December 14, 2023 - 10 min read
In the coming years, blockchain technology may begin to pervade nearly every aspect of our lives– revolutionizing a variety of industries like banking and finance, government, education, agriculture, and entertainment. Blockchain tech may also significantly change the global economic balance of power in a variety of ways, with blockchain-based cryptocurrencies fighting for dominance with fiat currencies, blockchain tech securing voting systems, and DAOs revolutionizing the way corporations, non-profits, and other institutions are governed.
Blockchain technology market size, 2022-2032. Source: Precedence Research.
Significant research backs up this idea, especially since the blockchain industry is expected to grow exponentially in the coming years. A 2022 report from Precedence Research estimated that the blockchain technology market will grow to more than $30 billion by 2025 and to more than $2.3 trillion by 2032. A similar report from Gartner estimated that “The business value-add of blockchain will grow to slightly more than $176 billion by 2025, and then it will exceed $3.1 trillion by 2030.”
It’s important to note that these market growth estimates focus on the growth of the blockchain tech market, excluding the market cap of cryptocurrency, which, as of mid-Q4 2023, sat at more than $1.32 trillion, down from nearly $3 trillion at the height of the crypto market boom in November 2021. When these two figures are combined, the true size of the blockchain industry becomes much, much larger.
Gold market cap (in trillion dollars), 2010-2021. Source: Finasko.
Specifically, a report from Allied Market Research estimates that the overall market cap of all cryptocurrencies will grow to nearly $5 trillion by 2030, so if we combined the projections of the non-crypto blockchain industry size and the potential future market cap of crypto, we could be looking at a combined market size of around $8 trillion. For reference, this is just slightly less than the combined current annual GDP of the world’s third and fourth highest GDP countries (Germany and Japan) and around two-thirds of the market cap of all the gold in the world, which is currently estimated to be around $11.5-13 trillion.
These numbers, while only estimates, make it clear that the blockchain and crypto sector is likely to continue to grow rapidly in the coming years and, with that growth, will have an increasingly influence on a variety of traditional industries. In this article, we’ll break down several major blockchain industry predictions and how they might impact both the global economy and ordinary people alike.
While it’s true that crypto has become significantly more mainstream in recent years, it’s still considered a niche investment product. A report from the crypto payments company Triple-A estimated that, in 2022, 13.7% of Americans owned at least some cryptocurrency, a significant increase from the estimated 8.35% of Americans who owned crypto in 2020. While it’s unlikely that crypto ownership will continue to rise this rapidly, if it does, we could easily see up to 40% of Americans holding cryptocurrency by 2032. This rise in crypto ownership is already being facilitated by publicly traded crypto products like the Grayscale Bitcoin Trust and will likely be further facilitated by the rise of crypto ETFs.
In addition to rising crypto usage, blockchain technology may lead to the tokenization of many real-world assets. In the coming decade, we could see the widespread tokenization of popular assets like real estate, stocks, bonds, and commodities and more niche alternative investment products like wine, watches, and precious gems.
While, for example, there are already quite a few tokenized real estate investment platforms, like RedSwan (which uses SEC-regulated security token offerings or STOs), interoperability and liquidity issues have prevented the widespread tokenization of real estate– but this could change soon. In addition to tokenized real estate platforms, tokenization allows individual property owners to use private transactions to transfer the ownership of property, potentially cutting out middlemen like real estate agents, lawyers, and title and escrow companies.
Finally, over the last few years, the Australian Stock Exchange unveiled an ambitious plan to tokenize all securities traded on the platform in order to improve security, speed, and data integrity. While this plan was eventually scrapped due to a variety of technical issues, as these issues are addressed, we could see more stock and commodities exchanges adopting blockchain and DLT (distributed ledger technology) to improve user experiences and exchange security.
While cryptocurrencies like Bitcoin are considered quite secure, as it would be extremely expensive and impractical to conduct a 51% attack on the Bitcoin blockchain, smaller-cap cryptocurrencies don’t have the same level of protection. While large-cap cryptos like BTC and ETH may be relatively secure, wallets holding these assets can still be hacked in a variety of ways. In addition, essential crypto and blockchain middleware, like blockchain bridges, have also suffered many hacks in recent years, leading to a significant lack of trust in DeFi protocols as a whole.
However, this may all change with the development of quantum encryption and quantum key distribution (QKD). Unlike traditional encryption, quantum encryption is theoretically unbreakable, as most attempts to hack a quantum-encrypted transaction will immediately invalidate the transaction itself. While quantum encryption still has a long way to go before reaching mainstream use, many believe it will be integral to future cryptocurrencies.
While quantum computing may provide cryptos with an incredibly high level of security, it also presents a security challenge, as quantum computing may be able to break encryption algorithms that would previously take many years to decipher with traditional computers. This is why some cryptocurrencies, like Bitcoin Post Quantum, are already taking steps to become quantum-resistant.
Currently, experts believe that symmetric ciphers like AES-256 and Twofish-256 will be resistant to quantum computing-empowered encryption. However, the most popular public-key cryptography methods, like RSA, ECDSA DSA, EdDSA, DHKE, and ECDH, may be extremely vulnerable to quantum attacks.
Many of the DeFi ecosystem’s largest and most influential protocols, such as Uniswap and MakerDAO, are currently governed by smart contract-empowered decentralized autonomous organizations (DAOs), allowing token holders to vote on governance proposals and steer the direction of these protocols.
