The Smart Contracts Market was valued at $1.3 billion in 2023. This market is expected to reach $8.7 billion by 2031 from an estimated $1.7 billion in 2024, at a CAGR of 26.4% during the forecast period from 2024 to 2031.
Smart Contracts Market Size & Forecast
The growth of this market is attributed to the increasing use of smart contracts on a blockchain in the BFSI sector, growing cross-border transactions and international trade, and the rise in digital transformation initiatives. Moreover, the integration with emerging technologies such as AI & ML and the development of user-friendly interfaces are expected to offer growth opportunities for the players operating in this market.
Smart Contracts Market Growth Drivers
Increasing Use of Smart Contracts on a Blockchain in BFSI Sector
Smart contracts are gaining traction in the BFSI sector as banks and financial institutions are seeking innovative solutions to cut costs and enhance operational efficiency. These self-executing agreements automate and optimize banking processes based on predefined terms. Powered by blockchain technology, smart contracts ensure that all terms and transactions are immutably recorded on the blockchain, offering transparency and security to all parties involved.
The adoption of smart contracts is rising in the BFSI sector to automatically execute, manage, and document legally binding events and actions according to contractual terms. These contracts are increasingly used to automate processes such as loan origination, insurance claims, and trade finance, reducing processing time and manual intervention. By enhancing efficiency and transparency, smart contracts also lead to substantial cost savings through decreased paperwork. As a result, the growing use of smart contracts in the BFSI sector is expected to drive market growth during the forecast period.
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Smart Contracts Market Trends
Hybrid Blockchain Solutions for Smart Contracts
A hybrid blockchain solution is a combination of public and private blockchain networks. A hybrid blockchain solution for a smart contract is an advanced form of a smart contract that combines on-chain infrastructure with off-chain data and computation. This combination is facilitated by decentralized oracle networks (DONs). It offers transparency of public blockchains for certain operations and takes care of the privacy and scalability of private blockchains.
Hybrid smart contracts are designed to enhance contract enforcement efficiency and transparency across diverse industries. They offer a modern alternative to traditional contracts, particularly in scenarios where outcomes depend on real-world events. This approach is especially advantageous in sectors like insurance, where external factors frequently influence results. By automating execution processes, hybrid smart contracts minimize the time and resources required for contract management, dispute resolution, and enforcement. Therefore, the growing adoption of hybrid blockchain solutions in smart contracts is driving market growth during the forecast period.
Smart Contracts Market Opportunity
Integration with Emerging Technologies such as AI & ML
AI-enabled smart contracts are designed to streamline and automate various processes. AI facilitates the analysis and interpretation of complex legal language, translating it into executable code for smart contracts. The integration of AI and machine learning (ML) with smart contracts enhances transaction efficiency and accuracy, reduces reliance on intermediaries, and boosts the speed and security of processes. Specifically, AI is utilized to analyze and interpret intricate contracts, while ML is employed to detect anomalies in transaction patterns and identify potential fraudulent activities.
Several companies are concentrating on developing AI-enabled smart contract platforms to address user privacy concerns. For example, Near.org (U.S.) plans to launch NEAR AI in May 2024. This platform will enable users to create web3 applications without coding on a comprehensive network while enhancing AI technology to protect user privacy and sovereignty. Such advancements are driving increased demand for AI-enabled smart contracts across various sectors, including BFSI, legal affairs, automotive, and real estate, where high transaction volumes are common. Additionally, AI facilitates cross-border transactions by overcoming language barriers, legal differences, and currency conversions. These factors are contributing to the rising demand for AI-enabled smart contracts and creating growth opportunities in the smart contracts market during the forecast period.
Smart Contracts Market Analysis: Key Findings
The Smart Legal Contracts Segment to Dominate the Smart Contracts Market in 2024
Based on type, the smart contracts market is segmented into smart legal contracts, decentralized autonomous organizations (DAO), and application logic contracts (ALC). In 2024, the smart legal contracts segment is expected to account for the largest share of over 43.0% of this market. The significant market share of this segment is driven by several factors, such as the increasing demand for smart legal contracts to manage supply chains, a rising need for self-executing contracts within legal departments, rapid adoption of blockchain technology, and the growing necessity for organizations to automate routine tasks in order to reduce legal and operational costs. Moreover, this segment is also expected to register the highest CAGR during the forecast period.
