FRAMINGHAM, Mass.--(BUSINESS WIRE)--Worldwide spending on blockchain solutions is forecast to reach $2.1 billion in 2018, more than double the $945 million spent in 2017, according to the inaugural Worldwide Semiannual Blockchain Spending Guide from International Data Corporation (IDC). IDC expects blockchain spending to grow at a robust pace over the 2016-2021 forecast period with a five-year compound annual growth rate (CAGR) of 81.2% and total spending of $9.2 billion in 2021.
"Interest and investment in blockchain and distributed ledger technology (DLT) is accelerating as enterprises aggregate data into secure, sequential, and immutable blockchain ledgers, transforming their businesses and operations," said Bill Fearnley, Jr., research director, Worldwide Blockchain Strategies. "Many technology vendors and service providers are collaborating and working with consortiums such as the Enterprise Ethereum Alliance and the Hyperledger Projects to develop innovative solutions that improve processes such as post-trade processing, tracking and tracing shipments in the supply chain, and transaction records for auditing and compliance. Also, multiple regulators and central banks have made positive comments about blockchain and DLT and this will help to accelerate demand in regulated industries such as financial services and healthcare."
The United States will see the largest blockchain investments and deliver more than 40% of worldwide spending throughout the forecast. Western Europe will be the next largest region for blockchain spending, followed by China and Asia/Pacific (excluding Japan and China)(APeJC). All nine regions covered in the spending guide will see phenomenal spending growth over the 2016-2021 forecast period with Latin America and Japan leading the way with CAGRs of 152.5% and 127.3%, respectively.
"2017 was the year of experimentation as enterprises realized both the benefits and challenges of blockchain. 2018 will be a crucial stage for enterprises as they make a huge leap from proof-of-concept projects to full blockchain deployments. As a leader in blockchain innovation and integration, the U.S. will continue to invest in blockchain throughout the forecast, spending heavily in financial services, manufacturing, and other industries. The U.S. will look to improve efficiencies in existing operations while promoting new applications in others, creating new streams of revenue and areas of spend. With increased investments driven by pressures to keep up with the accelerating pace in innovation, the world will continue to look to the U.S. for guidance as other regions forge ahead in their own blockchain projects and initiatives," said Stacey Soohoo, research manager, Customer Insights & Analysis.
Blockchain spending will be led by the financial sector ($754 million in 2018), driven largely by rapid adoption in the banking industry. The distribution and services sector ($510 million in 2018) will see strong investments from the retail and professional services industries while the manufacturing and resources sector ($448 million in 2018) will be driven by the discrete and process manufacturing industries. In the U.S., the distribution and services sector will see the largest blockchain investments. The financial services sector will be the leading driver in Western Europe, China, and APeJC. The industries that will see the fastest growth in blockchain spending will be professional services (85.8% CAGR), discrete manufacturing (84.3% CAGR), and the resource industries (83.9% CAGR).
Within the financial sector, blockchain lends itself to a number of common use cases including regulatory compliance, cross-border payments & settlements, custody and asset tracking, and trade finance & post-trade/transaction settlements. In the distribution and services sector and the manufacturing and resources sectors, the leading use cases include asset/goods management and lot lineage/provenance. Cross-border payments & settlements will be the use case that sees the largest spending in 2018 ($242 million), followed by lot/lineage provenance ($202 million) and trade finance & post-trade/transaction settlements ($199 million). These three use cases will remain the largest in terms of overall spending in 2021 as well.
"There are a multitude of potential new use cases for blockchain, as transactions and records are the lifeblood of just about every organization. However, we are seeing initial blockchain spending to transform existing highly manual and inefficient processes such as cross-border payments, provenance and post transaction settlements. These are areas of existing pain for many firms, and thus blockchain presents an attractive value proposition," said Jessica Goepfert, program director, Customer Insights and Analysis.
From a technology perspective, IT services and business services (combined) will account for roughly 75% of all blockchain spending throughout the forecast with spending fairly well balanced across the two categories. Blockchain platform software will be the largest category of spending outside of the services category and one of the fastest growing categories overall, along with security software.
The Worldwide Semiannual Blockchain Spending Guide quantifies the emerging blockchain market by providing spending data for ten technologies across 19 industries and 14 use cases in nine geographic regions. 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. Spending associated with various cryptocurrencies that utilize blockchain and distributed ledgers technology, such as Bitcoin, is not included in the spending guide. Unlike any other research in the industry, the comprehensive spending guide was designed to help IT decision makers to clearly understand the industry-specific scope and direction of blockchain spending today and over the next five years.
About IDC Spending Guides
IDC's Spending Guides provide a granular view of key technology markets from a regional, vertical industry, use case, buyer, and technology perspective. The spending guides are delivered via pivot table format or custom query tool, allowing the user to easily extract meaningful information about each market by viewing data trends and relationships.
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International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of International Data Group (IDG), the world's leading media, data and marketing services company that activates and engages the most influential technology buyers. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn.