As one of the most significant innovations to come out of the cryptocurrency boom, blockchain technology completely changed the way companies across different industries operate, make transactions, and manage their assets.
According to data gathered by , the global spending on blockchain solutions is expected to surge by 235% and reach $14.4bn in 2023.
57.7% Year-on-year Growth, Despite COVID-19
By allowing digital information to be distributed but not copied, the blockchain technology created the groundwork for the new type of internet. Although initially invented for the cryptocurrency Bitcoin, by improving online security and streamlining fundraising and payment options, the blockchain technology was adopted by many companies across different industries.
In 2017, the global spending on blockchain solutions amounted to $950 million, revealed Statista data and IDC 2020 Worldwide Semiannual Blockchain Spending Report. In the next twelve months, this figure rose to $1.5bn. Statistics show the surge in the global blockchain solutions spending continued in 2019, with the amount rising to $2.7bn, a 185% jump in two years.
Like all technology investments, spending on blockchain projects has also been affected by the impacts of the COVID-19 pandemic. According to the IDC data, the global spending on blockchain solutions is expected to reach $4.3bn in 2020, a 6% drop compared to the pre-COVID-19 forecast. Nevertheless, this figure represents a 57.7% jump compared to 2019 figures.
The IDC report also revealed that all regions are expected to witness double-digit spending growth in the next three years, led by Europe with a combined five-year CAGR of over 63%.
Manufacturing and Resources Sector to Witness the Fastest Growth in Blockchain Spending
Statistics show hospitality, transportation, and personal and consumer services represent the most-affected industries, expected to witness a 9.5% drop in the blockchain spending in 2020. The financial industry is expected to see a moderate decline in spending this year, as well.
However, the manufacturing and resources sector will witness the most rapid growth in blockchain spending between 2018 and 2023, with a CAGR of 60.5%. The distribution and services sector follows with a CAGR of 58.7%, respectively.
Cross-border payments and settlements represent the leading individual blockchain use case, accounting for nearly 17% of the global blockchain technology market in 2019.
Trade finance and post-trade/transaction settlements ranked as the second-largest use case with a 10.4% market share last year. Lot lineage/provenance, asset/goods management, and identity management follow with 9.7%, 8.4%, and 7.3% share, respectively.
Statistics show that cross-border payments and Lot lineage and provenance use cases are expected to receive the most investment in 2020. On the other hand, loyalty programs and service/parts management will be the most impacted due to the coronavirus pandemic.
Blockchain Technology SWOT Guide
As writer Maria Fonseca pointed out in this very media, here is a SWOT analysis of blockchain technology:
Strengths: Blockchain is a decentralised and distributed database (distributed along the nodes of its network). What are then its strengths? A decentralised ledger of transactional data presents numerous operational benefits. These are for example the lower cost of ownership its secure encryption and tamper-proof capabilities. Supposedly it also provides reduced storage costs and operational efficiency accessible worldwide. The storage is distributed and not centralised.
Weaknesses: Blockchain is an extremely complex technology. One thing is the media’s narrative and storytelling about it, another is the details of how it operates. The devil is in the detail, but to look at those details, is key to prevent challenges and foresee solutions. An important weakness of blockchain pertains to the network itself. These tend to be quite small (made up with the connected nodes of the network, each node run by smart engineers and techie coders, that know how to mine and/or program). Actually, most applicable solutions developed with blockchain tech, use off-chain technology. Then, the issues with energy consumption are remarcable and need to be tackled, if blockchain truly delivers what it promisses.
Opportunities: Looking at opportunities, pertain to the external. How are the practical applications of blockchain helping the world? Payment processing is one of the benefits that has arguably been most explored for blockchain technology. This is to the point that some people do not even understand that blockchain has benefits beyond those provided for cryptocurrencies, which have become slightly discredited due to all the scams and speculation happening in 2018.
Threats: Blockchain challenges also need to be considered. Believing this technology is without its issues would be folly. One challenge is the risk of a 51% attack. To understand what this means, one needs to grasp how blockchain architecture operates. A blockchain network, consist of a group of nodes ( computers). A 51% attack occurs when either a node or group of nodes within the network that control 51% of the power of the blockchain can change the records on the blockchain. This makes blockchains not immutable in this circumstance. Such an attack would damage the reputation of blockchain, and impact negatively on its potential use.
Founder Dinis Guarda
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