Market Overview

The domestic market size of blockchain-utilized services (based on the sales at businesses) in FY2021 is projected to attain 78,330 million yen. Until FY2019, the market was in its initial phase, where companies centered on major enterprises were learning the characteristics of blockchain technology. Many of demonstration experiments were in the trial status and companies have been absorbing the knowledge regarding blockchain technology through trial and errors. This led the market size in FY2019 to remain at 17180 million yen.

On the other hand, there have been some changes in the demonstration verification processes by some major businesses after having accumulating the knowledge gained until the previous year on characteristics and applications of blockchain technology, in that they have started advancing the verification from trial stage to the effect verification, assuming the operation on the production environment.

Among the application areas, application of blockchain technologies in the non-financial areas has become conspicuous, such as for authentication of commodity distribution management, digital identification, etc. There have been proactive demonstration experiments in progress mainly by major companies and by municipalities as well as associations in industries. Especially since FY2021, blockchain applications have spread in the areas primarily of traceability (logistics and supply chain tracking), authentication, and NFT*.

*NFT: Abbreviation for Non-Fungible Token. It refers to ownership of irreplaceable digital assets recorded on a blockchain. Currently it is prominently used in the content field such as digital trading cards for game characters and athletes, digital art, etc.

Noteworthy Topics

Applications of blockchain technology driven by the areas of 1) traceability, 2) authentication, and 3) NFT

The areas of 1) traceability, 2) authentication, and 3) NFT are expected to be the driving forces in using blockchain technology. First, traceability is an optimal area for blockchain technology to take advantage of its strengths, as multiple players can be involved. Including the application of blockchain for commercial distribution and logistics management in cosmetics, the applications are rapidly expanding for ensuring transparency in distribution channels and in identifying end users. In addition, there are some cases of blockchain technology being used for commercial distribution management of agricultural produce in rural areas, and the MAFF (Ministry of Agriculture, Forestry, and Fisheries) is working on smart food chains and other environmental improvements.

In the area of authentication, some municipalities have gradually started linking Individual Number Card with digital IDs, the effort of which is expected to spread to other municipalities. The use of blockchain technology in digitization of university degree certificates and other documents is also likely to expand. Especially, the efforts to move on to paperless and for contactless/non-face-to-face aiming to prevent infections in the COVID-19 calamity are expected to boost the technology introduction.

In the area of NFT, in association with NFT rapidly spreading since FY2021, there are some cases of providing of NFT by means of existing contents especially in the gaming industry centered on major gaming software companies and there are cases of issuance of digital trading cards of athletes. While currently there is no clear legal framework on NFT, some regulations such as necessity of identity verification are likely to be imposed to transactions surpassing certain amount.

Future Outlook

The domestic market size of blockchain-utilized services (based on the sales at businesses) attaining 724,760 million yen is anticipated by FY2025. Use of blockchain technology has well spread primarily among major companies since FY2021, and such a situation is projected to spread to middle-size companies and to local governments by FY2025, which is likely to increase the effect verifications assuming the operations on production environment rather than trial.

Use of blockchain technology is not projected to be limited only to traceability or authentication, but also to various other areas, such as organizing data linkage between a residence rent contract with public utility expenses etc. on a blockchain platform, making waterworks and electricity to be available as soon as the resident moves in.

Research Outline