The blockchain technology market value will exceed $2 billion in five years

Market Report Hub (MRH), a research and data company, recently released a 153-page report focusing on the global blockchain market and its growth rate in terms of finance, investment, and development.

According to Market Reports Center, the blockchain technology market is expected to exceed $2.3 billion in 2021, considering the rapid maturation of blockchain startups and service providers, whose venture capital funding mainly comes from established financial institutions.

The report further states that emerging economies including China, Australia and Singapore are leading the global blockchain market by providing funding to early-stage and mature startups through innovative accelerator programs and investment platforms. In addition, blockchain technology is expected to grow fastest in the media and entertainment industry, allowing the industry to solve issues such as copyright issues and revenue distribution for content creators.

However, the Market Reports Center also claims that the main factor behind the exponential growth of the blockchain market is the rising interest in the transparency, immutability and scalability of blockchain technology, which is a controversial topic in the blockchain space.

There are two forms of blockchain technology in the current blockchain market: permissioned ledgers and distributed blockchain networks. The first form refers to centralized blockchain networks, through which administrators like banks can be granted control, while the latter refers to fully distributed open networks that provide transparency and immutability.

If one takes a closer look at the financial aspects of the blockchain industry, it becomes apparent that the market is dominated by banks, with major financial institutions attempting to integrate the technology to reduce transaction and asset settlement costs.

Banks have spent hundreds of millions of dollars running various tests and developing prototypes in the hope of exploring the potential of blockchain in the financial industry. However, banks and financial institutions have failed to come up with a single working demonstration. One of the obvious reasons behind the failure is the compromise on security.

To operate on a blockchain network, it requires immutability, decentralization, and a level of security that closed servers and databases cannot provide. Bank executives and developers understand that immutability is a key factor in the success of cryptocurrencies. Even Federal Reserve Governor Lael Brainard stressed the importance of immutability at an event last week.

Global financial regulations and policies prevent banks from transforming their financial services into immutable and decentralized ones, as this hinders law enforcement and government agencies from accessing sensitive user data. In order to comply with global regulations, banks are forced to integrate into permissioned ledgers.

This is the core problem. When immutability and security are no longer present in a blockchain network, and flexibility and functionality are emphasized, the network is prone to hacking incidents and security vulnerabilities. This is also the reason why financial institutions have repeatedly failed in their attempts to integrate blockchain by investing hundreds of millions of dollars in blockchain network development and marketing.

Thus, the main part of the report reads: “The blockchain technology market is growing rapidly as organizations focus more on transparency, immutability, and scalability. However, factors such as lack of awareness about blockchain technology and uncertain regulatory status are major restraints for the overall growth of the market.” It is arguable that the progress of the blockchain market will continue to remain unchanged as banks and financial institutions still stick to outdated methods of centralizing decentralized networks.