Smart Contracts Market Size, Share & Industry Analysis, By Platform (Ethereum, Cardano, Solana, BNB Smart Chain, and Others), By Blockchain Type (Public, Private, and Hybrid), By Enterprise Type (Large Enterprises and Small & Medium Enterprises (SMEs)), By End-Users (BFSI, Transportation and Logistics, Healthcare, Government and Public, Real Estate, and Others), and Regional Forecast, 2024 - 2032

The global smart contracts market size was valued at USD 1.71 billion in 2023. The market is projected to be worth USD 2.14 billion in 2024 and reach USD 12.55 billion by 2032, exhibiting a CAGR of 24.7% during the forecast period (2024-2032). A smart contract is a computer program that automatically performs contractual tasks without involving third parties. The execution of a smart contract can result in the exchange of funds, service provisions, and the release of content protected by Digital Rights Management. It can also facilitate other forms of data manipulation, such as changing land registry names.

Smart contracts market growth can be witnessed due to several factors, such as the increasing adoption of blockchain technology among various industries and supply chains and the rising usage of online banking. Furthermore, the emergence of DApps (Decentralized Applications) is a significant driver, expanding the global market share. According to a report published by DappRadar in 2022, the number of DApp users increased every day by 396% over the year, reaching 2.4 million users.

The COVID-19 pandemic positively affected the market due to the increased adoption of smart contracts. Many healthcare facilities experienced a high rate of smart contract adoption aimed at addressing problems, such as the management of patients' data and payments.

Smart Contracts Market Trends

Rising Integration of Internet of Things (IoT) to Propel Market Growth

Smart contracts include a wide range of technologies and industries, including the Internet of Things (IoT), which is not restricted only to financial dealings. The integration of smart contracts with the Internet of Things (IoT) has opened numerous opportunities for automation and improved efficiency. Businesses can set up self-driven agreements that activate actions based on real-time data from sensors. This is achieved using blockchain technology through a connection of hardware devices and smart contract solutions.

The integration of smart contracts and the Internet of Things (IoT) focuses on technological advancements by redefining the interaction of businesses, industries, and individuals with the digital and physical worlds. Moreover, the integration of smart contract development services and IoT with edge computing enables real-time data processing and decision-making processes and enhances responsiveness in IoT applications.

In addition, peer-to-peer trading between connected devices can be secured by integrating smart contracts with the IoT. This integration eliminates the need for intermediaries, such as service providers, and facilitates the exchange of information between devices.

Smart Contracts Market Growth Factors

Increasing Advancements in Blockchain Technology to Aid Market Growth

The use of blockchain for automation in smart contracts includes self-driven computer programs, making it easier to automate processes and payments to enhance efficiency. Blockchain development has aimed to change its capabilities through smart contract technology. The blockchain integrated with smart contracts unlocks the ability for developers to write application logic on top of the decentralized applications. The use of smart contract technologies has enabled a new interaction between different blockchain systems. Moreover, increasing government initiatives in the field of blockchain technology supports market growth. For instance, the Indian government partnered with 5ire and raised USD 100 million in July 2023 to provide blockchain capabilities.

These contracts streamline the contracting process by eliminating intermediaries, manual processing, and paperwork. This automation reduces human error, improves efficiency, and simplifies processes, which leads to an increase in productivity and cost savings. In addition, blockchain-based smart contracts ease payment processing, allowing real-time fund transfer while maintaining transparency and accuracy. They also speed up transaction settlements by allowing their autonomous verification. As a result, several companies are taking advantage of this technology, which is driving market growth.

RESTRAINING FACTORS

Scalability Issues to Hinder the Market Expansion

The scalability of smart contracts is a key challenge for market expansion. Scalability issues are expected to emerge with increasing network size and transaction volume, which leads to slower processing times and increased transaction costs. To achieve widespread uptake in high-volume sectors, addressing these scalability challenges is imperative.

The complexity of regulatory and legal frameworks can make encoding into smart contracts a difficult task. In addition, the active nature of regulations may affect smart contracts to adapt to these changes.

Smart Contracts Market Segmentation Analysis

By Platform Analysis

Enhancements by Large and Active Ethereum Developer Community to Increase Market Demand

Based on the platform, the market is divided into ethereum, cardano, solana, BNB smart chain, and others. In terms of market share, ethereum segment led the market in 2023. The growth and development of the ethereum platform are facilitated by a large and active developer community. The ethereum community has developed a wide variety of useful tools and frameworks for the development and deployment of this technology on its platform. According to a new report from Alchemy, the number of smart contracts installed on ethereum jumped almost 300% in 2022 compared to 2021.

The Solana segment is estimated to have the highest CAGR during the study period. The growth of the segment can be attributed to the scalability and flexible interface it provides. Solana is designed to be extremely scalable; therefore, it can process a large number of transactions per second. This is achieved by its flexible architecture, which enables concurrent processing of a series of transactions. Organizations are using Solana’s smart contract to allow developers to create fast, scalable DeFi applications, taking advantage of the high quality of the data.

By Blockchain Type Analysis

Rising Usage of Public Blockchain to Provide Effective Interaction with Users to Fuel the Product Demand

Based on the blockchain type, the market is segmented into public, private, and hybrid. In terms of market share, public segment dominated the market in 2023. A public blockchain is a network that is decentralized and interoperable. This facilitates interaction between smart contracts on a public blockchain with other decentralized applications and systems, creating an ecosystem that is more interconnected and integrated. Moreover, any transactions and smart contract in the public blockchain are transparently available to the users.

The hybrid segment is expected to grow at the highest CAGR during the forecast period. A hybrid smart contract combines the benefits of a blockchain and it is powered by the decentralized services offered by the decentralized oracle network (DON). This enhances users’ ability to implement innovative use cases that are not supported by blockchain, thus boosting connectivity between smart contracts and data sources. In addition, to meet business requirements or organizational needs, users can be allowed to create customized solutions through the deployment of a hybrid blockchain.

