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IDC forecasts drop in blockchain spending in 2020

According to the April update of the IDC Worldwide Blockchain Spending Guide Worldwide and Asia Pacific, blockchain spend will decline in 2020 as compared to the pre-COVID-19 forecast scenario. This decline is led by marked reductions in IT spend and bleak economic growth in recent months due to the pandemic.

Worldwide spending on blockchain solutions is forecast to reach nearly $4.3 billion in 2020 — a tempered 57.7% growth from the $2.7 billion spent in 2019. While IDC forecasts a drop in blockchain spend in every industry in 2020 due to COVID-19, the scope of these reductions will vary across industries.

IDC expects blockchain spending to grow at a tempered pace over the 2018-2023 period with a five-year compound annual growth rate (CAGR) of 55.3% for Asia/Pacific* and 57.1% for Worldwide — with worldwide spend reaching $14.4 billion by 2023.


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The Asia Pacific (APAC) contributes around 19.3% of the overall worldwide spend on blockchain in 2020 and is behind the United States and Western Europe in terms of total market size. The APAC market is primarily driven by three use cases that are linked to the BFSI sector: Cross-Border Payments and Settlements, Trade Finance & Post Trade or Transaction Settlements, and Regulatory Compliance. The drive across various APAC economies to improve payment methods, and assist in maintaining records for regulatory compliance and checks, continues to be the most dominant mindset that is expected to benefit blockchain investments in the region.

Saving grace

“Despite initial resistance, companies that adopted the technology early on have experienced significant benefits during the early months of the COVID-19 pandemic — better control of their supply chain, better traceability of goods, and the ability to maintain an auditable track record of product movement. Due to this reason, blockchain technology has turned out to be a saving grace for some enterprises,” said Ritika Srivastava, associate market analyst at IDC Asia Pacific.

Hospitality and tourism-heavy industries like transportation and personal and consumer services are expected to be the most negatively impacted markets, along with construction. Blockchain spending is expected to decline by 9.5% or more in the respective industries.

Global blockchain spending will also see a moderate decline in the financial sector. While the sector will see an overall slowdown, banking, securities and investment services, and insurance industries are still expected to invest more than $1.6 billion (combined in blockchain solutions) this year.

Even with significant risk, the manufacturing and resources sector will see the fastest growth in blockchain spending over the 2018-23 period with a five-year CAGR of 60.5%, followed closely by the distribution and services sector with a CAGR of 58.7%. Despite moderate risk across all industries, blockchain deployments will see a modest acceleration in professional services, manufacturing, healthcare, retail, and other industries that require coordination across their value chain.

Use cases

Loyalty Programs and Equipment and Service/Parts Management will be the most negatively impacted use cases due to the COVID-19 pandemic. Cross-Border Payments & Settlements, Others, and Lot Lineage/Provenance, on the other hand, are top blockchain use cases that will receive the most investment in 2020. Manufacturing will focus much of its blockchain investment in Lot Lineage/Provenance use cases and Asset/Good Management use cases, while Identity Management use cases will receive significant investments from the Banking, Government, and Healthcare Provider industries.

From a technology perspective, software will see the largest impact as it holds a moderate share of the blockchain opportunity – with spending expected to decline more than 7% relative to pre-COVID-19 forecasts. IT services and business services will see a more moderate reduction in spending as companies focus on keeping their mission-critical projects going. Hardware has the lowest decrease in 2020 at 6% led by purchases of servers and IaaS.