Blockchain-as-a-Service Market

Market Overview

The global blockchain-as-a-service market size was valued at USD 1.3 billion in 2022. It is estimated to reach USD 79.77 billion by 2031, growing at a CAGR of 58% during the forecast period (2023–2031). The increasing number of cyber threats following the COVID-19 pandemic aided in accelerating the global blockchain-as-a-service market growth, fueling the need for blockchain as a service (BaaS) solutions.

Blockchain-As-A-Service (BaaS) is a cloud-based service that enables organizations and developers to construct, host, and administer blockchain applications and smart contracts without building and maintaining their blockchain infrastructure. It simplifies the use of blockchain technology by providing pre-configured templates, tools, and infrastructure components, decreasing the complexity and cost of installing and operating blockchain networks.

Small and medium-sized businesses' growing use of blockchain-as-a-service (BaaS) tools and services to construct their blockchain applications, smart contracts, and payment systems is likely to fuel market expansion over the projection period. Small and medium-sized businesses are reaping the benefits of BaaS services such as secure decentralization, high immutability, efficiency, cost-effectiveness, security, etc. Furthermore, the evolution of cryptocurrencies and measures to raise awareness and adoption of blockchain-as-a-service among large organizations will likely drive the market's growth.

Market Dynamics

Global Blockchain-as-a-Service Market Drivers

Democratization of Blockchain Technology

BaaS is critical in democratizing blockchain technology access. It lowers the entrance hurdles and makes blockchain available to various organizations, regardless of size or technological skill. Small and medium-sized enterprises (SMEs) frequently lack the resources and technical know-how to build and manage their blockchain infrastructure. BaaS is a cost-effective and user-friendly solution. A small logistics company, for example, can use a BaaS platform to adopt blockchain for transparent supply chain tracking without requiring a specialized IT team. According to a Deloitte poll, 40% of SMEs believe blockchain technology is relevant to their industry. BaaS systems enable these organizations to utilize blockchain without requiring considerable in-house expertise.

Furthermore, the use of BaaS is not confined to advanced economies. Emerging markets are also adopting BaaS to capitalize on the benefits of blockchain. This global adoption is fueling the rise of BaaS. 

One of the top BaaS platforms, for example, Microsoft Azure, is available in different areas worldwide. This global reach demonstrates the high demand for BaaS in various markets. The Blockchain-as-a-Service Market trend is projected to continue as organizations recognize the accessibility and benefits of BaaS.

Global Blockchain-as-a-Service Market Restraints

Regulatory Challenges

Financial firms are frequently subject to strict regulatory obligations such as anti-money laundering (AML) and Know Your Customer (KYC). These restrictions differ from one country to the next and are frequently updated. Implementing blockchain applications in this sector via BaaS platforms necessitates careful thought about complying with these rules while reaping the benefits of blockchain's efficiencies. 

Furthermore, healthcare institutions may use blockchain to manage and share patient health records safely. While blockchain provides a transparent and immutable record, the sensitive nature of healthcare data requires strong data protection standards to be followed. It isn't easy to achieve compliance with standards such as the Health Insurance Portability and Accountability Act (HIPAA) in the United States or the General Data Protection Regulation (GDPR) in Europe. However, as the blockchain and BaaS industries mature, solutions and best practices are being created to address these problems and enable wider adoption across various businesses.

Global Blockchain-as-a-Service Market Opportunity

Integration with Emerging Technologies

BaaS integration with the Internet of Things (IoT) represents a big opportunity. IoT devices generate massive volumes of data that must be controlled and kept securely. BaaS can provide the infrastructure required to ensure the data's integrity and security. A smart city project, for example, that relies on an IoT network for traffic control, waste collection, and environmental monitoring, can utilize BaaS to build a secure and scalable infrastructure for data transmission and storage. BaaS can help with IoT security issues such as identity, data integrity, and access control. According to Gartner, IoT devices will make more than 30% of enterprise access control decisions by 2023, boosting the demand for secure access management via blockchain.

Combining BaaS and IoT allows for use cases such as supply chain monitoring, in which IoT sensors check the condition and location of items, and the data is securely recorded on a blockchain, ensuring transparency and trust among supply chain participants. As more businesses embrace IoT devices for various purposes, the demand for secure and effective data management solutions will increase. For these applications, BaaS can provide a reliable and scalable infrastructure.

Regional Analysis

The global blockchain-as-a-service market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

North America Dominates the Global Market

North America is the most significant global Blockchain-as-a-Service market shareholder and is estimated to grow at a healthy CAGR over the forecast period. The increased use of blockchain technology in software organizations and financial institutions such as banks and insurance sectors across nations such as Canada and the United States is driving the growth of the blockchain-as-a-service market in North America. Over the foreseeable period, thriving e-commerce and online retail activities would contribute significantly to regional market proceeds.

