Worldwide spending on blockchain solutions is forecast to be $4,1-billion this year, an increase of more than 50% compared to 2019.
According to a new update to the International Data Corporation (IDC) Worldwide Blockchain Spending Guide, blockchain spending will continue to grow at a robust pace throughout the forecast period with a five-year compound annual growth rate (CAGR) of 46,4%, reaching a total of nearly $17,9-billion in 2024.
“The issues facing the global economy due to Covid-19 and the efforts to contain it have caused nearly every industry, market, and sector to re-evaluate core processes. This has accelerated interest and investment in digital transformation, which includes blockchain and distributed ledger technology,” says James Wester, research director: worldwide blockchain strategies at UDC.
“So many of the disruptions to industries during the pandemic were exacerbated by processes and procedures that were inefficient and outmoded. The pandemic simply exposed the vulnerabilities and weaknesses in supply chains, financial services, and many more industries.
“As enterprises look at ways to address those vulnerabilities and weaknesses, they are recognizing that blockchain and distributed ledger technology, by improving visibility and increasing efficiencies across value chains, are the perfect tools to not only fix existing problems but build entirely new markets and services.”
More than a quarter of all blockchain spending worldwide will come from the banking industry, where the top use cases include: cross-border payments and settlements; trade finance and post-trade/transaction settlements; and transaction agreements.
The banking industry is expected to maintain a strong pace of investment in blockchain with a five-year CAGR of 45,3%.
Process manufacturing and discrete manufacturing are the next largest industries for blockchain spending, together accounting for nearly a quarter of all spending worldwide.
The leading use case in both industries is lot lineage/provenance with asset/goods management a close second for process manufacturing.
Both industries will continue to invest in blockchain at rates faster than the overall market – a 50,3% CAGR for process manufacturing and a 46,5% CAGR for discrete manufacturing.
The fastest spending growth over the forecast period will come from the fourth largest industry overall, professional services, which will see a five-year CAGR of 54%. Other industries showing strong blockchain spending growth include healthcare (49,3% CAGR) and state/local government (48,2% CAGR).
“The Covid-19 pandemic has proven to be a catalyst for the adoption of many emerging technologies, and blockchain is no exception. The need to obtain more visibility across the value chain has never been more important and, in many instances, the negative effects of previous pain points have been further amplified,” says Stacey Soohoo, research manager: customer insights & analysis at IDC.
“Organisations and enterprises are realizing the inconsistencies, gaps, and sheer lack of reliable information between different sources and entities.
“While many have ventured into digital currencies in light of the coronavirus pandemic, others see the many benefits of leveraging distributed ledger technology in other capacities to increase engagement across a value chain to promote transparency and traceability.
“It is without a doubt that the world will continue to learn from activities related to the digital dollar, enterprises are already implementing blockchain initiatives to solve real world problems.”
The blockchain use cases that will see the most investment across all industries are: cross-border payments & settlements; lot lineage/provenance; and trade finance and post-trade/transaction settlements. Together, these three use cases will account for more than one third of all blockchain spending throughout the forecast.
The use cases that will see the fastest spending growth include asset/goods management (49,7% CAGR) and trade finance and post-trade/transaction settlements (49,4% CAGR).
However, all the use cases identified by IDC will see strong spending growth over the forecast period with CAGRs greater than 40%.
From a technology perspective, IT services and business services (combined) will account for roughly 70% of all blockchain spending throughout the forecast with IT services receiving slightly more investment over the forecast period.
IT services spending will also see the fastest growth with a five-year CAGR of 51,4%.
Blockchain platform software will be the largest category of spending outside of the services segment and the second fastest growing technology category with a five-year CAGR of 48%.
Spending on blockchain solutions in the US will be more than $1,6-billion this year, making it the largest geographic market, followed by Western Europe ($1-billion) and China ($457-million). All nine regions covered in the Spending Guide will see exceptional spending growth over the forecast period led by China with five-year CAGR of 51,7% and Central and Eastern Europe (50,4% CAGR).