Trend Report




Freeing the trapped race car

NFTs. Smart contracts. Initial coin offerings.

Since Satoshi Nakamoto published "Bitcoin: A Peer-to-Peer Electronic Cash System" in 2008, there’s been an explosion in the number of concepts, acronyms, and business models related to blockchain technology.

How successful will these offshoots be?

Well, that depends on who you ask and what you ask them about.

Former Google CEO Eric Schmidt called bitcoin a “remarkable cryptographic achievement” while J.P. Morgan Chase CEO Jamie Dimon labelled it a “fraud”.

Michael Burry, the investor made famous by “The Big Short”, compared non-fungible tokens (NFT) to “magic beans”. Meanwhile, auction house Christie’s sold a piece of NFT artwork for $69.3 million.

One thing everyone can agree on is the transformative potential of a blockchain, a decentralized ledger that allows parties to transact with each other without a middleman.

Digital business is rapidly evolving and our modern intermediaries, aka middlemen like banks, have failed to keep up. As Harvard Business Review put it, they’re “like a rush-hour gridlock trapping a Formula 1 race car.”

Blockchains offer a solution.

So what are these solutions? And how do these solutions translate into business opportunities for entrepreneurs?

In this exclusive Blockchain Trends report, you’ll learn about the transformative potential of blockchain technology and the lucrative business opportunities it presents. You’ll learn about the most interesting cross-industry business opportunities offered by blockchains, and what role Canada stands to play in the world’s rapidly developing blockchain ecosystem.

What is blockchain technology in a nutshell?

What is blockchain technology in a nutshell?

Before diving into the cool opportunities presented by blockchain technology, let’s demystify it.

As we mentioned earlier, a blockchain is a decentralized ledger that allows parties to transact with each other without a middleman.

Let’s break down what this means.

From centralized ledgers

Suppose you’re a business owner in Calgary who does business with a supplier in Edmonton. Every month, you receive a shipment of computer monitors and in return, you send $10,000. One month, you receive an email from your supplier saying they haven’t received your $10,000 payment, but your ledger shows that you sent it.

Who’s in the right?

There is no reason for the supplier to trust your ledger, so you’re left to somehow prove that you’ve sent this money. Maybe your supplier takes your word for it and checks their funds. Maybe they decide you’re a cheat and travel to Calgary to get their money by force.

Now take this scenario and multiply it by thousands of parties trying to do business together: retailers, distributors, manufacturers all arguing with each other about who owes who instead of conducting business.

This is extremely inefficient.

Now let’s suppose when you sent that money there was a trusted third party – someone who has no stake in either business – who monitored each month’s money transfer and recorded the transaction in their own ledger. Anytime there was a dispute, both you and your supplier would check this third-party ledger.

This third-party ledger is a centralized ledger. Today, the third-party ledger for most Canadians is a bank. About 30 million financial transactions travel throughout Canada every day, totalling over $210 billion. These transactions are securely recorded.

Of course, consumers and businesses pay for this peace of mind with both their time and money. Since we’re so reliant on this service, there’s little incentive for banks to cut the cost of either. The cross-border money transfer industry alone pulls in an estimated $224 billion in revenues. If you want to send money from Regina to Rome, you’ll be hit with a money transfer fee of anywhere from $15 to $40, a currency exchange markup of around 2%, and your recipient probably won’t receive the money for a few days. Even after paying all these fees, your recipient might also be charged by any other banks that facilitate the transfer.

We are paying a very high premium for trust. This is because money doesn’t transfer directly from Point A to Point B. It travels through a network of interconnected financial institutions, increasing the time and cost in the process.

But what if there were a way to decentralize this system? What if there were a way for someone to interact with friends, family, and business partners directly, without an intermediary, and while retaining trust?

To decentralized ledgers

A blockchain is a decentralized ledger or record. Instead of one party or institution verifying each transaction, a network of people or “nodes” verify a transaction using a specific “consensus algorithm”. This is just a fancy way of saying rules for how a large group of people agree on something. Different blockchains have different consensus protocols such as Proof of Stake, Proof of Space, and Proof of Work, an energy-intensive process popularized by bitcoin.