Additionally, growing demand for real-time financial transaction processing in small and medium-sized businesses in nations such as the United States will accelerate the breadth of regional market expansion in the following decade. According to the China Academy of Information and Communications Technology (CAICT), there were around 2,000 ongoing blockchain initiatives in the United States between 2014 and 2017. Furthermore, over 500 organizations presently provide blockchain services in the United States. Furthermore, the United States and Canadian governments invest in blockchain services for public utilities such as airports, banks, and defense and military. The US government invested approximately USD 2.51 billion to assist various blockchain technology firms.

Asia-Pacific is anticipated to exhibit a healthy CAGR over the forecast period. The presence of significant key firms such as Huawei Service (Hong Kong) Co., Limited, BitSE, and others is driving growth in this region. According to the China Academy of Information and Communications Technology (CAICT), there are approximately 298 active blockchain technology and service companies in China. Furthermore, increased investment by various large companies and governments in creating blockchain-based initiatives will boost market growth shortly. For example, according to CAICT, the Chinese government adopted blockchain technology in May 2018 due to its multiple benefits. The Chinese government also funded over USD 600 million in several blockchain-based ventures.

Nonetheless, the government is concerned about the impact of bitcoin on the country's financial stability, economic system, and general public. The Securities and Exchange Commission of Thailand (the "SEC"), which regulates cryptocurrencies and other digital assets in Thailand, issued a directive on the use of cryptocurrency as a means of Payment on January 25, 2022, after consulting with the Bank of Thailand and holding a public hearing between January 25 and February 8, 2022. The regulation forbids "digital asset business operators" (as defined below) from accepting cryptocurrencies as Payment for products and services. These are projected to drive the regional market. 

Europe held a considerable position in 2022 Due to key competitors in the industry. Market leaders are investing in the development of blockchain-related technology. In January 2018, important firms in the United Kingdom committed over USD 19 million to developing new products and services based on emerging technological domains such as blockchain.

The Middle East and Africa, and Latin America are expected to grow rapidly. This expansion is due to increased government initiatives to invest in the development of blockchain services for oil and non-oil firms and the advent of technological developments in these regions.

Segmental Analysis

The global blockchain-as-a-service market is segmented based on components, applications, verticals, and regions.

The component segment is further bifurcated into Tools and services.

The tools segment accounts for the largest blockchain-as-a-service market share. Tools are software applications or platforms that allow people to create, manage, and engage with technology or services. The increased need for BaaS solutions in BFSI enterprises for enhanced and secure transaction models in their business units drives the segment's growth. BaaS tools enable customers to construct, host, and manage blockchain applications, functionalities, smart contacts, and other services using cloud-based services. According to Blockchain-as-a-Service Market insights, some banks and financial organizations focus on incorporating blockchain solutions into their business strategies.

The services a BaaS provider supplies to help users deploy, operate, and maintain their blockchain systems are referred to as services.

The application segment can be bifurcated into Payment, smart contracts, supply chain management, identity management, governance, risk, and compliance management.

The Supply Chain Management segment led the market growth. Blockchain technology is used to trace and verify the flow of goods and products along the supply chain. It increases openness and traceability while decreasing fraud and errors. The market's key players are focusing on building blockchain services for supply chain management applications. Manufacturing and retail organizations are adopting blockchain services in their business divisions to exploit various aspects, such as supply chain operations with improved resource allocation, lower prices, and increased productivity.

Blockchain technology can be used to make payments more secure and transparent. It is frequently connected with cryptocurrency transactions, providing a decentralized and tamper-proof log for financial transactions.

Based on verticals, the market is sub-segmented into BFSI, IT and Telecom, Healthcare, Retail, Manufacturing, Logistics, Government, Media and Entertainment, Energy and Utilities.

The BFSI sector is the most influential, leading to the market’s expansion. Blockchain is utilized in financial activities that require security and efficiency, such as cross-border payments, trade finance, and asset tokenization. The increase is mostly due to various companies' rising usage of decentralized applications based on blockchain services. Secure decentralization, cost-effectiveness, immutability, efficiency, and security are all advantages of decentralized applications. Banking and financial institutions are focusing on launching numerous blockchain-based projects.

The manufacturing industry is expected to increase at a considerable CAGR during the anticipated period. In manufacturing, blockchain enhances supply chain management, quality control, and product tracking. BaaS services in the manufacturing business assist in easing production processes by collecting and keeping previous and present records, which helps to enhance production efficiency by assuring proper labor employment.

Recent Developments

• October 2023- EY and IBM launch AI solutions designed to help increase productivity and drive efficiencies in human resources.
• October 2023- Oracle expands distributed cloud offerings to aid organizations in innovating from anywhere.