Global spending on blockchain solutions is forecast to reach US$4.1 billion in 2020, up 50% from 2019. IDC’s Worldwide Blockchain Spending Guide forecasts blockchain spending to 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 US$17.9 billion in 2024.
James Wester, research director, Worldwide Blockchain Strategies, says COVID-19 has accelerated interest and investment in digital transformation, which includes blockchain and distributed ledger technology.
He explained that the disruptions to industries during the pandemic were exacerbated by processes and procedures that were inefficient and outmoded. The pandemic exposed the vulnerabilities and weaknesses in supply chains, financial services, and many more industries.
Enterprises recognise that blockchain and distributed ledger technology address these issues by improving visibility and increasing efficiencies across value chains. They are thus the perfect tools to not only fix existing problems but build entirely new markets and services.
IDC estimates that over 25% of global blockchain spending will come from the banking industry, with the top use cases being cross-border payments & settlements; trade finance & 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 54.0%.
Other industries showing strong blockchain spending growth include healthcare (49.3% CAGR) and state/local government (48.2% CAGR).
COVID-19 is good for emerging technologies
IDC’s Stacey Soohoo, research manager, Customer Insights & Analysis, says the COVID-19 pandemic has proven to be a catalyst for the adoption of many emerging technologies, and blockchain is no exception.
The common need for many is 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
Organisations and enterprises are realizing the inconsistencies, gaps, and sheer lack of reliable information between different sources and entities. A particular benefit seen with leveraging distributed ledger technology is to increase engagement across a value chain to promote transparency and traceability.
Blockchain use cases – popularity show
The blockchain use cases that will see the most investment across all industries are: cross-border payments & settlements; lot lineage/provenance; and trade finance & post-trade/transaction settlements.
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 & post-trade/transaction settlements (49.4% CAGR).
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 48.0%,