Once there’s consensus, a transaction is executed and the record or “block” is added to the chain. In the financial world, blockchain technology can bring companies closer to real-time transactions and minimal fees. But there are a few challenges that stand in the way of widespread adoption, which we will discuss in this report.

Interest in blockchain technology increasing in Canada and around the world

Interest in blockchain technology increasing in Canada and around the world

In early 2018, cryptocurrency prices plummeted. Searches for “blockchain” increased in response before levelling out until early 2021. Five years ago, the blockchain was just an obscure technology that somehow allowed people to become overnight millionaires. Today, it’s something that bank CEOs and governments are actively investing in to avoid losing their grip on the global financial system.

Figure: Canada-wide interest in the term “blockchain” over a five-year period via Google Trends.
Figure: Canada-wide interest in the term “blockchain” over a five-year period via Google Trends.

By 2023, global spending on blockchain solutions will hit $19 billion. This represents an iota of blockchain’s potential value over the next several decades. While 60% of blockchain’s current market value comes from the financial sector, it’s quickly diversifying to other areas such as healthcare, agriculture, and supply chain management. In Canada, the growing number of blockchain employees, particularly in Ontario and British Columbia, signals the development of our own blockchain technology ecosystem.

Figure: The number of blockchain workers in Canada has exponentially increased since 2015. (ICTC)

Recent trends in blockchain technology

Recent trends in blockchain technology

What are the forces driving blockchain technology’s development and adoption? Over the past 12 months, we’ve witnessed the following trends:

  • Private blockchains are driving the market forward
  • Central banks and governments are more invested in digital currency conversations
  • Industry-specific use cases are going to further power the increase in blockchain usage
  • Interoperability is becoming an important element for widespread blockchain adoption

Private blockchains are driving the market forward

Bitcoin was the first blockchain use case, and it reflected the goals of decentralization. While bitcoin’s rising prices mesmerized the public, private companies turned their attention to the blockchain itself.

For the private sector, the thought of real-time reconciliations was very appealing.

Decentralization and public access? Not so much.

In response, they started toying with the idea of private blockchains. These blockchains would have the benefits of decentralization in a closed environment. Whereas anyone with an internet connection can access bitcoin’s blockchain, private blockchains function as an invite-only network.

Spunta Banca DLT in Italy

Banks found a very promising use case: interbank reconciliation. Banks borrow from each other domestically, so they can stay in line with mandatory reserve requirements. The Italian Banking Association (ABI) launched Spunta Banca DLT, a distributed ledger project for interbank reconciliation. As of March 2021, this private blockchain has processed 332 million transactions, and is poised to be a launching pad for future blockchain-enabled financial recordkeeping in Italy and across Europe.

Enterprise Ethereum Alliance (EEA)

Ethereum is the most actively used blockchain. It was released in 2015 as a public blockchain and offers its own cryptocurrency, Ether, which is the second-largest cryptocurrency after Bitcoin. The biggest difference between Bitcoin and Ether is that while Ether has its own associated blockchain, Bitcoin doesn’t. In other words, Etherium and Ether have value that extends beyond a one use case.

In 2017, a group of Fortune 500 companies, research groups, and startups joined forces to found the Enterprise Ethereum Alliance, an organization focused on developing a private Ethereum blockchain for private use. Today, the EEA counts The Bank of New York Mellon, J.P. Morgan Chase, Microsoft, SAP, and VMware as members. Together, this alliance works on enterprise requirements, building standard specifications, and achieving global interoperability.

Why is the private sector so important for driving widespread adoption of blockchain technology?

If anyone around the world can access public blockchains, why will a handful of private companies drive widespread adoption?

Simply put, blockchain technology is a foundational technology, not a disruptive technology.

