HITS

Blockchain is “still nascent” technology, but the business value it generates is expected to grow from $2.5 billion in 2017 to a whopping $2 trillion in 2030, research and analysis company IHS Markit projects. Business value refers to the cost savings and efficiencies that could be realized by incorporating blockchain into corporate business strategies, according to the “Blockchain Vertical Opportunities Report – 2018.”

“Early adopters of blockchain have mostly been companies in the financial services industry, which use it mainly in payments-related solutions,” Don Tait, IHS Markit senior blockchain analyst and one of the report’s authors, said Aug. 1 in a news release announcing the report’s release. But he said, “the technology is poised to ripple through virtually every industry, affecting almost all organizations in the coming years.”

The business value created by blockchain technology was estimated to be $12.5 million in 2017 for the advertising and media market, according to the report. Based on the projected increase in the number of blockchain projects that are launched and will become commercially deployed, the business value is projected to reach $122 billion by 2030, IHS Markit said.

The “key assumptions” of that “probable” forecast included “digital advertising and media companies embrace blockchain technology and start to use it as part of their business processes,” the report said. Other assumptions: The companies involved in blockchain projects within the ad and media sector launch large and commercially deployed solutions within the next 2-3 years; there’s high adoption from the various players within the space, including advertisers, publishers and users; governments and regulatory bodies are positive about blockchain; and large companies embrace blockchain and incorporate it into their business processes and “help them gain efficiencies and reduce costs,” according to the report.

One major benefit of blockchain for the sector is that it “provides a way to eliminate the antiquated paper-based contract framework called the insertion order, which is rife with inefficiencies and does not provide a mechanized way to verify contractual commitments,” IHS Markit said. The technology also 
“provides a new business model that benefits all participants and evens the playing field,” it said.

Blockchain has demonstrated “especially significant potential” in the financial, supply chain and logistics, identity management, retail and e-commerce and healthcare areas, according to IHS Markit.

The financial vertical market, which includes financial services, insurance and financial technology (fintech), will mainly use blockchain to conduct cross-border payments, share trading, securities, claims management, derivatives, asset custody across public and private markets, currency, collateral management and corporate actions processing, according to the company.

Because the market capitalization of all the world’s stock markets is about $73 trillion, even small cost savings and efficiency gains could create major business value for companies and industries that introduce blockchain technology, it said.



“There is barely a day that goes by without a fresh announcement about how banks and financial institutions are seeking to use blockchain technology to transform significant parts of their business,” Tait said, predicting: “The financial vertical market will be the largest-value market to use blockchain.”

The supply chain and logistics industry stands to improve significantly with the introduction of blockchain, according to IHS Markit.

It pointed to an estimate by the World Trade Organization that the reduction of barriers throughout the supply chain has the potential to grow worldwide gross domestic product 5% and escalate total trade volume 15%.

 Based on the projected increase in the number of blockchain projects that launch and become commercially deployed, the business value in the identity management sector is projected to hit $200 billion by 2030, according to IHS Markit. “Digital identity is one of the oldest and hardest problems on the internet,” Tait said. But he added that the World Wide Web Consortium is “standardizing the format for digitally signed credentials, and public blockchains can provide the decentralized registration and discovery of public keys needed to verify digital signatures.”

Based on the projected increase in the number of blockchain projects that launch and become commercially deployed within the retail/e-commerce vertical sector, the business value there is expected to hit $164 billion by 2030, according to IHS Markit. “Using blockchain within the retail and e-commerce sector can lead to a direct relationship opportunity with the customer, providing companies with greater understanding of their needs and behavior,” Tait said.

In the U.S. alone, counterfeit drugs cost pharmaceutical companies more than $200 billion annually in lost revenue, according to IHS Markit. Blockchain stands to help decrease those losses and should help the business value from blockchain in the healthcare sector to total $134 billion by 2030, it said.

IHS Markit developed the report using various sources, “the core of which was composed of primary research interviews with strategic blockchain specialists,” it said in the report.