The Impact of the Top 3 Strategic Imperatives on the Blockchain Industry

Disruptive Technologies

• Why: Blockchain has the potential to significantly disrupt the traditional finance sector. In addition, it is increasingly finding application across various sectors beyond finance, such as in healthcare, public sector, automotive, logistics, among various others, and getting integrated with AI to deliver authentic transparency and security in transactions
• Frost Perspective: As blockchain adoption spreads across sectors, organizations will try to leverage the combined strength of blockchain technology in collaboration with new-age tech such as AI or ML to derive higher returns on technology investments.

Industry Convergence

• Why: Blockchain technology is facilitating the convergence of various applications and industries and helping augment traceability, security, and authenticity of transactions.
• Frost Perspective: Blockchain-aided supply chain management is gaining traction across the retail, eCommerce, logistics, and manufacturing industries. As a technology, it enables authenticity and convergence by enabling interoperability between technologies, platforms, and related transaction networks.

Competitive Intensity

• Why: Top companies such as IBM and SAP are focused on delivering a broad portfolio of blockchain solutions. In addition, various start-ups and innovative mid-sized companies are working on and delivering cutting-edge blockchain-based solutions as well.
• Frost Perspective: Strong tailwinds propel the incorporation of AI and ML technologies into blockchain, thus delivering more evolved solutions catering to advanced use cases such as blockchain-enabled AI marketplace and AI-powered blockchain smart contracts.

Scope of Analysis

• The evolution of blockchain technology is advancing quite rapidly—going beyond the realm of cryptocurrencies and bitcoin—to address challenges related to application areas across industries. It is facilitating digital transformation and authentic transaction through advance blockchain-based smart contract creation and application deployment.

Segmentation

Blockchain has the potential to revolutionize conventional business models and supply chains through enhanced efficiency, connectivity, and innovative design capabilities.

Blockchain Technology Analysis Across Segments

Blockchain includes various components in the design.

This segment incorporates the basic components of blockchain technology including hardware, software platforms, and associated services.

Hardware components include high-performance computers, storage devices, adequate memory, and network devices. In virtual currency, crypto ATMs and Kiosks are also part of the ecosystem.

Layers of blockchain distinguish providers.

In the blockchain ecosystem, providers can be distinguished by their offerings, applications, infrastructure, or middleware platforms.

Infrastructure providers, especially with open-source platforms have boosted the development and adoption of blockchain solutions for other vendors in the ecosystem.

Diverse use cases range from conventional to new-age technologies.

Conventional industries that use blockchain include banking, finance, insurance, gaming, automotive, manufacturing, healthcare, public sector, and gaming, among others.

New-age technologies that have converged with blockchain to cater to a wider range of use cases include AI and ML, digital twin, robotics, IoT, and quantum computing.

Growth Drivers

Availability of open-source platforms: The Linux Foundation made Hyperledger, an open-source platform, public. It was designed for cross-industry cooperation to develop blockchain technology and to create distributed ledger. The scalability offered by this platform has enabled players to build blockchain solutions with enhanced performance and privacy.

Blockchain in SCM: Blockchain has found significant importance and adoption in supply chain management. The transparency and security offered by blockchain solutions has made transactions in industry supply chains efficient and smart.

Blockchain in IoT: High adoption of IoT devices has driven the demand for a secure and transparent medium of data transactions, especially through blockchain.

Open-source Dapps: Decentralized applications (Dapps) built on a decentralized network by combining smart contracts and user interfaces have gained significant momentum in recent years. These applications are open-source, decentralized, and provide data integrity and privacy. Commonly known platforms to create Dapps include NEO, TRON, and Ethereum.

Growth Restraints

Complex nature of blockchain: The complexity of blockchain technology and the challenges associated with its scalability, standardization, and data privacy create hurdles in its adoption on a larger scale. For large-scale transactions, blockchain networks like Ethereum and Bitcoin can face scalability problems, especially when the client base is consistently increasing.

Associated high costs: The finances associated with blockchain projects such as infrastructure setup, skillset, software R&D, and maintenance can be difficult.

Lack of skillset: The lack of technical expertise and skills required to comprehend, develop, implement, and maintain blockchain platforms has created challenges for its widespread adoption. As the technology is still at a nascent stage and evolving, predefined frameworks and protocols do not exist. There is also a shortage of experienced professionals with multidisciplinary skills including legal, business, social, technical, and economic to fully develop blockchain projects for an organization.

Lack of awareness: Blockchain is still relatively new for users to adopt as a mainstream technology amongst consumers. Lack of awareness about the potential it offers and its implications for business development further hinders its adoption.