European Blockchain Spending Slows Due to COVID-19

European Blockchain Spending Slows Due to COVID-19
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While virtually all businesses have been impacted by the COVID-19 pandemic, the effect has been varied. According to the results of the IDC European IT Buyer Sentiment Survey, companies expect to cut their IT spending due to the outbreak.

"The pandemic and the subsequent lockdown have had a negative impact on many industries, and we expect a significant slowdown in technology spending due to a pause in investments across companies and prioritization of urgent expenses," said Carla La Croce, IDC European Blockchain Practice co-Lead. "With depressed customer demand, disrupted supply chains, and widespread remote working, many companies are putting on hold innovative projects, including in blockchain, until there is more clarity about the future.

Before the pandemic, IDC's Blockchain Spending Guide had forecast that European blockchain spending would be $1.4 billion in 2020, with healthy growth of 58% CAGR to 2023. Now, IDC expects a number of changes in spending in 2020. There will be a slight slowdown in blockchain solutions, with spending down around 8% in 2020 on previous expectations.

Business and IT services will be the most impacted technology segments in 2020 (down 16%), followed by software (down 12%), with blockchain platforms driving the slowdown. If hardware is expected to have the lowest decrease in 2020 (down 8%), external storage will see the biggest fall (down 17%). By industry, IDC has revised down spending for all vertical markets, with a more severe slowdown for personal and consumer services, manufacturing, resource industries, utilities, telecoms, and the whole financial sector. Overall CAGR for 19-23 is expected to be down by more than 3 percentage points compared with pre-COVID-19 forecasts.

The political process, specifically elections and voting, is another area that has been disrupted by the pandemic. "The traditional process puts politicians, voters, and all those involved in the related services at risk. This could have been avoided through a secure blockchain voting mobile app," said Mohamed Hefny, program manager, Virtualization, Systems, and Infrastructure Solutions, CEMA.

Blockchain technology can alleviate many of the security concerns that have plagued previous e-voting attempts. The biggest hurdle, however, remains the general public's skepticism and mistrust of voting using digital technology. Perhaps the current situation will give new impetus to e-voting initiatives across Europe. IDC believes there is a lot of potential for the use of blockchain technologies in numerous scenarios, especially in the supply chain.

With the pause in investments across companies and the prioritization of urgent expenses, however, blockchain adoption will slow down. "Given the benefits that blockchain can have in terms of reliability of the supply chain, transparency, and tracking the path of goods, blockchain investments are expected to see only a temporary slowdown in 2020 and recover soon after the pandemic eases," said La Croce.

The recovery will be bolstered by the European blockchain ecosystem, with the biggest players in the market working together with a variety of smaller, innovative companies. The blockchain landscape in Europe remains vast with vendors catering to practically all major industries, IDC concluded.