IDC defines blockchain as a digital, distributed ledger of transactions or records. The ledger, which stores the information or data, exists across multiple participants in a peer-to-peer network; there is no single, central repository that stores the ledger. Distributed ledgers technology (DLT) allows new transactions to be added to an existing chain of transactions using a secure digital or cryptographic signature.
In 2020, blockchain projects took a backseat as companies tried to contain the negative impact of the pandemic.
IDC forecasts global spending on blockchain solutions reach US$19 Billion in 2024, with US$6.6 billion in 2021, already 50% more than 2020.
According to the IDC Worldwide Blockchain Spending Guide, blockchain spending will continue to see strong growth throughout the 2020-2024 forecast period with a five-year compound annual growth rate (CAGR) of 48.0%.
“The pandemic highlighted the need for more resilient, more transparent supply chains, healthcare delivery, financial services, and so much more, and enterprises around the world have been investing in blockchain to provide that resiliency and transparency," said James Wester, research director, Worldwide Blockchain Strategies.
According to IDC, corporations, financial institutions, and even governments and showing real interest and investment with implications on everything from retail to financial services to capital markets.
Non-crypto use cases
The leading use case for blockchain in 2021 and throughout the forecast is Cross-Border Payments & Settlements, which uses distributed ledger technology to track, trace, and manage payments and settlements.
The second-largest blockchain use case is Lot Lineage/Provenance, which is used to verify the origin and authenticity of a product as it moves throughout the value chain. Other leading use cases include Trade Finance & Post Trade/Transaction Settlements, Asset/Goods Management, and Identity Management.
Who is spending on what
From an industry perspective, banking leads the way in blockchain spending, accounting for nearly 30% of the worldwide total in 2021. Banking will remain the top industry for blockchain spending throughout the forecast although its share of spending will diminish slightly by 2024.
The primary use cases for blockchain within the banking industry are Cross-Border Payments & Settlements and Trade Finance & Post Trade/Transaction Settlements.
The next largest industries for blockchain spending are process manufacturing and discrete manufacturing, which together account for more than 20% of all spending worldwide. The leading use case in both industries is Lot Lineage/Provenance.
Following the manufacturing industries are professional services, retail, and insurance, which rely on blockchain to trace the movement of payments and products.
The industries that will see the fastest growth in blockchain spending over the forecast period are professional services (56.0% CAGR), state/local government (53.3% CAGR), and healthcare (52.7% CAGR).
"While the effects of the pandemic had organizations diverting budget or pausing projects to focus on more essential endeavours, this was not the case with blockchain," said Stacey Soohoo, research manager, Customer Insights & Analysis.
She opined that COVID-19 has put priority on having resilient business operations.
“Changes in behaviour, demand, and supply have forced companies to adopt a digital-led and blockchain-driven business model to survive lockdowns, supply disruptions, and future crises.”
“The market is now reaching a point where successful pilots and deployments have proven the need, but other key factors such as a willingness to collaborate are needed to instill blockchain technology across the entire value chain, with every single participant needing and wanting to be a part of the network," she continued.
From a technology perspective, IT services and business services (combined) will account for more than two thirds of all blockchain spending throughout the forecast with IT services receiving slightly more investment over the forecast period.
Blockchain platform software will be the largest category of spending outside of the services segment and the fastest growing technology category overall with a five-year CAGR of 52.9%,
Spending associated with various cryptocurrencies that utilize blockchain and distributed ledgers technology, such as Bitcoin, is not included in the Spending Guide.