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Blockchain – Habitat for Cryptocurrencies and NFTs

  • GlobalData estimates Blockchain market to grow at a CAGR of 46% from the year 2020-2025

  • Bitcoin and Ethereum cryptocurrencies, based on blockchain technology, have emerged as dominant cryptocurrencies in the world, capturing almost 50% of the crypto market

  • Non-Fungible Tokens (NFT) reported considerable growth in 2021, which also increases the demand for Ethereum & Solana that is used in purchasing NFTs

Blockchain – Habitat for Cryptocurrencies and NFTs

Published: January 2022
Source: GlobalData

Blockchain is one of the trending technologies in the world, with the highest number of social media mentions in 2021. Due to various use cases in the Supply chain, Payments, Digital Assets (Cryptocurrencies), Non-Fungible Tokens (NFT), and Smart Contracts, Blockchain registered massive growth in the past few years. According to GlobalData, the blockchain market is likely to grow from $3.6 billion in 2020 to $24.1 billion in 2025 at a CAGR of 46%. An increase in investments and acquisitions aids the growth - PayPal recently acquired Curv (Cryptocurrency Security start-up) in March 2021 at a valuation of $200 million.

Blockchain technology-based cryptocurrencies such as Bitcoin and Ethereum have registered tremendous growth in recent years. It has prompted the launch of other digital assets as well.

Blockchain and its Role in Cryptocurrencies

Blockchain technology was first introduced in Bitcoin, the largest cryptocurrency globally, with a market capitalization of ~$807 billion as per Coin Market Cap. Blockchain is a decentralized ledger of all transactions in P2P (peer-to-peer) networks and confirms transactions without any clearing authority, as these cryptocurrencies need blockchain to record their transactions.

According to Coin Market Cap, as of January 2022, there were around 16,893 cryptos listed on 453 exchanges with a total market capitalization of $2.05 trillion. Bitcoin and Ethereum dominate the market, with 39.5% and 19.1% share. El Salvador is one of the first countries to officially recognize Bitcoin as legal tender, making bitcoin an accepted means of exchange for goods and services. As per the 2021 Global Crypto Adoption Index by Economic Times, Vietnam and India are among the leading crypto adopters, while the US and countries in Europe are still researching the potential of central bank digital currencies.

An increase in the adoption of cryptocurrencies in various countries and their usage to buy Non-Fungible Tokens or Digital Collectibles will increase the market value of Blockchain-related technologies.

Non-Fungible Tokens: A New Arena

NFT or Non-Fungible Tokens is based on Ethereum-Blockchain Technology. It is a unique digital representation of an item, which can be in the form of an image, video, or audio. It provides the owner of the digital item a unique and clear proof of ownership. As NFTs are unique, they are not replicable similar to an individual game character, artwork, or collectible.

NFT as a market is growing as NFT marketplace such as Opensea currently has listed more than 24 million tokens. As per Forbes, trading in NFTs in 2021 reached $23 billion. The market registered new highs in 2021, with an NFT called “Beeple’s the First 5000 Days” being sold for over $69 million. Growth in the market follows the boarding of the NFT bandwagon by celebrities and global brands such as Nike and Visa investing in the domain. Besides artwork, NFT can be used in multiple sectors, such as Real Estate, to accelerate the verification and transfer ownership by using smart contracts.

Blockchain and Web 3.0

Blockchain-driven technologies such as cryptocurrencies and NFT will play a significant role in the upcoming internet revolution, Web 3.0. Compared to Web 2.0, Web 3.0 is more decentralized, and users can be in control of their online data. It will also help personalize web browsing based on user preference, allowing sellers to market their products better. Since Web 3.0 is decentralized, it will prevent big corporations from censoring users on the decentralized apps. Web 3.0, based on blockchain technology, will grow with time as we move towards a more decentralized tech ecosystem and token-based economics.



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