Distributed ledger technologies (DLT) will gain new momentum this year. Worldwide spending on blockchain solutions is forecast to reach $2.1 billion in 2018, according to the latest worldwide market study by International Data Corporation (IDC).
The industry analyst expects blockchain investment to grow over the 2016-2021 forecast period with a five-year compound annual growth rate (CAGR) of 81.2 percent -- with total spending to reach $9.2 billion in 2021.
Blockchain Application Market Development
"Interest and investment in blockchain and distributed ledger technology is accelerating as enterprises aggregate data into secure, sequential, and immutable blockchain ledgers, transforming their businesses and operations," said Bill Fearnley, research director at IDC.
The United States market will see the largest blockchain investments and deliver more than 40 percent of worldwide spending throughout the forecast period.
Western Europe will be the next largest region for blockchain spending, followed by China and Asia-Pacific (excluding Japan and China). All regions 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 percent 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.
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. market for guidance, as other regions forge ahead in their own blockchain projects and initiatives.
Blockchain spending will be led by the financial sector ($754 million in 2018). The distribution and services sector ($510 million) will see strong investments from the retail and professional services industries, while the manufacturing and resources sector ($448 million) will be driven by the discrete and process manufacturing.
In the U.S. market, the distribution and services sector will see the largest investments. The financial services sector will be the leader Western Europe, China, and Asia-Pacific. Industries with the fastest growth will be professional services (85.8 percent CAGR), discrete manufacturing (84.3 percent CAGR), and the resource industries (83.9 percent CAGR).
Outlook for Blockchain Apps Growth
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.
From a technology perspective, IT services and business services will account for roughly 75 percent of all blockchain spending throughout the forecast 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.