Across the globe, CIOs and CTOs will assess the potential benefits of distributed ledger technology applications that are empowered by purpose-built peer-to-peer networks. To date, the adoption and development of blockchain solutions have been somewhat problematic, due to a variety of complex challenges.
Regardless, organizations are forecast to spend nearly $6.6 billion on blockchain solutions this year -- that's an increase of more than 50 percent compared to 2020. Blockchain investments will see growth throughout the 2020-2024 forecast period with a five-year compound annual growth rate (CAGR) of 48 percent, according to the latest worldwide market study by International Data Corporation (IDC).
"This is an important time in the blockchain market as enterprises across markets and industries continue to increase their investment in the technology. The pandemic highlighted the need for more resilient, more transparent supply chains, healthcare delivery, financial services, and so much more, and enterprises around the world have been investing in blockchain to provide that resiliency and transparency," said James Wester, research director at IDC.
The leading use case for blockchain in 2021 and throughout the forecast is Cross-Border Payments & Settlements, which uses distributed ledger technology to track, trace, and manage payments and settlements.
Regardless, organizations are forecast to spend nearly $6.6 billion on blockchain solutions this year -- that's an increase of more than 50 percent compared to 2020. Blockchain investments will see growth throughout the 2020-2024 forecast period with a five-year compound annual growth rate (CAGR) of 48 percent, according to the latest worldwide market study by International Data Corporation (IDC).
"This is an important time in the blockchain market as enterprises across markets and industries continue to increase their investment in the technology. The pandemic highlighted the need for more resilient, more transparent supply chains, healthcare delivery, financial services, and so much more, and enterprises around the world have been investing in blockchain to provide that resiliency and transparency," said James Wester, research director at IDC.
Blockchain Technology Market Development
There's growing interest and investment by corporations, financial institutions, and governments in areas previously viewed with some uncertainty -- such as cryptocurrencies, digital assets, central bank digital currencies, decentralized finance, and stablecoins.
The leading use case for blockchain in 2021 and throughout the forecast is Cross-Border Payments & Settlements, which uses distributed ledger technology to track, trace, and manage payments and settlements.
The second-largest blockchain use case is Lot Lineage or Provenance, which is used to verify the origin and authenticity of a product as it moves throughout the value chain. Other leading use cases include Trade Finance & Post Trade or Transaction Settlements, Asset or Goods Management, and Identity Management.
From an industry perspective, banking leads the way in blockchain spending, accounting for nearly 30 percent of the worldwide total in 2021. Banking will remain the top industry for blockchain spending throughout the forecast although its share of spending will diminish slightly by 2024.
From an industry perspective, banking leads the way in blockchain spending, accounting for nearly 30 percent of the worldwide total in 2021. Banking will remain the top industry for blockchain spending throughout the forecast although its share of spending will diminish slightly by 2024.
According to the IDC assessment, the primary use cases for blockchain within the banking industry are Cross-Border Payments & Settlements and Trade Finance & Post Trade or Transaction Settlements.
The next largest industries for blockchain spending are process manufacturing and discrete manufacturing, which together account for more than 20 percent of all spending worldwide. The leading use case in both industries is Lot Lineage or Provenance.
The next largest industries for blockchain spending are process manufacturing and discrete manufacturing, which together account for more than 20 percent of all spending worldwide. The leading use case in both industries is Lot Lineage or Provenance.
Following the manufacturing industries are professional services, retail, and insurance, which rely on blockchain to trace the movement of payments and products. The industries that will see the fastest growth in blockchain spending over the forecast period are professional services (56 percent CAGR), state or local government (53.3 percent CAGR), and healthcare (52.7 percent CAGR).
From a technology perspective, IT services and business services (combined) will account for more than two-thirds of all blockchain spending throughout the forecast with IT services receiving slightly more investment over the forecast period.
From a technology perspective, IT services and business services (combined) will account for more than two-thirds of all blockchain spending throughout the forecast 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 fastest growing technology category overall with a five-year CAGR of 52.9 percent.
Outlook for Blockchain Applications Regional Growth
Spending on blockchain solutions in the United States will be nearly $2.6 billion this year, making it the largest geographic market, followed by Western Europe ($1.6 billion) and China ($777 million).
Outlook for Blockchain Applications Regional Growth
Spending on blockchain solutions in the United States will be nearly $2.6 billion this year, making it the largest geographic market, followed by Western Europe ($1.6 billion) and China ($777 million).
All nine regions covered by IDC analysts are predicted to see exceptional spending growth over the forecast period, led by China with a five-year CAGR of 54.6 percent and Central and Eastern Europe (50 percent CAGR).
That said, I've followed the blockchain market through the recent history of abundant hype and euphoria that has led to the current more realistic outlook. One of the most persistent challenges is the lack of people that have proven skills and experience with this technology. I anticipate that market growth will continue to be impacted by this significant obstacle to accelerated progress.