In addition, in the world of GameFi, DAOs have formed the governance structure for a variety of new gaming guilds that invest in GameFi tokens and NFTs, making them, in practice, much like venture capital firms.
DAO proponents believe that DAOs represent a new form of governance structure that is more fair, equitable, flexible, and democratic and one day could replace corporations, NGOs, non-profits, or even certain government institutions. However, DAOs have various issues preventing them from gaining widespread appeal, including the fact that voting on many proposals can prevent the organization from moving quickly, especially in times of crisis. More importantly, however, most DAOs currently use a “one-token, one-vote” system that allows whales and early-stage investors (like VCs) to dominate the voting process, making DAOs, in practice, often just as centralized as the corporations they aim to replace.
However, these issues may be addressed with new governance systems and new technologies, such as Soulbound Tokens (SBTs), which are NFTs that cannot be moved from one wallet to another. Soulbound Tokens can help allow for a “one-person, one-vote” system that may be fairer and more democratic. DAOs may also decide to elect strong leaders who can make certain executive decisions for the DAO. However, these leaders could be easily replaced by a popular vote, ensuring the process stays democratic.
Inflation is proving to be one of the biggest economic issues of the 21st century, and blockchain technology may be able to help. Projects like Reserve are already providing access to the U.S.-dollar-backed stablecoins to consumers in high-inflation countries like Venezuela and Argentina, and some ambitious projects have even attempted to create inflation-resistant stablecoins, such as Frax’s FPI stablecoin, which has attempted to link the stablecoin’s price increases to the U.S. Bureau of Labor Statistics’ (BLS’s) Consumer Price Index, the U.S. government’s official measure of inflation. In this way, at least in theory, holders of FPI would be able to maintain their purchasing power indefinitely.
While FPI is an algorithmic stablecoin and may not be able to live up to its promise, many ideas have been floated regarding asset-backed stablecoins, perhaps backed by a basket of real-world assets such as gold, oil, or even real estate. If stablecoins can be created that can, at the very least, have an inflation rate much lower than the U.S. dollar, these currencies may begin to supplant traditional fiat currencies, leading to an economic revolution that helps poorer and middle-class individuals throughout the world maintain and acquire wealth, reducing the wealth gap and creating an economically fairer society.
Blockchain IDs are a controversial subject, as many believe that they could be used to track individuals and control their spending or other activities illegally. However, if ethically implemented, blockchain-based IDs (such as passports, driver’s licenses, and social security cards) could make government more efficient, cut down on fraud and identity theft, and allow people to transition from physical to purely digital IDs.
In addition, blockchain-based IDs could also be used as digital resumes, cryptographically confirming that people have worked at certain companies or on certain projects or have attended or received degrees or certifications from academic institutions.
New technologies, such as the aforementioned Soulbound Tokens (SBTs), could also play a significant part in blockchain IDs, as they cannot be transferred to other people’s wallets, further reducing the potential for identity theft.
According to data from Statista, in 2022, the global video game market generated an estimated $347 billion in revenue, with mobile gaming representing more than two-thirds of the total estimated market revenue. Other data suggests that, in 2022, the sale of in-game items totaled $129 billion, more than one-third of the total estimated industry revenue. However, in-game items have a problem; they typically cannot be traded or re-sold, meaning that most gamers will never be able to get their money back when they purchase an in-game item.
However, the explosion of GameFi and gaming NFTs is changing this rapidly. Games like Axie Infinity, the Sandbox, and Decentraland allow users to resell in-game NFT items and assets at any time for the market price, meaning that many users may be able to profit from reselling their in-game items. While this economic revolution is mostly tied to the DeFi and GameFi ecosystem, NFTs will likely be adopted by mainstream, triple-A (AAA) games (like Call of Duty, Grand Theft Auto, etc.) in the coming years. This could rapidly expand overall gaming industry revenue and has already enabled some gamers to make gaming and NFT trading a full-time job.
From crypto becoming a mainstream asset to DAO voting and the widespread tokenization of real-world assets, it’s increasingly clear that blockchain technology will continue to influence nearly all areas of our society and our economy. While much progress must be made, and many blockchain innovations will happen behind the scenes (unseen by the general public), blockchain tech can create many new economic opportunities, improve global cybersecurity readiness, reduce inflation, and help create more democratic and equitable institutions.
While not mentioned above, blockchain technology is also beginning to help the more than 1.4 billion individuals who are “unbanked,” meaning that they do not have access to a traditional bank account. Simply providing many of these individuals with crypto wallets could rapidly reduce poverty and increase economic opportunities (including small business ownership) for individuals and families, particularly those living in developing countries.
Despite blockchain’s incredible potential to advance our quality of life, it’s still important to realize that several barriers remain until blockchain can reach that potential. In regards to crypto, DeFi, and GameFi, UI/UX issues (as well as a lack of education) have prevented millions– if not hundreds of millions, from truly immersing themselves in blockchain technology. In addition, most DAOs and other blockchain governance structures still remain highly centralized.
Finally, the crypto and blockchain sector has suffered from its fair share of fraud and mismanagement in recent years, from the collapse of Three Arrows Capital, FTX, and Celcuius to the implosion of the Terra Luna blockchain ecosystem and the rapid fall of the UST algorithmic stablecoin.
However, as crypto users, investors, and regulators begin to learn from their past mistakes and developers and founders work on improving crypto and blockchain education and accessibility, many of these problems may be fixed in the coming years. When addressed, this will allow the blockchain sector to truly blossom.
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