  • Disruptive technology: Changes an industry’s business model (e.g. music industry shifting from selling CDs to selling streaming subscriptions)
  • Foundational technology: Lays the groundwork for brand new economies and industries (e.g. the adoption of the internet)

For a foundational technology to take off, it needs big players to adopt it. The internet revolutionized business; many of today’s largest companies are internet companies. But this took decades starting with the development of a foundational technology, TCP/IP, which laid the groundwork for the Internet and the World Wide Web. Harvard Business Review has outlined the phases of adoption for foundational technology adoption:

Figure: Experts consider blockchain a foundational technology that will transform economies after decades of progressive adoption. (HBR)

Figure X: Experts consider blockchain a foundational technology that will transform economies after decades of progressive adoption. (HBR)

Today, blockchain use mainly sits in the single-use stage. The development of private blockchains means we’re moving into the localization stage that drives further development.

Central banks and governments are more invested in digital currency conversations

Last year, 40% of central banks reported experimenting with central bank digital currencies (CBDC).

This year, it’s 60%.

Why? As the price of Bitcoin surged and companies like Facebook announced their intentions to throw their hat in the ring with Diem (formerly Libra), central banks figured they’d need to get to know this technology before it posed an existential threat.

Another reason is the rising value of cryptocurrencies like Bitcoin.

There are only a certain number of Bitcoin that can be “produced” and shot into circulation, which stands in juxtaposition to the fiat currency that banks are pumping out in response to the COVID-19 pandemic.

If there’s widespread usage of cryptocurrencies, central banks would slowly lose control of their grip on the financial system.

The solution? Develop a cryptocurrency of their own that has the safeguards and regulatory controls of fiat currency while retaining all the advantages (e.g. minimal processing delays) of a cryptocurrency.

At the moment, the world has its eyes on China, where cryptocurrency experimentation and development is in full swing. The government wants to replace digital payment methods with an e-Yuan cryptocurrency that would have its own wallet at the bank.

Over time, this would become more convenient for people to use. It could also help China shift the international financial system away from the U.S. dollar; most international trade is conducted in U.S. currency. China started working on the e-Yuan in 2014 and conducted a pilot project in 2020, distributing e-Yuan via a digital wallet to 50,000 Chinese citizens.

Similarly, the European Central Bank (ECB) is also exploring the development of its own digital currency. The U.S. government has explored doing the same, but there are no immediate plans to create a so-called “FedCoin”.

In 2016, the Bank of Canada announced a collaboration with Payments Canada, TMX Group, and Accenture titled “Project Jasper” to explore distributed ledger technology. The goal: to run a proof of concept (POC) to assess the strengths and weaknesses of using DLT for wholesale payments.

In February 2021, Canada offered the first bank-issued, fiat-backed cryptocurrency in North America. VersaBank released VCAD, a stablecoin, in partnership with Stablecorp, 3iQ, and Mavennet. At present, VCAD is only being used for transactions with bank intermediaries – much like the Italian banking system project – with hopes to extend it to individual use.  

For entrepreneurs, the business opportunities lie in creating the actual cryptocurrencies considered secure enough for banks and other members of the ecosystem to invest in.

Figure: Stablecorp is a partnership between 3iQ and Mavennet that launched VAD, the first bank-issued, fiat-backed cryptocurrency in North America. (Stablecorp)

There’s also the opportunity to create the exchange and wallet technology needed to transfer and secure cryptocurrency amounts.

Figure: Bitbuy is a Canadian cryptocurrency platform that allows people to buy coins using Interac eTransfer. (Bitbuy)

Figure: Platform for large-scale cryptocurrency transactions in Canada. (Satstreet)

Figure: Platform for buying, selling, and trading cryptocurrency with headquarters based in Calgary. (

Industry-specific use cases are going to further power the increase in blockchain usage

Even though 60% of blockchain’s market value comes from the financial sector, it’s rapidly being applied to use cases in other industries.

Are there barriers to adoption? Sure. But it’s not yet clear whether these barriers are due to specific idiosyncrasies in these industries’ cultures or issues with blockchain technology itself.

