Global spending on blockchain solutions will rise to US$6.6 billion (A$8.5 billion) this year, an increase of more than 50% compared to the pandemic year, the technology analyst firm IDC says.

The company said there would be strong spending growth from 2020 to 2024. with a five-year compound annual growth rate of 48.0%.

The leading use case is forecast to be cross-border payments and settlements, lot lineage/provenance — verifying the origin and authenticity of a product as it travels the value chain — trade finance and post-trade/transaction settlements, asset-goods management and ID management.

“This is an important time in the blockchain market as enterprises across markets and industries continue to increase their investment in the technology,” said James Wester, research director, Worldwide Blockchain Strategies.

“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.

“What is also very important right now is that we are seeing real interest and investment by corporations, financial institutions, and even governments in areas they previously viewed with some uncertainty such as cryptocurrencies, digital assets, central bank digital currencies, decentralised finance and stablecoins. This investment will have major implications in a very short time on everything from retail to financial services to capital markets.”

IDC said banking would lead the way in blockchain spending, with about a third of the total spent in 2021, and also for most of the five-year forecast period, though there would be a slight decrease in 2024.

Process manufacturing and discrete manufacturing were the next in line, with the two seen accounting for about 20% of global spending. Industries forecast to see the fastest growth in blockchain spending were professional services (56.0% CAGR), state/local government (53.3% CAGR), and healthcare (52.7% CAGR).

“While the effects of the pandemic had organisations diverting budget or pausing projects to focus on more essential endeavours, this was not the case with blockchain,” said Stacey Soohoo, research manager, Customer Insights and Analysis.

“Along with the ongoing pressures of digital transformation, COVID-19 made it clearer than ever that in order to have resilient business operations, changes in behaviour, demand, and supply have forced companies to adopt a digital-led and blockchain-driven business model to survive lockdowns, supply disruptions, and future crises.

“Within the current environment, the use of blockchain is coming up especially within banking, manufacturing, professional services, and retail. Specifically, focus has been in tracking items from manufacturer to distribution to the end consumer and related payments and settlements that come with goods movements and management.

“The market is now reaching a point where successful pilots and deployments have proven the need, but other key factors such as a willingness to collaborate are needed to instill blockchain technology across the entire value chain, with every single participant needing and wanting to be a part of the network.”

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