Blockchain Spending and Investment to Reach $11.7 Billion in 2022

Worldwide spending on blockchain solutions forecasted to reach $11.7 billion in 2022, as per Worldwide Semiannual Blockchain Spending Guide from International Data Corporation (IDC).

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.

The five-year compound annual growth rate (CAGR) forecasted to reach 73.2% for Worldwide spending on blockchain solutions in the forecasted period of 2017-2022. The overall spending for Worldwide spending on blockchain solutions will be $1.5 billion in 2018. This is twice the amount spent in 2017 on blockchain solutions, as per the report.

Sector-wise, the spending on Blockchain will be primarily driven by the financial sector ($552 million in 2018). This is largely due to rapid adoption of Blockchain technologies in the banking industry. In 2018, the financial services sector will be the driver in Western Europe, Middle East and Africa (MEA), China, and APeJC in 2018.

Common use cases including regulatory compliance, cross-border payments & settlements, custody and asset tracking, and trade finance & post-trade/transaction settlements will be catered by Blockchain technologies.

The largest spending in 2018, around $193 million will be attributed to Cross-border payments & settlements use cases followed by lot/lineage provenance ($160 million) and trade finance & post-trade/transaction settlements ($148 million). These use cases will continue to drive blockchain investment in 2022 as well, according to the report.

The distribution and services sector ($379 million in 2018) will see strong investments from the retail and professional services industries. The United State will see the largest blockchain investment in distribution and services sector. Common use cases including asset/goods management and lot lineage/provenance will be catered by blockchain technologies.

The manufacturing and resources sector ($334 million in 2018) will be driven by the discrete and process manufacturing industries. Among the manufacturing sector blockchain spending will be more towards process manufacturing accounting around 78.8% compound annual growth rate (CAGR), professional services around 77.7% compound annual growth rate (CAGR), and banking around 74.7% compound annual growth rate (CAGR).

Region wise, the United States will see the largest blockchain investments. The 36% of worldwide spending throughout the forecast will be coming from the United States. Western Europe will be the next largest region for blockchain spending. The next region in the line is followed by China and Asia/Pacific (excluding Japan and China) (APeJC). Japan and Canada will the way with CAGRs of 108.7% and 86.7%, respectively. All nine regions in the world in the spending guide will see phenomenal spending growth over the 2018-2022 forecast period.

Technology-wise, IT services, and business services (combined) will account for roughly 70% of all blockchain spending in the forecasted period. 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.

Research manager with IDC's Customer Insights & Analysis team, Stacey Soohoo said,  "Enthusiasm for blockchain continues to be universally shared across regions as businesses and organizations alike continue to explore the technology’s potential business application. Regulatory concerns and industry standards continue to hinder widespread adoption as governments around the globe work with enterprises to formulate policies and governance. As such, cross-business collaboration and blockchain interoperability are emerging as key aspects in the growth of the distributed ledger technology (DLT)."

Program vice president, IDC's Customer Insights and Analysis, Jessica Goepfert said, "We continue to see the greatest spending and growth for blockchain around lot lineage and asset and goods management. Highly visible scandals combined with complex supply chains and incomplete information set the stage for investments and projects in these areas. End to end, the stakeholders have a vested interest in solving these issues. Manufacturers want to ensure products arrive where they are supposed to arrive. Retailers and wholesalers seek assurance around the validity and quality of the products they are selling. And consumers are demanding greater transparency from providers."