The non-financial services sector leading the blockchain adoption charge is technology, media, and telecom (TMT). 49% of TMT respondents to a Deloitte survey said they planned on spending at least $5 million on blockchain over a one-year period. The blockchain is also expected to play a big role in driving supply chain transparency. Trust is a significant part of doing business for supply chain and logistics companies, presenting interesting potential applications for the blockchain.

The rise of NFTs, or non-fungible tokens, has made blockchain especially interesting for marketers. NFTs use blockchain technology to create non-replicable digital assets like music or art. Brands can offer digital assets such as exclusive sports highlights, rare memorabilia, limited edition items, custom brand collaborations, and more.

Healthcare and biotechnology are two other areas that offer huge potential for blockchain adoption, although regulatory regimes make things trickier. In healthcare, it can help with speed of access, transparency, data immutability, and patient-centric health experiences.

Figure: In Canada, the industries with high feasibility and high impact use cases for blockchain include transport and logistics, TMT, public sector services, and financial services. (ICTC)

Figure: Companies across verticals are increasing their spending in blockchain technology, with TMT and energy taking the lead. (Deloitte)

Interoperability is becoming an important element for widespread blockchain adoption

The beauty of a blockchain is its ability to help people work together faster through a trusted network. But if every company creates its own blockchain, generating shared value will be hard.

There’s been a proliferation of different types of blockchain technology. Over time, it’s become clear that it isn’t possible for one blockchain to meet every possible use case or industry’s needs. As a result, blockchain interoperability is essential.

Analysts report that the biggest barrier to blockchain adoption is not technological, but sociological. Different parties in the ecosystem – governments, financial institutions, companies across different industries – must collaborate.

If blockchain users can trust that a blockchain technology will work regardless of where it’s been manufactured, there’ll be more confidence. Interoperability would also make innovation easier for developers. The entities best positioned to lead this interoperability are large organizations. As Deloitte puts it, "co-opetition" is needed.

Figure: Interoperability solution proposed by Accenture. (Accenture)

Figure X: Interoperability solution proposed by Accenture. (Accenture)

Fortunately, blockchain interoperability projects are on the rise. An analysis of Google Scholar search results for “blockchain interoperability” shows a dramatic increase in the number of papers available. In 2015, that search term only returned 8 results. In 2020, it returned 207, an increase of 185%.

Companies working on blockchain interoperability solutions include:

Taking blockchain to the bank by unlocking business opportunities

Taking blockchain to the bank by unlocking business opportunities

Blockchain technology is in its lift off stage. Can entrepreneurs hop on for the ride? They sure can, but founder beware. As we mentioned earlier, blockchain is a foundational technology. Getting it to a stage of widespread adoption will take significant cooperation with established players across industries and – despite the idealistic dream of a decentralized ledger – governments. So there are two options for aspiring blockchain entrepreneurs:

  • find a key link in the blockchain value chain and specialize in solving that problem, thereby creating value for other players in the blockchain ecosystem, or
  • go big on a larger blockchain initiative with the understanding that you may be in it for the long haul

Here are a few blockchain business models to consider.

Blockchain as a Service (BaaS) Business Model

The blockchain as a service (BaaS) market is expected to grow by $15 billion by 2023.

What does a BaaS business do? It gives people and companies a blockchain environment where they can play without building an entire jungle gym. They can check out the technology and see if their use cases are viable without losing a lot of money on research and development.

Cloud service providers maintain the blockchain network, and customers can experiment with new technologies like smart contracts and blockchain applications. Companies that have dedicated BaaS sections include:

It’s difficult for startups to play in this space. Microsoft recently announced it would be shutting down its blockchain offering in September 2021. That said, entrepreneurs can design solutions that support these cloud providers’ business models.

Token-Based Business Model

There are two categories of crypto assets:

  • native coins
  • crypto tokens

Native coins, like bitcoin, function as alternative currency with its own value and payment infrastructure.

