Image: Blockchain, Pixabay
Image: Blockchain, Pixabay

Blockchain spending in Asia Pacific, excluding Japan, (APEJ) is expected to reach nearly US$523 million in 2019, an increase of 83.9% from the US$284.8 million spent in 2018, according to the latest findings from the International Data Corporation (IDC)’s Worldwide Semiannual Blockchain Spending Guide.

IDC, a provider of market intelligence and advisory services for the information technology, telecommunications and consumer technology markets, forecasts that blockchain spending in the region will grow at a strong pace between 2018 and 2022 with a five-year compound annual growth rate (CAGR) of 77.5%. The firm estimates a total spending of US$2.4 billion by 2022.

APEJ is set to contribute around 18.4% of the overall worldwide spending on blockchain this year, ranking third after Western Europe at 23.7% and the US, the biggest spender, at 37%. In APEJ, China is expected to contribute the most, representing 70% of the region’s overall spend in 2022.

According to Ashutosh Bisht, senior research manager for customer insights and analysis at IDC, blockchain implementations are moving quickly beyond the pilot and proof of concept phase in APEJ. “We have reached an inflection point,” Bisht said. “Networked integrity, distributed power, value as incentive, security, privacy, rights reserved and inclusion are the seven basic design principle of the blockchain economy, and are providing the confidence for industry leaders to accelerate their adoptions of this maturing technology.”

Findings from a recent report by Global Market Insights go even further, suggesting that the Asia Pacific region will likely user in a new era and lead in blockchain adoption. The region’s blockchain market is estimated to grow by an estimated 87% over the next six years.

According to Amyn Gillani, CEO of Talos Digital, a software development company, one of the primary reasons APAC looks poised to blaze trails in blockchain is its consumer market which is not only huge with a middle class expected to reach 3.5 billion by 2030 but which is also especially eager to embrace new technologies.

Additionally, government initiatives and policies in countries including Thailand, Singapore, South Korea, Hong Kong and Japan are helping fuel demand for blockchain technology in the region, he added. In India, a recent study found that cryptocurrency and blockchain-related job postings increased by an astonishing 290% in 2017 and is still growing.

The banking and financial sector to lead blockchain adoption

According to IDC, the financial and banking industry will be the biggest spender in 2019 and throughout the forecast period. Over the 2018-2022 forecast, IDC estimates that the financial sector will account for about half of the world’s spending on blockchain. The banking, securities and investment services, and insurance industries are expected to invest a combined US$294.8 million in blockchain solutions in 2019.  

IDC anticipates trade finance and post trade and transaction settlements, as well as cross border payments and settlements, as the two blockchain use cases that will receive the most investment in 2019, at US$82.1 million and US$79 million respectively.

Meanwhile, the manufacturing and resources sector, and the distribution and services sector are set to witness blockchain spending of US$95 million and US$90.6 million respectively in 2019.

Over the 2018-2022 forecast, the fastest growth in blockchain spending is expected to be seen in the infrastructure sector with a five-year CAGR of 99.6%, followed closely by the distribution and services sector with a CAGR of 83%.

“After much experimentation, [blockchain] is beginning to emerge in a range of production environments driven by the thought leadership of early adopters and an ever-growing industry of blockchain businesses helping their customers realize the value of this technology,” said Simon Piff, vice president for security and blockchain research at IDC Asia Pacific.

“As we see the emergence of the concept of digital trust, blockchain is a key ingredient in delivering this trust, at scale, across many markets, allowing a new pace of business interaction that had previously been restricted by process and approval challenges.”