Blockchain will grow to $15.9 billion in 2023, IDC reports

Enterprise blockchain technology has proved its worth, and will grow to almost six times its current size over five years

Corporate adoption of blockchain technology has reached a “tipping point” that will see spending grow dramatically the next four years, reaching $15.9 billion by 2023, according to a report released on August 8 by the well-respected research firm IDC.

That’s nearly six times the $2.7 billion IDC is forecasting for 2019. $1.1 billion of that will be in the United States, the current blockchain leader. Western Europe and China between them will account for nearly another $1 billion, with the EU and its partners outspending China two-to-one.

The newly released Worldwide Semiannual Blockchain Spending Guide from International Data Corporation (IDC) adds that between 2018 and 2023, blockchain’s compound annual growth rate (CAGR) grow by 60.2% annually. Spending is set to grow 80% this year alone; that doesn’t include cryptocurrency projects, which were excluded in the IDC guide.

“Behind the sometimes-heated public discussions and debates over blockchain, enterprise adoption of the technology has quietly reached a tipping point across multiple use cases,” said James Wester, IDC’s research director for worldwide blockchain strategies, in a statement.

The key cause of this growth is that corporate pilot programs in areas like financial services, supply chain management, and identity verification have proven their worth by increasing efficiency and improving processes, Wester noted. Companies, he said, are “moving those projects into production.”

The question is no longer “whether blockchain is here to stay, but rather the scope of blockchain’s adoption,” added Stacey Soohoo, IDC’s research manager for customer insights & analysis. “Sharing data between institutions, simplifying outdated processes, and bringing transparency to business processes while also encouraging collaboration and partnerships—these are the tangible benefits that blockchain brings to the table.”

Banking and financial services are leading the charge, and will account for 30% of blockchain’s growth over the five years. Within the banking category, cross border payments and settlements will join trade finance and post-trade/transaction settlements as the fastest growing segment.

Next will be manufacturing, accounting for 20% through 2023. The fastest growing industries in the remaining 50% will include professional services, retail, and utilities. 

The fastest growth in spending is expected to be in developing blockchain technology and platforms. These IT services and business services will account for 70% of blockchain spending in 2019, IDC predicts. 

One hurdle is that the law has yet to catch up with blockchain, Wester said. 

“There is certainly some uncertainty still regarding the technology, specifically in the areas of governance and regulation,” Wester said. “[B]ut adoption of blockchain for financial services, identity, trade, and other markets is encouraging.”

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.