While private sector players are keen on utilizing blockchain technology, governments could be the biggest adopters of Web3, pushing the market capitalization to new highs.
According to a Research and Markets report, the market capitalization for blockchain applications in government is expected to reach $791.5 billion by 2030. In 2024, the market size stands at a modest $22.5 billion, with the projection representing a compound annual growth rate (CAGR) of 81%.
The spike in valuation for the sector will be driven by several factors including a dire need for transparency in government processes. Early adopters of Web3, particularly private enterprises, have pulled up transparency benefits, forcing government institutions to follow suit.
With the demand for government transparency, the report predicts blockchain adoption from different countries worldwide. Efficient procurement processes and election use cases are expected to be major drivers for the technology while pundits are eyeing the reduction of administrative costs.
Key application areas include public infrastructure management, welfare distribution, court processes, and taxation.
The report projects a rise in new application providers tailored specifically for government-focused clientele distinct from enterprises. Middleware and infrastructure providers are expected to wade into the space, pushing the market valuation to nearly $800 billion by the decade’s end.
Regarding distribution, the United States and the rest of North America will hold a clear lead over the sector, with Europe steadily increasing its market share. China is expected to lead Asia’s blockchain adoption in government while the rest of Asia-Pacific increases the size of its adoption metrics.
Early adopters show promise
Governments adopting blockchain have seen a rise in productivity and efficiency metrics in recent years. The lowest hanging fruit for early adopters appears to be in finance, with regulators leaning on the technology to roll out central bank digital currencies (CBDCs).
Others are eyeing cross-border payment applications and use cases in tourism via metaverse offerings. Several countries have turned to blockchain for digital identity solutions while unveiling digitization plans.
IoT in smart cities eyes $952 billion valuation by 2032
Meanwhile, Internet of Things (IoT) technology in smart cities is growing and is projected to soar to nearly $1 trillion by 2032, driven by various applications.
SNS Insider says the sector will clinch a market size of $952.69 billion before 2032 from its current of 195.18 billion. The report predicts a compound annual growth rate (CAGR) of 19.3% during the eight-year forecast period, with several factors playing a role in the surge.
The biggest growth driver for IoT in smart cities will be increasing adoption rates by governments in multiple regions. Several governments building smart cities from scratch are inserting IoT into the underlying architecture, while a handful of nations are retrofitting existing cities with IoT functionalities.
IoT is gaining ground in key sectors, including transportation, public safety, public utilities, health care, and energy. Since these sectors are integral to building smart cities, the report projects a double-digit CAGR for market size growth.
Apart from government policies, a seismic shift in consumer behavior over the last five years confirms the increasing acceptance of IoT.
Remote monitoring is expected to bring real-time location systems while reporting and analytics will be done more efficiently. Smart public transportation services will be the industry leader in application, while citizen services and buildings will take up a third of the market’s capitalization.
Regional distribution sees North America hold a 42% market share by 2032, but the Asia Pacific region will have the fastest-rising CAGR at 21.51%. In Asia, China will be the undisputed industry leader, with early applications in smart waste disposal and energy efficiency yielding positive results.
The report projects a combination of IoT with blockchain for smart cities for transparency, contributing its share to the ner-$1 trillion market capitalization.
Not an easy climb
To reach the projected market capitalization, the sector will have to contend with a raft of issues. Cybersecurity issues stand as the biggest obstacle but blockchain integrations are expected to provide a measure of security for consumers.
Furthermore, IoT for smart cities will require expensive and scalable infrastructure while interoperability and standardization issues threaten industry growth. The report mentions that the energy requirements of smart cities, along with the changing regulatory landscape for emerging technology, are potential roadblocks.
Watch: Educating the government on potentials of blockchain
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Wahid Pessarlay