Worldwide Blockchain Spending Will Grow to $11.5 Billion CAD by 2021
According to the Worldwide Semiannual Blockchain Spending Guide from the International Data Corporation (IDC), the global spending forecast for blockchain technology will grow from $2.1 billion USD (approximately $2.6 billion CAD) in 2018 to $9.2 billion USD (approximately $11.5 billion CAD) in 2021.
The 2018 spend estimate is more than double the $945 million USD (approximately $1.1 billion CAD) spent in 2017. The IDC anticipates that spending on blockchain technology will grow about 81 percent over the next five years in a variety of industries from distribution and services to manufacturing. Swiss Bank UBS sees a similar trend and estimates that blockchain will contribute $300 to $400 billion USD (approximately $375 to $500 billion CAD) in annual economic value on a global level by 2027.
The finance sector is estimated to lead blockchain spending, with a projected spend of $754 million (approximately $943 million) in 2018. While there are many use cases for blockchain technology, initial applications are primarily from banks who transform manual and inefficient processes concerning payments and transactions. Over 20 of the world’s largest banks, including UK’s Barclays, Hong Kong’s HSBC, and Germany’s Commerzbank are developing international payment systems.
As for other industries, blockchain technology helps aggregate and organize company data. Many businesses are currently working with industry partners, alliances, and associations to undergo real-world blockchain deployments later this year.
Spending on blockchain in the financial sector
Although there are a lot of use cases for blockchain technology, the initial blockchain applications are transforming ”existing highly manual and inefficient processes such as border payments, provenance, and post-transaction settlements,” said Jessica Goepfert, program director, customer insights and analysis of IDC. Despite being a relatively new technology, blockchain is a highly attractive solution for clearing payments and settlements.
Other common use cases for blockchain in the financial sector include regulatory compliance, cross-border payments and settlements, financing for trade, post-trade settlements and the tracking of assets.
The financial sector will likely invest heavily in cross-border payments and settlements. The cost of creating cross-border payments and settlements will reach $242 million USD (approximately $302 million CAD) in 2018. Other popular use cases include tracing the data’s origins and activities through data lineage and streamlining the process of settling post-trade transactions.The IDC estimates that these three use cases will remain the largest in 2021 as well.
Interest in blockchain from other industries
While blockchain technology is very popular in the finance sector, enterprises in other industries also express great interest. They see blockchain technology as a tool that can aggregate company data into secure, sequential blockchain ledgers to transform security and operations.
The spending forecast on blockchain technology for the distribution and services sector is $510 million USD (approximately $638 million CAD) in 2018 and largely from the retail and professional services industries. For example, retail giants Unilever and Walmart are partnering with IBM to use blockchain technology to streamline their supply chains. The manufacturing and resource sector will also be investing in blockchain technology at around $48 million USD (approximately $60 million CAD) in 2018.
The Worldwide Semiannual Blockchain Spending Guide from the International Data Corporation (IDC) outlines a very robust future for blockchain technology. 2017 was a big year for experimentation, especially for enterprises who saw the benefits and challenges of blockchain technology. 2018 will be crucial year regarding the development of the technology. It will mark the moment where blockchain leaps from creating proof of concept projects to rolling out real-world blockchain applications.
While The IDC’s predictions of growth in blockchain spending are optimistic, future growth is highly dependent on how well these initial real-world blockchain applications perform.
Image credit: Wikimedia Commons
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