Blockchain Spending Close to $12B Mark: Report
Spending related to the blockchain technology is projected to hit the $12 billion mark in the next four years, based on a report by the International Data Corporation (IDC).
Total spending on projects in the blockchain industry is expected to rise annually at a growth rate of almost 75 percent until 2022, analysts at the firm said in the report entitled “Worldwide Semiannual Blockchain Spending Guide.” Specifically, global spending is seen to reach $11.7 billion in 2022 alone, compared to the $1.5 billion estimated spending for this year.
Financial sector is mostly expected to allocate a significant amount of money, with banks being one of the early adopters of the blockchain technology. Data shows the sector alone has spent $552 million this year, followed by the distribution and services sector with $379 million.
Manufacturing and resources sector, which has shelled out $334 million this year, “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.”
“From a technology perspective, IT services and business services (combined) will account for roughly 70 percent 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,” it said.
The United States will witness the largest blockchain-related investments and deliver over 36 percent of global spending. Western Europe, meanwhile, is seen to be the next biggest region for such a spending, followed by China and the Asia Pacific (excluding China and Japan).
“All nine regions covered in the spending guide will see phenomenal spending growth over the 2018-2022 forecast period with Japan and Canada leading the way with CAGRs of 108.7% and 86.7%, respectively,” the report noted.
About $193 million has been spent on cross-border payments and settlements being the most popular use case for the technology. Lot/lineage provenance ($160 million) and trade finance and post-trade/transaction settlements ($148 million) came in second and third, respectively.
Both information technology and business services will account for nearly 70 percent of all blockchain spending, the IDC noted, with spending “well balanced” between the two sectors. Blockchain platform software, on the other hand, is anticipated to be the biggest spender outside the services category. Together with security software, it is also expected to be one of the fastest growing segments as well.
Jessica Goepfert, program vice president for the International Data Corporation, said that moving forward, some uses for blockchain are not going to disappear at any given time. “We continue to see the greatest spending and growth for blockchain around lot lineage and asset and goods management … 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,” Goepfert said.