Blockchain is not a new technology, having been first outlined in 1991, but its early association with cryptocurrencies has ultimately negatively impacted its wider commercial development to date.

There are substantial opportunities emerging for blockchain and while COVID-19 has disrupted international economic development and diverted corporate strategic resources to short-term aims, the long-term development of blockchain will be substantial in both the public and private arenas. The pandemic may have temporarily stunted market growth in some commercial and industrial areas, but the World Health Organisation’s use of blockchain in its response to the pandemic will further raise its profile beyond cryptocurrency applications.

For industries to fully benefit from all that blockchain has to offer requires a willingness of companies to work with competitors and others in the industrial ecosystem toward some common purpose. There is no doubt that this requirement and the relative immaturity of the technology have held back market growth.

One of the primary driving forces of blockchain adoption now is the increased availability of blockchain-as-a-service, with most of the major technology companies having launched their services. This introduces the possibilities of blockchain solutions to a far wider audience through cloud usage rather than being restricted to the largest enterprises. With major market entrants now offering BaaS including companies such as Microsoft and Amazon then the potential for a wider user audience becomes clear.

Key issues covered in this Report

  • The impact of COVID-19 on the development of the blockchain market

  • The large volume of opportunities of blockchain for public sector activities

  • The even greater breadth of opportunities of blockchain in the private sector

  • The different types of blockchain that are emerging for such varied applications

  • The emergence of blockchain-as-a-service to boost market growth

  • The blockchain industry structure including a vibrant UK industry

  • The attraction of venture capital to blockchain companies and their technology

COVID-19: Market context

The first COVID-19 cases were confirmed in the UK at the end of January, with a small number of cases in February. The government focused on the ‘contain’ stage of its strategy, with the country continuing to operate much as normal. As the case level rose, the government ordered the closure of non-essential retail stores on 20 March, 2020.

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work ‘if absolutely necessary’ followed on 23 March. Initially, a three-week timeframe was put on the measures, which was extended in mid-April for another three weeks. On 10 May a conditional plan to reopen society was announced, including those who cannot work from home, such as those in construction and manufacturing, being encouraged to return to work from 11 May. This was subsequently clarified; companies will have to prove they have introduced safety measures before they can reopen.

The Health Protections Regulations 2020 came into effect on 15 June allowing the reopening of all non-essential retail stores in England as well as the mandatory use of face coverings on public transport. Pubs, restaurants, hotels and hairdressers were able to reopen on 4 July, with many beauty businesses following on 13 July.

In an effort to avoid a return to national lockdowns, the government has reacted with local restrictions being placed where COVID-19 cases rise strongly in excess of national averages. Such local measures have to date affected Leicester (from 29 June with easing as of 3 August); parts of North England (Greater Manchester, parts of Lancashire and West Yorkshire from 31 July) and Luton (with easing as of 1 August).

On 31 July some national lockdown easing measures scheduled to begin on 1 August were postponed for two weeks amid concerns of rising COVID-19 cases including bowling alleys and casinos remaining closed.

Economic and other assumptions

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its July 2020 Fiscal Sustainability Report. The scenario suggests that UK GDP could fall by 12.4% in 2020, recovering by 8.7% in 2021, and that unemployment will reach 11.9% by the end of 2020, falling to 8.8% by the end of 2021.

The current uncertainty means that there is wide variation on the range of forecasts however, and this is reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q1 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

Products covered in this Report

For the purposes of this Report, Mintel has used the following definitions:

Blockchain is a distributed ledger technology (DLT) that is also a transformational technology. It has the potential to extend the digital economy outside the enterprise and is transformational because it allows the enterprise to reach beyond a company’s walls to do business in concert with partners. Blockchain permits the enterprise data centre to reach into the processes it shares with suppliers, customers and partners.

At its most basic level, blockchain is literally just a chain of blocks. “Blocks” on the blockchain are made up of digital pieces of information. Specifically, they have three parts:

  • Blocks store information about transactions, such as the date, time and currency amount.

  • Blocks store information about who is participating in transactions. Instead of using an actual name, the purchase is recorded without any identifying information using a unique “digital signature,” somewhat like a username.

  • Blocks store information that distinguishes them from other blocks. Each block stores a unique code called a “hash” which distinguishes it from every other block.

A single block on the blockchain can actually store up to 1 MB of data. Depending on the size of the transactions, that means a single block can house a few thousand transactions under one roof.

When a block stores new data it is added to the blockchain. A blockchain, as its name suggests, consists of multiple blocks strung together. In order for a block to be added to the blockchain, however, four things must happen:

  • A transaction must occur.

  • The transaction must be verified. With blockchain, however, the verification task is left up to a network of computers. These networks often consist of thousands (or in the case of Bitcoin, some five million) of computers spread across the globe. These computers confirm the details of the purchase, including the transaction’s time, currency amount and participants.

  • The transaction must be stored in a block. After your transaction has been verified as accurate, it gets the green light. The transaction’s dollar amount, your digital signature and the originator’s digital signature are all stored in a block. There, the transaction will likely join hundreds or thousands of others like it.

  • The block must be given a hash. Once all of a block’s transactions have been verified, it must be given a unique, identifying code called a hash. The block is also given the hash of the most recent block added to the blockchain. Once hashed, the block can be added to the blockchain.

  • When the new block is added to the blockchain, it becomes publicly available for anyone to view.

Anyone can view the contents of the blockchain, but users can also opt to connect their computers to the blockchain network. In doing so, their computer receives a copy of the blockchain which is updated automatically whenever a new block is added. Each computer in the blockchain network has its own copy of the blockchain, which means there are thousands - or in the case of Bitcoin millions - of copies of the same blockchain. Although each copy of the blockchain is identical, spreading that information across a network of computers makes the information more difficult to manipulate. With blockchain, there isn’t a single, definitive account of events that can be manipulated. Instead, a hacker would need to manipulate every copy of the blockchain on the network. Although transactions on blockchain are not completely anonymous, personal information about users is limited to their digital signature or username.

Blockchain technology accounts for the issues of security and trust in several ways. First, new blocks are always stored linearly and chronologically - that is, they are always added to the ‘end’ of the blockchain. After a block has been added to the end of the blockchain, it is very difficult to go back and alter the contents of the block. This is because each block contains its own hash, along with the hash of the block before it. Hash codes are created by a math function that turns digital information into a string of numbers and letters. If that information is edited in any way, the hash code changes as well.

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