The financial sector is leading the way in the use of blockchain technology with the industry analyst International Data Corp. (IDC) expecting that global spending will increase by more than 50% this year compared to 2020. IDC said organizations will cough up $6.6 billion in blockchain solutions.
The IDC Worldwide Blockchain Spending Guide saw continued growth in the blockchain until 2024 with a five-year compound annual growth rate (CAGR) of 48%. The Worldwide Blockchain Spending Guide quantifies the emerging blockchain market by providing spending data for 10 technologies across 19 industries and 17 use cases in nine geographic regions.
IDC defines blockchain as a digital, distributed ledger of transactions or records.
Payments and financial services are seen to contribute significantly in this growth. According to IDC, Cross-Border Payments and Settlements, which uses distributed ledger technology to track, trace, and manage payments and settlements, will be the biggest contributor in the spending. It will be followed by Lot Lineage/Provenance, which is used to verify the origin and authenticity of a product as it moves throughout the value chain.
Trade Finance & Post Trade/Transaction Settlements, Asset/Goods Management, and Identity Management sectors are also expected to play a role in the expected spending on blockchain.
“What is also very important right now is that we are seeing real interest and investment by corporations, financial institutions, and even governments in areas they previously viewed with some uncertainty such as cryptocurrencies, digital assets, central bank digital currencies, decentralized finance, and stablecoins,” said James Wester, research director, Worldwide Blockchain Strategies. “This investment will have major implications in a very short time on everything from retail to financial services to capital markets.”
IDC said the banking industry will contribute about 30% of the worldwide total in blockchain spending this year and it will remain as “the top industry” in this area. However, the industry analyst firm sees a slight decline in 2024.
Process manufacturing and discrete manufacturing will account for more than 20% of global spending. 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.
IT, business services
The industries that will see the fastest growth in blockchain spending over the forecast period are professional services (56% CAGR), state/local government (53.3% CAGR), and healthcare (52.7% CAGR).
IDC said the combine IT and business services 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 (2020-2024). 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%,
The United States is expected to spend nearly $2.6 billion this year, making it the largest geographic market, followed by Western Europe ($1.6 billion) and China ($777 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 54.6% and Central and Eastern Europe (50.0% CAGR).