Blockchain technology, the distributed ledger system underpinning cryptocurrencies like Bitcoin, is poised to revolutionise numerous sectors beyond finance. Its core features–decentralisation, immutability, and transparency–offer a powerful set of tools for streamlining processes, enhancing security, and enabling new business models.

A recent report by Statistica estimates that global blockchain spending will reach $19 billion by 2024, representing a 45% CAGR, creating new opportunities and reshaping traditional business models. While the full extent of its impact is still unfolding, several industries stand to benefit significantly from this adoption wave.

• BFSI: The financial services sector is arguably the most ripe for blockchain disruption. Traditional intermediaries can be replaced by smart contracts – self-executing agreements coded on-chain – automating repetitive processes like KYC, and reducing transaction costs.

According to several reports by Deloitte, blockchain in banking operations can yield up to a 30% reduction in costs globally. Trade finance and cross-border payments can be re-imagined with solutions like RippleNet and JPMorgan’s Quorum, which reduce settlement times from days to minutes, while cutting costs by an order of magnitude.

On a related note, asset tokenisation facilitates fractional ownership of assets, democratising access to investment opportunities.

• Healthcare: Blockchain can facilitate secure and efficient exchange of medical records and resources. Using platforms like medicalChain, patients can securely store and share their medical records with authorised providers, empowering them to make informed decisions about their health, improving access to care, and streamlining the healthcare workflow.

This approach promises to directly tackle medical error – arguably the third-largest cause of deaths in the US. An NIH report asserts that blockchain can be used to track the provenance of pharmaceuticals, ensuring their authenticity and preventing counterfeit drugs from entering the market.

• Logistics: The complex and often opaque nature of global supply chains creates significant inefficiencies and vulnerabilities. Blockchain can enhance transparency and traceability by providing a tamper-proof record of every step in the supply chain, from raw-material sourcing to product delivery, enabling accurate tracking and fraud-prevention.

For instance, IBM’s Food Trust Network connects retailers, suppliers, and consumers, and has been adopted by major companies like Nestle & Walmart – whose Food Traceability Initiative has reduced the time taken to trace the source of a contamination from weeks to seconds. A World Economic Forum report estimates that blockchain could reduce supply chain barriers, adding $1.1 trillion to global trade.

• Media and Entertainment: The digital media industry is plagued by piracy and copyright infringement, and faces new challenges amidst the Cambrian explosion of generativeAI tools. Blockchain implementations like NFTs can go a long way in protecting IP rights and ensuring artists receive fair compensation for their work. Additionally, it can empower creators by enabling them to directly connect with their audience and distribute content without relying on intermediaries.
• Real Assets: Real asset transactions, especially real estate, are notorious for complexity and inefficiency. Some such real estate platforms are beginning to facilitate property transactions using smart contracts.

These allow real estate deals to be processed on chain and significantly reduce the need for closing costs like title insurance. For instance, Sweden’s Lantmäteriet pilot project demonstrated blockchain’s ability to streamline the real estate transfer process, providing a secure and transparent transaction platform.

Estonia, a leader in e-governance, has adopted blockchain to manage its land registry and voting system, increasing efficiency and reducing fraud. Also, their e-Health system leverages the tech to achieve a secure and interoperable healthcare data system. Their implementation showcases the multifaceted advantages of blockchains.

If the increasing experimentation by young and established companies alike is any indication of the opportunity spectrum here, application of blockchains is expected to continue to accelerate.

As we enter 2024, we’re perhaps slowly emerging from the trough-of-disillusionment phase of this new tech’s Gartner Hype Cycle.

As these applications get wider adoption, implications across key sectors present significant opportunities, and, as with any disruptive tech, challenges around distribution & regulatory risks.

The venture industry has taken clear note. According to CB Insights, VC funding of blockchain startups reached a record high of $26.8 billion in 2022, although the recent trend has been on the decline, in line with the global macro and overall slowdown in the pace of venture financings.

Often projects in this space require nuanced participation and support – on the community, technology and governance sides. Given these specific challenges of the blockchain segment, some investors have built large in-house tech teams to not only help underwrite the complex tech, but also contribute to open-source projects more actively.

Decentralised fundraising models like ICOs/ Security Token Offerings have also been tried, though the experience of business-building that VCs bring to the table will continue to be invaluable for entrepreneurs in the space.

Blockchain technology is a powerful tool with the potential to transform numerous industries. While some of the early projects have faced adoption challenges, they have successfully demonstrated their potential. As the technology matures and adoption ramps up, we can expect to see it snowballing across the global economy.

Ravi Srivastava is Partner at venture capital fund Leo Capital