The blockchain sector remains one of the most talked-about sectors of the moment. Billions are invested, and countless startups are springing up left, right, and center. If you listen to the proponents of blockchain, they’ll tell you there isn’t much the technology can’t do. But what’s the reality on the ground?
Europe’s blockchain sector
The European Commission has made no secret of its wish to lead in the blockchain sector. Various reports and statements have categorically stated it wants to be a leader, innovator, and solutions provider while hosting platforms and companies. As a result, the Commission has created a strategy that will help it reach those goals. This includes creating a gold standard in the EU that integrates European values into their regulatory framework.
These standards include environmental sustainability. This means blockchain and cryptocurrency are to be powered via energy-efficient means. It also includes adherence to data protection laws, provisions to boost cybersecurity, and respect for the bloc’s evolving digital identity framework.
Over the next few years, they aim to build their pan-European blockchain for public services. The plan will include interoperability with private sector platforms throughout the bloc. Other aims include promoting legal certainty and a solid regulatory regime when it comes to blockchain applications. This will consist of digital tokens and smart contracts to protect consumers.
The Commission will also provide funding for research and innovation. Between 2016-2019, the Commission gave more than EUR 180 million in grants. More will likely be allocated in the coming months and years.
By the end of this year, revenue from blockchain in the EU will surpass $2 billion. The majority of this revenue will come from the banking sector, including cross-border payments, transaction agreements, and transaction settlements. The second most lucrative sector is process manufacturing, followed by professional services and retail.
A recent report from the European Investment Bank noted a deficit of around $10 billion that could be holding the EU back. To transition to a fully digital economy and support blockchain developments, Member States should address this gap, they noted.
Asia’s blockchain sector
The Asia Pacific tech sector is set to witness 54.4% growth over the next six years. A sizeable chunk of this will be down to the blockchain sector. Another factor worth considering is the size of the region’s population. With almost 3 billion people in the area, it presents significant opportunities for investments and the rollout of blockchain software.
Back in 2018, there was $284 million of investment in blockchain in APAC. This increased by 84% to $529 million in 2019. This figure continues to rise, with estimates putting blockchain sector spending at $2.4 billion by the end of 2022. Most of this spending will come from China, equivalent to 70%.
So what’s driving this significant growth in the region? Firstly, proactive legislation in South Korea, Japan, Singapore, China, and Hong Kong has nurtured steady growth and new opportunities. Another plus point for the blockchain sector in the region is a large and tech-savvy workforce.
Furthermore, there is an increase in the demand for improved financial services in the region. A growing middle-class means that two-thirds of the world’s middle-class population will reside in APAC by 2030. With blockchain consistently used in financial services, there are potentially billions of new customers.
Asides from blockchain platforms, cryptocurrency is also very popular in Asia. China is set to launch its own digital Yuan, linked to the fiat Yuan and controlled by the central bank. Singapore has long been a hotspot for cryptocurrency startups, and even Hong Kong is getting in on the action.
Earlier this year, some $40 million was ploughed into Babel, a platform that offers crypto services to over 500 institutional clients. A South Korean gambling company, Nexon, transferred $100 million in fiat into bitcoin, suggesting growing confidence in digital assets.
The United States blockchain sector
By 2025, the US blockchain sector will be worth more than $4.1 billion. With a compound annual growth rate of around 44.4%, this demonstrates impressive and sustainable growth.
Most of the public discourse around blockchain in the US centers on cryptocurrency. But the reality is that the application of blockchain has already penetrated multiple industries. A broad cross-section of industries in the public and private sectors are already using or planning to use blockchain.
Customs departments, federal agencies, the Treasury, and even electoral agencies have all started using blockchain. Some are still in the pilot stage; others are widely used throughout the country.
But big companies have also got in on the action. IBM and Microsoft have been using blockchain for years. Other names like Amazon, Apple, and even Walmart are also using blockchain technology. In the financial sector, those sceptical of cryptocurrency are coming around and integrating blockchain behind the scenes. JP Morgan, Deloitte, and Goldman Sachs are just some that are happily exploring their blockchain options.
Smaller companies are also utilizing blockchain for supply chain management, drug trials, and data management.
In terms of regulation, much of the focus remains on cryptocurrency. There is no uniformity between states and the debate on what crypto is raging on. In terms of blockchain, companies are generally free to implement it without issue. If they are operating in a regulated market such as financial services, finance, or gambling, they may need to consider additional measures.
As of 2021, a total of 31 states have blockchain and crypto laws pending. These include definitions of virtual currencies and rules on implementing crypto and blockchain technology.
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