TheCityUK identifies that around 9.8 million people in the UK, equivalent to 19% of the population, own cryptoassets in 2021. This is significant growth compared with just 3% of the population in 2018. Cryptocurrencies are an increasing feature of international economies. However, blockchain is much more than just its association with cryptoassets and there are expectations that up to 20% of the world economic infrastructure will be running on blockchain-based systems by 2030.

COVID-19 has brought new opportunities for the disruptive technology and interest in the sector from venture capitalists has increased. Investment in 2020 in start-ups increased 10% to US$2.3 billion, but this was already exceeded in Q1 2021 when investment levels reached US$2.6 billion. While this was influenced by several large investments, the number of deals in Q1 2021, at 129, was equivalent to 38% of that recorded throughout 2020.

There are few limitations on the potential of the sector with widespread applications being actively examined. However, implementation is often at a very early stage and the nascent nature of the market is reflected in the global growth taking revenues to an expected US$7 billion in 2021. Forecasts vary strongly due to difficulties in identifying the timing of implementations with one expectation indicating the global market will reach US$3.1 trillion by 2030.

Applications are developing in virtually every industry and commerce sector as well as the public sector. Central bank cryptocurrencies could also become an integral part of the world economy, following the first launch in 2020.

Key issues covered in this Report

  • How COVID-19 has propelled digitisation programmes generally so furthering the opportunities for blockchain.

  • The exceptional levels of growth anticipated with huge prospects throughout industry, commerce and public services.

  • How and why the launch of the Sand Dollar in the Bahamas will be the first of a wave of central bank digital currencies.

  • The emergence of blockchain-as-a-service that will continue to widen the industry opportunities.

  • The extreme growth in venture capital investment in the technology in Q1 2021 consolidating a steady stream of investment in previous years.

  • The unusual industry structure that sees half the international patents held by non-technology companies.

COVID-19: market context

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. Rapidly rising case numbers led to the first national lockdown, starting on 23 March. It wasn't until 15 June that non-essential stores were allowed to reopen, followed by pubs, restaurants, hotels and hairdressers on 4 July and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a month-long lockdown from 5 November and Scotland introducing a new five-level system of coronavirus restrictions.

Despite these restrictions, however, case numbers continued to increase. All four UK nations tightened restrictions further in January 2021, effectively leading to a full UK-wide lockdown.

On 22 February, Boris Johnson announced the roadmap to an easing of restrictions in England, starting with the reopening of schools on 8 March, followed by easing of restrictions on outdoor gatherings on 29 March and with a hoped end to all restrictions by 21 June, although the growth of the Delta variant means this final lifting of restrictions was delayed. The Welsh and Scottish governments also gave more details on their plans to ease restrictions, with both nations taking a slightly more cautious approach to the one planned for England.

Even before the full reopening of the economy, retail sales and Mintel’s own household finances tracker provided encouraging signs of a rapid return to consumer confidence, and a willingness to spend at least some of the savings that many households were able to build up over the lockdown periods.

The UK’s vaccination programme started on 8 December 2020. As of 13 July more than 87% of the UK population had received their first dose of the vaccine and more than 66% had received their second dose.

Economic and other assumptions

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its March 2021 Economic and Fiscal Outlook report, but also take into account predictions made by other economic forecasts, including the Bank of England.

After the fall of 9.9% over the course of 2020, the OBR’s scenario suggests that UK GDP will grow by 4% in 2021 and 7.3% in 2022. GDP isn’t expected to return to pre-COVID-19 levels until Q2 2022, although this is six months earlier than the OBR forecast in November 2020, mainly because of the faster-than-expected rollout of vaccines.

Unemployment is expected to peak at 6.5% in Q4 2021. As with GDP, this is more positive than the OBR’s November forecast, but the OBR does raise the prospect of long-term scarring on employment, especially in the more exposed retail and hospitality sectors.

The rapid vaccine rollout and the continued efficacy of the vaccine, however, mean that more recent economic forecasts have been significantly more optimistic than the OBR’s March forecast, even given the rise of the Delta variant. We have factored this rise in optimism into our market analysis and scenario forecasts.

Products covered in this Report

For the purposes of this Report, MBD 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 1MB 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 5 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 Amazon’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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