You must have heard a lot about Blockchain Technology and its various use cases. In this article, we will throw light on global spending on Blockchain applications, as suggested by IDC Spending Guide, especially in the banking and manufacturing domain. We will delve deeper into how this technology is transforming both these sectors.
Table of Contents
- Basics of Blockchain Technology
- New IDC Spending Guide Sees Robust Growth in Blockchain Space
- Blockchain- A Perfect Fit for Banking and Manufacturing
- Concluding Lines
Basics of Blockchain Technology
Blockchain is a Peer-to-Peer decentralized distributed ledger technology that mitigates the third party involvement. The groundbreaking features of Blockchain technology such as decentralization, transparency, immutability, security, automation are generating a variety of use cases worldwide. Tech giants, top financial institutions, governments, and conglomerates are now seeing and utilizing the advantages of Blockchain-based technologies for various purposes. Everybody can imagine a world of Blockchain in which contracts are encoded in digital code and stored in a permanent and transparent way, where they are secured from any kind of data manipulation.
Blockchain Developers and Experts claim it’s a fundamental technology that can create new foundations for our economic and social structures.
New IDC Spending Guide Sees Robust Growth in Blockchain Space
The IDC Worldwide Blockchain Spending Guide offers a detailed analysis of the Blockchain ecosystem and acts as a basis for how IDC organizes its studies and predictions on Blockchain technology. According to IDC, global investment on Blockchain applications this year will hit $4.1 billion, a rise of more than 50 percent relative to the previous year. The Worldwide Blockchain Spending Guide predicts a five-year CAGR of 46.9%, hitting a record of approximately $17.9 billion by 2024.
Finance will be the highest investment, at 29.7%, followed by process manufacturing (11.4%) and discrete manufacturing (10.9%). The report also mentioned that Professional services scored 6.6.%, whereas Retail services ranked 6%. The report suggests that the banking sector (which is predicted to be 29.7%) will alone account for more than one-third of Blockchain spending.
In 2020, the US is expected to be the largest regional Blockchain investment market at $1.6bn, followed by Western Europe and China.
James Wester, IDC Research Director for Global Blockchain Strategies, believes that challenges posed by the Covid-19 outbreak in the global economy and the attempts to curb it have forced almost all businesses, markets, and sectors to re-evaluate core processes. In his words,
“This has accelerated interest and investment in digital transformation, which includes Blockchain and distributed ledger technology.”
Blockchain- A Perfect Fit for Banking and Manufacturing
As we have already seen, finance will be the highest investment, followed by the manufacturing sector. Let’s explore how Blockchain benefits both these domains.
Blockchain and Banking
Much of the financial services industry has made major investments in a variety of services and applications due to weaknesses in network maintenance and breaches in security. Blockchain ledgers have revolutionary advantages over conventional methods that promote bilateral settlement by removing intermediaries’ failures, collateral costs, delays, reducing credit risks, speeding up transaction execution, and improving operational transparency, among others.
The banking sector has traditionally faced several problems with the recoverability of bank loans. Blockchain can be seen as an innovation tech where all transactions are registered in a block right from the disbursement until its end-use.
In the conventional system, domestic payments take minutes hours, and the process for cross-border payments takes several days. Inadequate infrastructure often poses security issues when creating a foreign transfer, and therefore these transfers are vulnerable to cyber-attacks, which can disrupt transmission. Blockchain technology also enables payment processes, reducing human blunder, running costs, and fraud. Technology also helps financial institutions like banks to get rid of all payment service intermediaries, which decreases the costs of managing customer and bank payments.
Blockchain and Manufacturing
Blockchain is helpful in manufacturing in supply chain management. Manufacturers have set their sights on the Blockchain to mitigate instability in the supply chain and quench their supply chain-related unease. Companies are focusing on perfecting processes, in which all supply chain members connect to and maintain a single record. These systems enable manufacturers to minimize product losses and provide specific provenance indicators to those who move the finished product along.
There’s another problem when it comes to manufacturing: it’s not resistant to security breaches, which can take many forms. Private, company confidential details and user credentials are the most popular types of data stolen from manufacturers. However, Blockchain allows all participants in a network to authorize data entry and then change the ledger. It spreads the possible vulnerabilities across the entire network from one single access point. Since manufacturing needs constant contact between suppliers and a single data breach could disrupt each party’s operations, this level of protection could prevent fraud resulting in both minor and cataclysmic failures of the systems.
Blockchain’s future is near, and banking is not the only sector that has been affected. Tech giants and enterprises have understood the capabilities of this technology and started utilizing it for streamlining their operations. Its decentralized nature, transparency, and immutability can be applied to various industries, creating a multitude of use cases.
As the Blockchain space is booming, if you are interested in learning blockchain technologies and want to become a Certified Blockchain Developer, get enrolled in Blockchain Council.