring sounder and more valuable business models emerge over the next few years. ABI Research expects the market to get back to 2018 revenue levels by 2023,” said Michela Menting, research director at ABI Research. The vertical markets poised to take advantage of the new traction are those where successful business use cases are currently applied. The pandemic has had some positive impacts on select blockchain applications, most notably supply chain and logistics management — due in part to the international scramble for medical systems and personal protective equipment (PPE) supplies.
The pandemic also revealed the inadequacies and flaws of existing procedures, especially in terms of transparency and quality assurance. Blockchain is now a technology that is recognized as capable of addressing these issues.
As such, interest and demand could boost revenue for blockchain applications focusing on use cases in the manufacturing, transport, and storage sectors — as well as within retail and consumer markets.
Beyond that, interest in blockchain applications for healthcare is soaring, notably for sharing timely, relevant, and authenticated information on the pandemic (including regarding the spread of infection, containment practices, hygiene-based information, data related to trials and vaccine research, etc.), especially in light of misinformation increasingly being spread online and through social media.
Outlook for blockchain applications growth
“Blockchain projects launched by the United Nations’ World Health Organization, alongside many national Centers for Disease Control, show the usefulness of blockchain in these circumstances. Healthcare applications are expected to increase faster than anticipated in light of the pandemic,” concludes Menting.
I believe that the global pandemic will continue to drive additional high-growth opportunities for the savvy IT and networking vendors that are able to capitalize on global market disruptions and associated trends.
As an example, in addition to the renewed blockchain technology upside, there will be an increasing demand for comprehensive cloud-based enterprise access security solutions for remote workers. More CIOs and CTOs will be seeking new information and guidance on this key DevSecOps topic.