Report Suggests Global Spending on Blockchain Tech Could Reach $9.2 Billion by 2021
Blockchain technology may revolutionize the manner in which businesses provide services to both customers as well as other organizations. From building digital confidence over an entirely transparent ledger, to allowing participants to quickly interact using a peer reviewed network, blockchain technology is proving to be a solution that will drive the next stage of digital transformation. This in mind, partnerships and businesses are spending more money than ever before on blockchain solutions.
According to IDC’s inaugural Worldwide Semiannual Blockchain Spending Guide, $945 million has been spent on blockchain options in 2017. The report notes that this sum is expected to reach $2.1 billion during 2018. IDC expects blockchain spending to increase at a robust pace over the 2016-2021 prediction period with a five-year compound annual growth rate (CAGR) of 81.2%, reaching a total spending of $9.2 billion in 2021.
“Interest and investment in blockchain and distributed ledger technologies (DLT) is accelerating as enterprises aggregate data into secure, sequential and immutable blockchain ledgers, changing their businesses and operations,” explained Bill Fearnley, Jr., study director, Worldwide Blockchain Strategies.
“Many technology vendors and service providers are collaborating and working with consortiums such as the Enterprise Ethereum Alliance and also the Hyperledger Projects to develop innovative solutions that enhance processes such as post-trade processing, tracking and tracing shipments from the supply chain, and transaction documents for auditing and compliance. Additionally, multiple regulators and central banks have made positive comments about blockchain and DLT and this will help to accelerate requirement in regulated industries like financial services and health care.”
Additionally, it is interesting to remember that blockchain budgets are rising worldwide in various sectors. As an example, the USA is expected to spend more than every other nation in blockchain options and will devote a huge proportion of their budget to the supply and services industry.
2018 is going to be a vital stage for enterprises since they create a massive jump from proof-of-concept jobs to complete blockchain deployments. As a pioneer in blockchain integration and innovation, the U.S. will continue to put money into blockchain through the forecast, spending greatly on financial services, manufacturing, and other sectors. The U.S. will appear to enhance efficiencies in existing operations while encouraging new programs in other people, generating new streams of revenue and also regions of invest,” stated Stacey Soohoo, a research director in Client Insights & Analysis in IDC.
Globally, blockchain technology spending is anticipated to be quite high from the banking and financial businesses (anticipated to reach $754 million in 2018), but major use cases for blockchain technologies are also being observed in different locations. For example, from the supply and solutions and the production and resources industries, the top use cases include strength and merchandise management and great deal lineage and provenance.
Fr8 Network, a U.S. based supply-chain management firm, is utilizing blockchain technologies to fix quite a few issues to help enhance the circulation of products and services in the cargo market. Fr8 Network intends to invest greatly in blockchain engineering in the coming weeks as the company builds out their Minimum Viable Product, which utilizes blockchain solutions like intelligent contracts, to remove middlemen and generate a peer-to-peer network in which shippers and carriers may arrange cargo transactions.
From a tech standpoint, IT services and business services (combined) will account for approximately 75 percent of most blockchain spending through the 2016-2021 prediction, with spending quite well balanced across both categories. According to IDC, blockchain platform applications is going to be the largest group of spending out the services class and among the fastest growing classes overall.
By way of instance, ArcBlock intends to make a “Blockchain 3.0” generation which may focus on the progress of decentralized software, while enabling users overcome the principal challenges related to blockchain technology.
“We estimate to spend at least $3 million at the development and research to the ArcBlock system, which will considerably enhance the efficacy of blockchain program growth,” explained ArcBlock’s Creator and Lead Architect Robert Mao.
A Universal Solution?
Findings from IDC’s inaugural Worldwide Semiannual Blockchain Spending Guide clearly show that there will be a continual gain in the amount of money spent on blockchain technologies in the next several years. Enterprises and companies are now seeing the actual value in blockchain-based solutions, which also has a great deal to do with digital confidence.
SAP’s Head of Blockchain, Torsten Zube, believes that the digital trust created by blockchain technology can help businesses transform entirely. “Blockchain is capable of forcing digital transformation, as businesses should see blockchain as a new supply of trust that allows for much better communication in the electronic world,” Zube explained.
However, the report notes that blockchain technology shouldn’t be regarded as a silver bullet for every single entreprise or company. It suggests that blockchain-based solutions are mainly solving real-world challenges faced by industries who have experienced inefficient, manual processes that have yet to evolve.
“There are a multitude of potential new use cases for blockchain, as transactions and records will be the lifeblood of pretty much every organization. But, we are seeing first blockchain spending to change existing highly manual and inefficient processes like cross-border payments, provenance and post transaction settlements. All these are areas of existing pain for many businesses, and thus blockchain presents an attractive value proposition,” said Jessica Goepfert, program director, Customer Insights and Evaluation at IDC.
Even though blockchain technology does provide a variety of benefits, it’s important for businesses to think about their pain points before devoting a major budget to blockchain-based solutions. Since the IDC report predicts, big investments in blockchain technology will mostly be made in the financial services industry, manufacturing sector and IT services moving forward.