The Ethereum Segment to Dominate the Smart Contracts Market in 2024
Based on platform, the smart contracts market is segmented into ethereum, hyperledger, counterparty, polkadot, and other smart contract platforms. In 2024, the ethereum segment is expected to account for the largest share of over 65.0% of this market and is expected to record the highest CAGR during the forecast period. This segment’s large market share is due to the rising demand for Ethereum-based decentralized applications (dApps), increasing institutional investment in blockchain technology, rapid adoption of blockchain solutions, the swift expansion of the NFT market across various countries, and the growing utilization of the Ethereum platform for applications in finance, gaming, and supply chain management.
In May 2023, Filecoin Foundation (U.S.) launched Filecoin Virtual Machine (FVM), an ethereum-style smart contract that supports smart contracts and user programmability through FVM.
The External Models Segment to Dominate the Smart Contracts Market in 2024
Based on model, the smart contracts market is segmented into external models and internal models. In 2024, the external models segment is expected to account for the larger share of over 68.0% of this market. This segment’s large market share is driven by heightened security concerns, including data tampering and manipulation in large enterprises, a growing preference for external models for legal contracts, and a rising need for external solutions to manage complex agreement terms.
However, the internal models segment is estimated to register the highest CAGR during the forecast period. The segment's growth is attributed to the rapid adoption of blockchain technology, the growing demand for smart contracts across various sectors, and the growing need to reduce operational costs and human interaction in small and medium-sized enterprises.
The Large Enterprises Segment to Dominate the Smart Contracts Market in 2024
Based on organization size, the smart contracts market is segmented into large enterprises and small and mid-sized enterprises (SMEs). In 2024, the large enterprises segment is expected to account for the larger share of over 70.0% of this market. This segment’s significant market share is attributed to the growing adoption of smart contracts by large enterprises to automate operational processes, increasing demand for self-executing contracts, and increasing security risks such as data tampering, fraud, and disputes in business operations.
However, the small and medium-sized enterprises segment is anticipated to register the highest CAGR during the forecast period. This segment’s growth is driven by the increasing need to minimize paperwork and operational costs, the rising emphasis by SMEs on automating tasks such as invoicing, payments, and contract management, and the swift adoption of smart contracts by SMEs aiming to enter emerging markets like the digital economy.
The Trade Segment to Dominate the Smart Contracts Market in 2024
Based on application, the smart contracts market is segmented into record storage, commercial activities, supply chain, trade, mortgages, property purposes, employment contracts, copyright protection, health services, electoral processes, insurance claims, and other applications. In 2024, the trade segment is expected to account for the largest share of over 33.0% of this market. The major market share of this segment is due to the increasing adoption of ethereum by large enterprises to make trade, increasing strategic development by market players to offer finance-based blockchain solutions, and the increasing need to streamline complex trade processes across various sectors such as logistics, BFSI, and legal affairs.
However, the supply chain segment is expected to register the highest CAGR during the forecast period. The growth of this segment can be attributed to several factors: the increasing demand for automation in purchase orders, supplier selection, and contract management; the need to manage extensive paper documentation in the logistics sector; the rapid adoption of blockchain technology for supply chain management; and the growing need to eliminate delays associated with payment approval hierarchies in traditional contracts.
The BFSI Segment to Dominate the Smart Contracts Market in 2024
Based on end user, the smart contracts market is segmented into government, BFSI, healthcare, agriculture, transportation/logistics, automotive, real estate, legal affairs, education, and other end users. In 2024, the BFSI segment is expected to account for the largest share of over 34.0% of this market. This significant market share is driven by the rising demand for smart contracts in financial applications, the growing integration of advanced technologies to streamline and expedite transaction processes, and the escalating need for smart contracts within the BFSI sector to safeguard sensitive financial data against cyber threats.
However, the legal affairs segment is estimated to register the highest CAGR during the forecast period. The rapid growth of this segment is driven by several factors: the expanding integration of AI, ML, and blockchain technology in legal applications; the rising demand for self-executing contracts; ongoing strategic initiatives by market players to develop smart contract platforms and tools; and the adoption of subscription-based legal services by law firms.
