With a compound annual growth rate (CAGR) of 80.2% for 2017-2022, Europe will increase its spending from around $400 million in 2018 to $3.5 billion in 2022, helping it to close the gap with the U.S., the biggest blockchain investor.

2017 was a significant year for blockchain in Europe, with companies asking themselves how blockchain solutions can help simplify, improve, and secure their businesses. A recent IDC survey across Europe, however, revealed there is still some way to go in terms of understanding blockchain applicability and usefulness, especially among smaller European companies.

‘The European market is less flexible than other regions, and is also more fragmented in terms of business size,’ said Carla La Croce, senior research analyst, Customer Insights and Analysis, IDC. ‘Nevertheless, as IDC has already highlighted, 2018 is still the year of blockchain, and European companies are showing increasing interest, supported by growing investments. Companies recognize the importance of the technology and are starting to explore how it can be deployed in their business, going beyond pilots and identifying the best use cases.’

According to Mohamed Hefny, systems and infrastructure solutions program manager at IDC CEMA, ‘Blockchain offers a huge opportunity for start-ups and in the emerging markets of the region where government support and advanced skills offer a fertile ground for things to really happen. The technology is about rapid progress and agility – and the tech giants’ size and legacy are not an advantage here.’

The largest and fastest-growing industry for blockchain is the financial sector, with projected spending of $173 million this year (accounting for 42% of the total). Insurance and banking are also expected to grow above the average. Other fast-growing markets are supply-chain-related segments such as manufacturing and retail, at 82.7% and 82.5% CAGR respectively. Though the biggest industries are traditionally more inclined to invest in blockchain, sectors such as utilities, professional services, and government are also expected to see strong growth.

These sectors will use blockchain for transactions or to track goods and assets, with supply chain quality and provenance control among the key uses of blockchain across all regions. By 2022, IDC believes the top use cases will be trade finance and post-trade/transaction settlements, identity management, regulatory compliance, cross-border payments and settlements, and asset/goods management.

Growth will be driven by IT services, with the highest share devoted to project services and IT consulting. Services will account for more than two-thirds of growth in 2022, slightly increasing over time at the expense of software and hardware, with the latter representing only a very small share of the total. Software technologies will account for slightly less than a third in 2018, and this will decrease to a quarter in 2022. Software spending growth will be driven by security software.

IDC’s Worldwide Semiannual Blockchain Spending Guide quantifies the emerging blockchain market by providing spending data for 10 technologies across 19 industries and 16 use cases in nine geographic regions. IDC defines blockchain as a digital, distributed ledger of transactions or records. The ledger, which stores the information or data, exists across multiple participants in a peer-to-peer network. There is no single, central repository that stores the ledger. Distributed ledger technology (DLT) allows new transactions to be added to an existing chain of transactions using a secure, digital or cryptographic signature. Spending associated with various cryptocurrencies that utilize blockchain and distributed ledgers technology, such as Bitcoin, is not included in the spending guide. Unlike any other research in the industry, the comprehensive spending guide was designed to help IT decision makers to clearly understand the industry-specific scope and direction of blockchain spending today and over the next five years.

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