Crypto tokens, on the other hand, have their value tied to the issuing company’s business model aka a token-based business model. To fund their business, these crypto token providers have an Initial Coin Offering (ICO) (where they trade cash for the crypto they created) and use the proceeds from this exercise to fund their business. The more successful their ecosystem becomes, the more valuable their crypto token becomes. This is similar to a company offering shares during an IPO.

Platforms – whether for ride sharing or cryptocurrency exchange – require network effects. This is the growth in value that happens as more people start using a service. In the past, companies enticed buyers and sellers into a marketplace with subsidies, but this has always been an expensive method. The idea was to spend a lot upfront to secure market share and a loyal customer base. Initial coin offerings (ICO) deliver the incentives of a subsidy while discouraging disintermediation (where platform participants bypass the platform and work directly with each other).

Chainlink and Ethereum are two examples of token-based business models. Cryptocurrency projects raised $14.8 billion US through ICOs, while Platform businesses raised $12.6 billion US and business services raised $4.3 billion.

Figure X: Money raised for initial coin offering-based projects. (Statista)


Figure: Ripple, which offers a blockchain-enabled network for interbank transfers, raised money through its offering of XRP. (Ripple)

Providing Software for Blockchain
Business Model

Another option is making it easier for companies to use blockchain technology by creating software. This is a useful avenue for entrepreneurs who view blockchain-as-a-service as a behemoth endeavour but want to attract B2B dollars. Why? There are many companies that want to explore blockchain solutions for their business needs but don’t want to create their own solutions or hire the talent to create them. There are several challenges for companies trying to hire blockchain talent including skill gaps and budget constraints.

In 2017, Spotify acquired Mediachain Labs, so it could use blockchain to address attribution problems in the digital music industry. Meanwhile, PayPal announced a planned acquisition of Curv, a cryptocurrency security firm.

As expected, the majority of acquisitions are happening in the financial space, most notably in crypto. In 2020, the size of M&A activity in the cryptocurrency space rose to $1.1 billion and had an average deal size of $52.7 million.

Figure: Deal value of M&A activity in the cryptocurrency world has been steadily increasing. (Bloomberg)

Delivering Blockchain Services

This is a client-centric service that can be highly lucrative given the blockchain talent shortage, but does not enjoy the scalability of a product-based business. Scalability and network effects are two characteristics that venture capitalists look for when adding companies to their portfolios.

That said, blockchain professional services can be a strong starting point for entrepreneurs. They can build relationships with major players, understand their unique business problems, and identify opportunities to solve those problems through turnkey products as opposed to customized services.

While large consulting firms like Deloitte and EY have impressive blockchain consulting services, there are smaller companies that meet this need such as ArcTouch, ABES Lab, and Codezeros, and LeewayHertz.

Boom or Bust: How invested should entrepreneurs be in this space

Boom or Bust: How invested should entrepreneurs be in this space

So what’s the deal? Is blockchain the next best thing or just a way to lose a lot of money?

The answer is both.

As we’ve seen in this report, blockchain technology offers several interesting use cases across industries. It can also have a revolutionary impact on economies. But entrepreneurs that go too big too soon may find themselves holding the bag if the world isn’t ready for what they have to offer. Consider a company like Opsware, previously known as LoudCloud, which recognized the potential of cloud computing a little too early to become the multibillion dollar behemoth AWS did. AWS grew because it was its own first customer, it understood its target market, and it was surrounded by fast-growing early customers, like Netflix, that were fully invested in trying a new approach to IT. While Opsware was acquired by HP, the acquisition comes nowhere close to the huge chunk of the cloud computing market Jeff Bezos and friends managed to snag.

As the saying goes, “being early is the same as being wrong”, and this is something that entrepreneurs should keep in mind while exploring blockchain technology. Is the market ready? Do you have the right support in terms of large institutional partners or fully-invested early adopters? And can you deliver a very specific use case for your business? If so, you may be able to capitalize on the blockchain’s potential as it makes it move from emerging technology to a foundational one.

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