Blockchain adoption in 2023: Use Cases, Trends & More!!

"From Promise to reality,” found that blockchain is indeed integral to organizational innovation today. Banking and financial institutions (BFSI) apparently dominate blockchain development, as data suggests that around 50-90% of American and European banks are exploring blockchain and the financial services industry alone spends around $1-2 billion on blockchain4 on an annual basis.

Here TOP use cases are trending in 2023 and successful case studies around these use cases.

• Digital Identity

• CBDC

• Asset Tokenization

• Government digital Public Infrastructure

• Financial Services/FinTech

• Supply Chain Management

Digital Identity: Digital identity management is another area where blockchain is gaining traction as a potential solution. Traditional identity management systems are often centralized and vulnerable to data breaches and identity theft. Blockchain-based digital identity systems can provide a decentralized and secure way to manage and verify identities, reducing the risks associated with data breaches and identity fraud. In 2023, we can expect to see increased adoption of blockchain-based digital identity solutions in various sectors, including finance, government, and e-commerce.

Asset Tokenization: Physical assets, such as real estate, art, and other valuable items, can be tokenized through the blockchain. This process converts assets into digital tokens, increasing accessibility and liquidity. With blockchain’s transparent ownership records and seamless trading capabilities, investors can benefit from fractional ownership and easily trade tokenized assets. Central banks and government organizations are entering the scene as well, investigating the idea of tokenization and constructing the necessary framework to stay in line with technological progress. According to Boston Consulting Group, asset tokenization and blockchain have the potential to save around US$20 billion in global clearing and settlement annually. Additionally, by 2030, it could unlock a market worth US$16 trillion for tokenized illiquid assets.

Central Bank Digital Currency:  A CBDC is a virtual money backed and issued by a central bank. As cryptocurrencies and stablecoins have become more popular, the world’s central banks have realized that they need to provide an alternative—or let the future of money pass them by. 130 countries, representing 98 percent of global GDP, are exploring a CBDC. In May 2020, only 35 countries were considering a CBDC. A new high of 64 countries are in an advanced phase of exploration (development, pilot, or launch).

Government: Blockchain is being used by governments to improve the efficiency and transparency of a variety of processes, including voting, land registry, and social welfare payments. The global government blockchain market is expected to grow at a CAGR of 80.4% from 2023 to 2030.

Financial services: The finance industry is one of the largest adopters of blockchain technology. Blockchain is being used in finance to improve the efficiency and security of a variety of processes, including payments, trade finance, and asset management. The global finance blockchain market is expected to grow at a CAGR of 89.2% from 2023 to 2030.

Supply chain management: Blockchain is being used in supply chain management to improve the transparency and traceability of goods and services. Blockchain can help to reduce fraud and counterfeiting, and it can also help to improve the efficiency of supply chain operations. The global supply chain management blockchain market is expected to grow at a CAGR of 82.3% from 2023 to 2030.

Blockchain Trends/Highlights in 2023

Real-world Asset(RWA) Tokenization: The core idea of real-world asset tokenization is basically to create a virtual investment vehicle on the blockchain linked to tangible things like real estate, precious metals, art and collectibles.

ZKP Layer-1 Blockchain:  The technology enables blockchain projects to facilitate greater transaction throughput, protect user data while still being able to verify identities, and support complex computation, while also allowing enterprises to adopt blockchain technology while protecting their intellectual property. 

Decentralized Finance(DeFI): The year 2023 seen deeper integration between NFTs and DeFi. Platforms embracing NFT-backed collateral, lending, and trading will empower users to harness their NFT holdings to access DeFi services, thereby further enriching the utility and applications of both NFTs and DeFi.

Web3 gaming: Web3 Gaming has emerged as a revolutionary trend, introducing a new generation of online games built on blockchain technology. These games offer decentralized and transparent gameplay, enabling players to own and trade in-game assets securely. As the focus shifts towards creating enjoyable gaming experiences, the integration of blockchain and NFTs brings a new dimension to gaming, enticing both existing and new users into the world of blockchain technology.

Interoperability: Blockchains need to become interoperable in order for the industry to truly flourish and several innovations will accelerate the ecosystem towards it. The interoperability framework from Hyperledger called Hyperledger Cacti has matured to graduated status to use in production, it provides interoperability between Hyperledger, R3 & and EVM chains.

Regulatory consideration towards adoption of Blockchain & Digital Assets: Global Digital Assets & Crypto location has formed like MICA & VARA, In India’s G20 presidency global consent was achieved to form global crypto & digital asset regulations.

Bear Crypto Market & Blockchain Project Failure: The price of cryptocurrencies has been through a rollercoaster ride in the first half of the year. FTX fallout and Uncertainty about clear regulations.  There are few enterprise blockchain failures due to ROI & and missing out on clear data-sharing governance in the DLT consortium.

Blockchain Startup & Funding in 2023: In 2022, Web3 startups raised nearly $16 billion in the first half of the year, but this year’s fundraisers have totaled just $3.6 billion — a 78% drop.  Crunchbase’s data indicates that web3 startups raised $1.3 billion in the third quarter, down from around $2 billion in both Q1 and Q2. However, the number of Web3 unicorns for Q3 2023 rose to surpass that of Q2 2023 with five unicorns. The space also saw about 180+ deals in the same quarter.

Geographic Adoption

• Asia, especially China, will continue to be a major player in blockchain development and adoption.

• Europe and North America will see growth, with regulatory frameworks becoming clearer.

• Developing countries may use blockchain to leapfrog traditional infrastructure in various sectors.

The adoption of blockchain technology in finance accelerated the industry’s growth. This year, we’ve witnessed the remarkable potential of blockchain as it revolutionizes the industry. From simplifying cross-border payments and transforming trade finance to securing digital identity verification and enhancing supply chain finance, blockchain has proven its ability to streamline processes, boost transparency, drive efficiency, and fortify security within the financial ecosystem. Moreover, by leveraging blockchain for fraud detection and complying with Know Your Customer (KYC) regulations, financial systems are bolstered and seamless interactions between customers and institutions are facilitated. As we forge ahead, it becomes increasingly evident that blockchain will continue shaping and redefining the future of finance, empowering individuals and businesses with innovative solutions that truly make a difference.

Governments will work on establishing clearer regulations to address concerns about fraud, money laundering, and investor protection. This will influence blockchain adoption. As blockchain technology becomes more mainstream, educational institutions and organizations will offer more resources and training programs to educate professionals about its use.

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