Global revenues for blockchain technology are on track to hit almost US$10 billion by 2023, finds ABI Research, a global tech market advisory firm. These revenues continue to show strong interest in blockchain application, despite the significant decrease in Initial Coin Offerings (ICOs) in 2018. Investment continues to swell, buoyed primarily by an increase in VC funding, notably in blockchain infrastructure development.

VC funding is catching up to ICOs, with 620 rounds totaling US$3.1 billion in 2018, up from 153 rounds at US$850 million in 2017. “Tighter regulation (including securities) and taxation (as foreign currency, income, financial asset, etc.) on cryptocurrencies in a number of countries are prompting investors to look beyond ICOs towards more stable VC-based investment for blockchain startups focusing on support infrastructure, retail, supply chain, and enterprise applications,” explains Michela Menting, Blockchain & Digital Security Research Director at ABI Research.

Despite a strong growth outlook from a revenue perspective, the blockchain market beyond financial and insurance applications is struggling to lift off, due in large part to the lack of a middleware class of blockchain offerings, which can help tie-in Blockchain-as-a-Service (BaaS) with applications from startups. As such, this missing piece continues to provide obstacles for blockchain developers and therefore low revenue generation for blockchain companies. Moreover, BaaS offerings are very much focused on locking-in customers in-house (infrastructure, platform and software), with limited interoperability or platform agnostic offerings at the platform level to allow for hybrid scenarios.

However, ABI Research expects the middleware segment to emerge from 2021 onward, with several platform-agnostic solutions hitting the market, enabling development and interoperability at the platform and software level. “While the crypto-winter has dampened spirits somewhat despite successful completion of many pilots, the dip in enthusiasm is temporary and will serve to filter out the superficial and fraudulent offers from the market,” Menting concludes.