Global spend on blockchain solutions balloons
Global spending on blockchain solutions is expected to reach $2.7 billion (R41 billion) by year-end – an increase of 80% over 2018, according to global technology research and consulting firm International Data Corporation (IDC).
In its Worldwide Semi-annual Blockchain Spending Guide, IDC forecasts the figure will be close to $15.9 billion in 2023, driven by spending led by the banking industry, which will account for roughly 30% of the worldwide total.
Discrete manufacturing and process manufacturing will be the next largest industries, with a combined share of more than 20% of overall spending. Process manufacturing will also have the fastest spending growth of a 68.8% compound annual growth rate (CAGR), enabling it to become the second largest industry for blockchain spending by the end of the forecast period.
Four other industries (discrete manufacturing, professional services, retail and utilities) will grow faster than the overall market.
IDC says the banking industry will drive spending on two of the largest blockchain use cases – cross-border payments and settlements, and trade finance and post-trade/transaction settlements.
From a technology perspective, IT services and business services (combined) will account for nearly 70% of all blockchain spending in 2019, 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 second fastest growing technology category overall with a five-year CAGR of 65.2%, following IT services with a CAGR of 66%.
James Wester, research director at Worldwide Blockchain Strategies, says: “Behind the sometimes heated public discussions and debates over blockchain, enterprise adoption of the technology has quietly reached a tipping point across multiple use cases. Companies are recognising value from initial pilot programmes and moving those projects into production.
“As the data in the spending guide indicates, the growth and adoption of blockchain by enterprises is accelerating as the benefits of using blockchain to increase efficiency and improve processes are understood. There is still some uncertainty regarding the technology, specifically in the areas of governance and regulation, but adoption of blockchain for financial services, identity, trade and other markets is encouraging.”
The Worldwide Semi-annual 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.
“While the debate continues as to whether crypto-currencies are a solution in search of a problem, many organisations and enterprises have realised blockchain solves many current and impending business problems. Many blockchain projects are gaining steam as players across the value chain realise the significant progress blockchain brings, launching much-needed transformation within and across industries and use cases,” says Stacey Soohoo, IDC research manager, customer insights and analysis.
“With enterprises moving past the proof-of-concept phase, it’s not a matter of whether blockchain is here to stay but rather the scope of blockchain’s adoption. Sharing data between institutions, simplifying outdated processes, and bringing transparency to business processes while also encouraging collaboration and partnerships – these are the tangible benefits blockchain brings to the table.”