By Enterprise Type Analysis

Effective Handling of Complex and Time Consuming Processes by Large Enterprises to Aid Market Expansion

Based on enterprise type, the market is segmented into large enterprises and small & medium enterprises (SMEs). As per market share, large enterprises segment dominated the market in 2022. Large enterprises handle complex and time-consuming processes that are made more efficient through the use of smart contract solutions. This enhances performance and minimizes errors. In addition, in highly regulated sectors such as banking, financial services, and healthcare, large enterprises often operate, where compliance is of utmost importance.

Small & Medium Enterprises (SMEs) are expected to grow at the maximum growth rate during the forecast period. This growth is due to the cost-effectiveness and increased efficiency of smart contracts. It can help SMEs to reduce costs by automating many of their processes. The cost efficiency of these contracts is a significant advantage for SMEs, which often have limited resources. In addition, the automation of manual processes and the minimization of error risks improve efficiency and speed up transaction processes.

By End-Users Analysis

Due to the Rising Demand for Decentralized and Traditional Contracts to Aid Market Share in BFSI

Based on end-users, the market is categorized into BFSI, transportation and logistics, healthcare, government and public, real Estate, and others. Among these, the BFSI segment dominated the market in 2023. The BFSI industry is adopting these contracts, enabling peer-to-peer transactions, error-free insurance claims processing, transparent and auditable audits, and seamless KYC processes. The adoption of smart contracts allows easy claims and automatic authentication through the decentralized ledgers of the blockchain network. To ensure financial audit, traditional contracts require substantial documentation and detailed record keeping. By connecting to the decentralized, immutable code of a blockchain network, these contracts offer advanced bookkeeping solutions for this industry.

Healthcare is expected to grow at the highest CAGR during the forecast period. The adoption of such contracts in healthcare is expected to boost the demand for medicines and medical devices. This is due to the secure and effective exchange of patient information, automated insurance claims processing, contract management, and supply chain monitoring. For instance, Curisium, acquired by Health Verity in 2020, used blockchain technology to build the platform for rebate negotiation and contract management. Organizations using these contracts can improve patient privacy while allowing providers to adhere to regulations.

REGIONAL INSIGHTS

On the basis of regional ground, the market is fragmented into North America, South America, Europe, the Middle East & Africa, and Asia Pacific.

North America held a major part in the global smart contracts market share in 2023. The region's dominance can be attributed to a robust tech ecosystem and highly skilled workforce. In addition, several smart contract startups in the region have developed as a result of the early use of blockchain technology and a supportive ecosystem for startups. These factors enabled North American firms to take the lead in the market and contribute to regional dominance.

Asia Pacific is anticipated to grow significantly at the highest growth rate during the forecast period. The region has taken major steps in blockchain technology. It has nurtured a thriving ecosystem of blockchain startups and developments exploring smart contracts. To facilitate the adoption of blockchain technology, including smart contracts across different sectors, the Chinese government has initiated initiatives such as Blockchain Service Network (BSN).

Middle East & Africa is expected to register the second-highest growth rate in the market during the forecast period. Advancements in blockchain technologies used for smart contract led to a proliferation of this market in the region. Beyond Imagination Technologies, a blockchain company, announced its entry into the Middle East region and a partnership with Aba’ad Alkhayal to enhance blockchain solutions.

List of Key Companies in Smart Contracts Market

Market Players Announce Merger & Acquisition, Partnerships, and Product Development Strategies to Expand their Reach

Major industry participants operating in the market are emphasizing on providing automated transactional services to enhance business flexibility and security. These firms prioritize acquiring local and small firms to expand their business reach. Moreover, strategic partnerships, leading investments, and mergers & acquisitions contribute to an increase in demand for product.

List of Key Companies Profiled:  

• Blockstream Corporation Inc. (Canada)


• ScienceSoft USA Corporation (U.S.)


• Innowise Group (U.S.)


• Vention (Canada)


• Ava Labs (U.S.)     


• IBM Corporation (U.S.)


• Chainlink Foundation (U.S.)


• 4soft (Poland)


• Eleks, Inc. (Estonia)


• Algorand (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• August 2023: Obvious, a multichannel mobile-based smart contract wallet launched an account concept-based smart contract wallet driven by Biconomy Account Abstraction Stack. It enables the creation of automated transactions, deployment of adapted rules, and simplification of complicated economic interactions.


• June 2023: Horizen, provider of the public blockchain and Ankr, Web3 infrastructure provider collaborated to boost the accessibility and scalability of the EON Smart Contract Platform. This collaboration offered a package of developer tools to enable the deployment of smart contract applications.


• May 2023: Horizen partnered with Band Protocol, a cross-chain data oracle platform, to provide Horizen's new EVM-compatible smart contracting platform into decentralized oracle services to the EON ecosystem while supporting a wide range of use cases, including gaming, DeFi, and NFTs.


• January 2023: Bunzz, a web3 development platform for decentralized apps, completed a USD 4.5 million seed round. This platform was used by more than 8,000 DApp developers and this funding enhanced Bunzz’s Smart Contract Hub.


• October 2022: Data Gumbo, a company providing industrial smart contract solutions, announced that Equinor implemented the Data Gumbo Smart Contract platforms. The company utilized this platform to automate calculation and carry out payments for integrated drilling and well services. This solution enables the company to use industrial IIoT from Equinor and third party logistics systems for automated transactions under their existing natural language contract.

REPORT COVERAGE

The report provides a detailed analysis of the market and focuses on key aspects such as leading companies, and leading end-users of the product. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

REPORT SCOPE & SEGMENTATION