Blockchain is one of the trending technologies in the world, with the highest number of social media mentions. Due to various use cases in the Supply chain, Payments, Digital Assets (Cryptocurrencies), Non-Fungible Tokens (NFT), and Smart Contracts, Blockchain registered massive growth in the past few years.
According to GlobalData, the blockchain market is likely to grow from $3.6 billion in 2020 to $24.1 billion in 2025 at a CAGR of 46%.
An increase in investments and acquisitions aids the growth – PayPal recently acquired Curv (Cryptocurrency Security start-up) in March 2021 at a valuation of $200 million.
- GlobalData estimates Blockchain market to grow at a CAGR of 46% from the year 2020-2025
- Bitcoin and Ethereum cryptocurrencies, based on blockchain technology, have emerged as dominant cryptocurrencies in the world, capturing almost 50% of the crypto market
- Non-Fungible Tokens (NFT) reported considerable growth in 2021, which also increases the demand for Ethereum & Solana that is used in purchasing NFTs
Blockchain technology-based cryptocurrencies such as Bitcoin and Ethereum have registered tremendous growth in recent years. It has prompted the launch of other digital assets as well.
Blockchain and its Role in Cryptocurrencies
Blockchain technology was first introduced in Bitcoin, the largest cryptocurrency globally, with a market capitalization of ~$807 billion as per CoinMarketCap. Blockchain is a decentralized ledger of all transactions in P2P (peer-to-peer) networks and confirms transactions without any clearing authority, as these cryptocurrencies need blockchain to record their transactions (see How Worldwide Cryptocurrency Adoption Changes Compensation & Rewards Programs).
According to CoinMarketCap, there were around 16,893 cryptos listed on 453 exchanges with a total market capitalization of $2 trillion.
Bitcoin and Ethereum dominate the market, with 39.5% and 19% share. El Salvador is one of the first countries to officially recognize Bitcoin as legal tender, making bitcoin an accepted means of exchange for goods and services.
As per the 2021 Global Crypto Adoption Index by Economic Times, Vietnam and India are among the leading crypto adopters, while the US and countries in Europe are still researching the potential of central bank digital currencies.
An increase in the adoption of cryptocurrencies in various countries and their usage to buy Non-Fungible Tokens or Digital Collectibles will increase the market value of Blockchain-related technologies.
Blockchain Market Size, 2020-2025
Non-Fungible Tokens: A New Arena
NFT or Non-Fungible Tokens is based on Ethereum-Blockchain Technology. It is a unique digital representation of an item, which can be in the form of an image, video, or audio. It provides the owner of the digital item a unique and clear proof of ownership. As NFTs are unique, they are not replicable similar to an individual game character, artwork, or collectible.
NFT as a market is growing as NFT marketplace such as Opensea currently has listed more than 24 million tokens. As per Forbes, trading in NFTs in 2021 reached $23 billion. The market registered new highs in 2021, with an NFT called “Beeple’s the First 5000 Days” being sold for over $69 million. Growth in the market follows the boarding of the NFT bandwagon by celebrities and global brands such as Nike and Visa investing in the domain. Besides artwork, NFT can be used in multiple sectors, such as Real Estate, to accelerate the verification and transfer ownership by using smart contracts.
Despite a sharp decline in trading volume in June, the NFT market has had an overall resilient first-half. 2022 started strong for NFTs as trading activity surged, contributed by the launch of the LooksRare and X2Y2 marketplaces and the corresponding trading rewards offered by them both (see Underwriting Crypto Assets).
NFT sales recorded approximately $17.7B in first-half 2022, which is similar to sales recorded in second-half 2021. This is also a nearly 10x growth on a year-on-year basis when compared to first-half 2021.
The bulk of the trading volume was front-loaded, with most sales being logged between January and May. Trading volume in June was approximately US$678M, a sharp drop of over 80% compared to the average monthly trading volume of US$3.4B from January to May.
NFT marketplaces play an important role in facilitating trading activity by connecting buyers and sellers. OpenSea remains the leading NFT marketplace by trading volume and has approximately 50% market share. While OpenSea has largely maintained its market share over the past year, competition is fierce. New entrants such as LooksRare, X2Y2, and Magic Eden have demonstrated strong performance over the first half of 2022.
Blockchain and Web 3.0
Blockchain-driven technologies such as cryptocurrencies and NFT will play a significant role in the upcoming internet revolution, Web 3.0. Compared to Web 2.0, Web 3.0 is more decentralized, and users can be in control of their online data. It will also help personalize web browsing based on user preference, allowing sellers to market their products better.
Since Web 3.0 is decentralized, it will prevent big corporations from censoring users on the decentralized apps. Web 3.0, based on blockchain technology, will grow with time as we move towards a more decentralized tech ecosystem and token-based economics (see Decentralized Exchanges Risks Review).
Blockchain technology is a record of transactions and information organized in blocks in a peer-to-peer network. The blocks are linked together in a single list, called a chain, by means of a cryptographic hash making the records impossible to modify by creating a secure data structure.
All parties involved in verifying a transaction, as well as a significant number of third parties, maintain a full copy of the blockchain, creating a robust and distributed network.
Blockchain is ideal for delivering that information because it provides immediate, shared and completely transparent information stored on an immutable ledger that can be accessed only by permissioned network members.
A blockchain network can track orders, payments, accounts, production and much more. And because members share a single view of the truth, you can see all details of a transaction end to end, giving you greater confidence, as well as new efficiencies and opportunities.
Blockchain Social Media Mention Trends
Nevertheless, blockchain technology capabilities enable many more applications besides cryptocurrencies: it allows the digital representation – aka tokenization – of financial instruments such as bonds, stocks, or derivatives, the traceability of goods in a value chain, document notarization and more.
In the short but dynamic history of this nascent technology, two industries were clearly differentiated: cryptocurrencies and blockchain technology.
The same way the Internet shaped the world by allowing democratic access to information, blockchain is paving the road for how people and organizations set new business rules and exchange assets in this new Web 3.0, replacing trust by a tamper-proof and self-enforcing technology protocol.
What is Blockchain?
Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.
Blocks have certain storage capacities and, when filled, are closed and linked to the previously filled block, forming a chain of data known as the blockchain. All new information that follows that freshly added block is compiled into a newly formed block that will then also be added to the chain once filled.
A database usually structures its data into tables, whereas a blockchain, as its name implies, structures its data into chunks (blocks) that are strung together. This data structure inherently makes an irreversible timeline of data when implemented in a decentralized nature. When a block is filled, it is set in stone and becomes a part of this timeline. Each block in the chain is given an exact timestamp when it is added to the chain.
The goal of blockchain is to allow digital information to be recorded and distributed, but not edited. In this way, a blockchain is the foundation for immutable ledgers, or records of transactions that cannot be altered, deleted, or destroyed.
- A blockchain is a database that stores encrypted blocks of data then chains them together to form a chronological single-source-of-truth for the data
- Digital assets are distributed instead of copied or transferred, creating an immutable record of an asset
- The asset is decentralized, allowing full real-time access and transparency to the public
- A transparent ledger of changes preserves integrity of the document, which creates trust in the asset.
- Blockchain’s inherent security measures and public ledger make it a prime technology for almost every single sector
This is why blockchains are also known as a distributed ledger technology (DLT).
by Peter Sonner