A blockchain acts 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's no single, central repository. Distributed ledgers technology (DLT) allows new transactions to be added to an existing chain of transactions using a secure cryptographic signature.
Worldwide spending on blockchain solutions is forecast to reach $11.7 billion in 2022, according to the latest global market study by International Data Corporation (IDC).
Blockchain market development
IDC expects blockchain spending to grow rapidly throughout the 2017-2022 forecast period, with a five-year compound annual growth rate (CAGR) of 73.2 percent. Moreover, worldwide blockchain spending will reach $1.5 billion in 2018 — that's double the amount spent on the emerging technology during 2017.
The United States will see the largest blockchain investments and deliver more than 36 percent of worldwide spending throughout the forecast. Western Europe will be the next largest region for blockchain spending, followed by China and Asia-Pacific (excluding Japan and China).
All nine regions assessed by IDC will experience significant spending growth over the 2018-2022 forecast period, with Japan and Canada leading the way with CAGRs of 108.7 percent and 86.7 percent, respectively.
Blockchain spending will be led by the financial sector ($552 million in 2018), driven largely by rapid adoption in the banking industry. The distribution and services sector ($379 million in 2018) will see strong investments from the retail and professional services industries while the manufacturing and resources sector ($334 million in 2018) will be driven by the discrete and process manufacturing industries.
In the U.S. market, the distribution and services sector will see the largest blockchain investments. The financial services sector will be the leading driver in Western Europe, Middle East and Africa (MEA), China, and Asia-Pacific in 2018.
The industries that will see the fastest growth in blockchain spending will be process manufacturing (78.8 percent CAGR), professional services (77.7 percent CAGR), and banking (74.7 percent CAGR).
Within the financial sector, blockchain lends itself to a number of common use cases including regulatory compliance, cross-border payments & settlements, custody and asset tracking, and trade finance & post-trade/transaction settlements. In the distribution and services sector and the manufacturing and resources sectors, the leading use cases include asset/goods management and lot lineage/provenance.
Cross-border payments & settlements will be the use case that sees the largest spending in 2018 ($193 million), followed by lot or lineage provenance ($160 million) and trade finance & post-trade or transaction settlements ($148 million). These three use cases will remain the largest in terms of overall spending in 2022 as well.
"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," said Jessica Goepfert, program vice president at IDC.
Outlook for blockchain technology investment
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.
Furthermore, 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.