International. Although still nascent today, blockchain business value, which refers to the cost savings and efficiencies that could be achieved by incorporating blockchain into corporate business strategies, is projected to rise from $2.5 trillion in 2017 to $2.0 trillion in 2030, according to IHS Markit.
"Early adopters of Blockchain have mostly been companies in the financial services industry, which primarily use it in payments-related solutions," said Don Tait, senior blockchain analyst, IHS Markit. "However, the technology is about to spread across virtually every industry, affecting almost every organization in the coming years."
Although blockchain is still an emerging technology, it is expected to be transformative. According to IHS Markit's "Blockchain Vertical Opportunities Report," this technology demonstrates especially significant potential in the following vertical industrial markets and application areas:
1. Financial
The financial vertical market, which includes financial services, insurance and financial technology (fintech), will mainly use blockchain to make cross-border payments, share transactions, securities, claims management, derivatives, custody of assets in public and private markets, currency, collateral management and corporate share processing. Because the market capitalization of all the world's stock markets is equivalent to $73 trillion, even small cost savings and efficiency gains can generate significant business value for companies and industries that decide to introduce blockchain technology.
"Barely a day goes by without a new announcement about how banks and financial institutions are looking to use blockchain technology to transform significant parts of their business," Tait said. "The financial vertical market will be the highest value market for using blockchain."
2. Supply chain and logistics
The supply chain and logistics industry are anticipated to improve significantly with the introduction of blockchain technology. In fact, the World Trade Organization (WTO) estimates that reducing barriers throughout the supply chain could potentially increase global gross domestic product by 5 percent and increase total trade volume by 15 percent.
"Managing today's supply chains, with all the links to create and distribute goods, is extraordinarily complex," Tait said. "Depending on the product, the supply chain can span hundreds of stages, multiple geographic locations, a multitude of invoices and payments, has multiple people and entities involved, and spans months. Due to the complexity and lack of transparency of our current supply chains, there is interest in how blockchains could transform the supply chain and logistics industry."
3. Identity management
Although identity management is not a vertical market, it is an application area that is used in many vertical markets. With the projected increase in the number of blockchain projects being launched and implemented commercially, the commercial value within the identity management sector is projected to reach US$200 trillion by 2030. The ID2020 initiative continues to promote and support Blockchain technology to help the 1.1 billion people living without an officially recognized identity.
"Digital identity is one of the oldest and most difficult problems on the internet," Tait said. "However, the World Wide Web Consortium is now standardizing the format for digitally signed credentials, and public blockchains can provide the decentralized logging and discovery of the public keys needed to verify digital signatures."
4. Retail and e-commerce
Initial blockchain adoption in retail and e-commerce is anticipated to be led by trade promotions, decentralized marketplaces, payments, smart contracts, supply chain, and other applications. With the increase in the number of blockchain projects being launched and commercially implemented in this vertical sector, the value of the business is projected to reach US$164 billion by 2030.
"The use of blockchain within the retail and e-commerce sector can lead to a direct customer relationship opportunity, providing businesses with a greater understanding of their needs and behavior," Tait said. "Blockchain and smart contracts can also provide the tools and framework to create a new generation of markets where supply and demand sides can engage in trusted trading transactions, according to various trading rules, without the need for a central brokerage entity."
5. Health Care
In the United States alone, counterfeit drugs cost pharmaceutical companies more than $200 billion annually in lost revenue. Blockchain could help minimize these losses. For this and other reasons, the commercial value of blockchain in the healthcare sector is projected to reach US$134 billion by 2030. The initial adoption of blockchain within the healthcare sector is occurring in the application areas of medical data management, drug development, claims management and billing, and medical research.
"Blockchain could be used to solve many problems that affect the healthcare industry today," Tait said. "For example, it could be used to create a common health database across the range of electronic medical systems, stimulate greater security and more privacy, reduce administration time for clinicians, and accelerate the sharing of research results that facilitate new drugs and treatments."