Geographical Analysis
North America to Dominate the Smart Contracts Market in 2024
Based on geography, the smart contracts market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East & Africa. In 2024, North America is expected to account for the largest share of over 42.0% of this market. Market growth in North America is fueled by several key factors, such as the rising government initiatives to promote blockchain technology adoption, the presence of leading market players in the region, the growing use of digital assets by large enterprises, and the expanding application of smart contracts for supply chain management.
However, Asia-Pacific is poised to register the highest CAGR of over 28.0% during the forecast period. The growth of this regional market is driven by rapid technological advancements, supportive regulatory standards, strong economic growth in countries like China, India, Japan, and Singapore, and increasing strategic initiatives by market players in the region.
In October 2023, Hong Kong Exchanges and Clearing Limited collaborated with Depository Trust & Clearing Corporation (U.S.) to launch HKEX Synaps. This integrated settlement platform uses smart contracts to facilitate market efficiency and transparency and reduce settlement risks.
Smart Contracts Market: Key Companies
The report offers a competitive analysis based on an extensive assessment of the leading players’ product portfolios, geographic presence, and key growth strategies adopted in the last 3–4 years. Some of the key players operating in the smart contracts market are IBM Corporation (U.S.), Oracle Corporation (U.S.), Chainlink (U.S.), Infosys Limited (India), Stratis Group Ltd. (U.K.), Amazon Web Services, Inc. (U.S.), TATA Consultancy Services Limited (India), Solana Foundation (Switzerland), Shardeum (Switzerland), Ethereum Foundation (Switzerland), Avalanche (BVI), Inc. (U.K.), Algorand Foundation Ltd. (Singapore), Stellar Development Foundation (U.S.), Blockstream Corporation Inc. (Canada), and Waves Technologies (U.K.).
Smart Contracts Industry Overview: Latest Developments from Key Industry Players
- In July 2024, Oasys Pte. Ltd. (Singapore) launched Oasys Spring, a smart contract deployment tool designed to transform dApp development for game developers and gamers.
- In March 2024, Stellar Development Foundation (U.S.) launched Soroban, a smart contracts platform to build, deploy, and interact with Stellar-based decentralized applications (dapps) for financial services and payment applications.
Smart Contracts Market Research Summary
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Particulars
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Details
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Number of Pages
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250
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Format
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PDF
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Forecast Period
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2024–2031
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Base Year
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2023
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CAGR (Value)
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26.4%
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Market Size (Value)
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USD 8.7 Billion by 2031
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Segments Covered
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By Type
- Smart Legal Contracts
- Decentralized Autonomous Organizations (DAO)
- Application Logic Contracts (ALC)
By Platform
- Ethereum
- Hyperledger
- Counterparty
- Polkadot
- Other Smart Contract Platform
By Model
- External Models
- Internal Models
By Organization Size
- Large Enterprises
- Small and Mid-sized Enterprises (SMEs)
By Application
- Record Storage
- Commercial Activities
- Supply Chain
- Trade
- Mortgages
- Property Purposes
- Employment Contract
- Copyright Protection
- Health Services
- Electoral Processes
- Insurance Claims
- Other Applications
By End User
- Government
- BFSI
- Healthcare
- Agriculture
- Transportation/Logistics
- Automotive
- Real State
- Legal Affairs
- Education
- Other End Users
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Countries Covered
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North America (U.S., Canada), Europe (Germany, U.K., France, Italy, Spain, Rest of Europe), Asia-Pacific (Japan, China, India, South Korea, Australia & New Zealand, Rest of Asia-Pacific), Latin America (Mexico, Brazil, Rest of Latin America), and the Middle East & Africa (UAE, Israel, Rest of Middle East & Africa)
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Key Companies
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IBM Corporation (U.S.), Oracle Corporation (U.S.), Chainlink (U.S.), Infosys Limited (India), Stratis Group Ltd. (U.K.), Amazon Web Services, Inc. (U.S.), TATA Consultancy Services Limited (India), Solana Foundation (Switzerland), Shardeum (Switzerland), Ethereum Foundation (Switzerland), Avalanche (BVI), Inc. (U.K.), Algorand Foundation Ltd. (Singapore), Stellar Development Foundation (U.S.), Blockstream Corporation Inc. (Canada), and Waves Technologies (U.K.)
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Key questions answered in the smart contracts market report:
