Blockchain Trends: Investments Decline, but the Future Is Optimistic

Anna Khrupa by Anna Khrupa on March 19, 2020

Blockchain Trends: Investments Decline, but the Future Is Optimistic
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The blockchain was first invented in 2008 by the mysterious Satoshi Nakamoto. In 2009 the first Bitcoin was created. For a long time, hardly anyone was interested in blockchain technology. The attention was mainly paid to bitcoin price fluctuations. But at some point, the blockchain came into focus. Both startups and enterprises saw an enormous amount of opportunities it can provide. Blockchain can be used to automate processes, to increase traceability, to store data, to verify ownership, to enhance security and so on.

During 10 years blockchain has gone through several hype cycles. 2018 was one eventful year for technology. Investors were disappointed with the cryptocurrency prices, many projects were closed and the ICO market has literally died. But market players didn’t lose interest in the blockchain technology and its ecosystem continued to mature. What are the major trends in blockchain right now?

Investment trends

Tech market intelligence platform CB Insights has released a blockchain trend overview that foresees a 61% drop in blockchain-related investments globally. While 2018 witnessed a significant amount of investment of $4.1 bln, this year, the analysts say, will see only $1.6 bln in financing.

According to the study, blockchain space is far from mature as traditional equity investment is still usually received by early-stage startups. The study reveals, that seed/angel and Series A equity deals share grew from 80% in 2017 to 88% in 2019 year-to-date. At the same time series D and later deals almost nonexistent. The overview also shows the distribution of deals by geography. According to the report, 40% of equity investment went to the United States. China, CB Insights data says, is home to 15% of financings. The shares of the UK, Singapore, and South Korea are 8%, 4% and 3% accordingly. Several of the most well-funded blockchain projects are based in China, the study states.

ICOs and Tokens

Once millions of dollars were flowing into ICO projects now VC are expecting “much more than ICO funding, marking the end of the ICO era”. In every quarter since the third quarter of 2018 ICOs accounted for far less funding than traditional equity financing.

Traditional equity financing has outstripped ICOs in 2019, the report estimates. The interesting thing to note is that both ICOs and VC funding is falling. And the second quarter of 2019 saw the lowest level since the beginning of 2017.

“А second wind”

There is high uncertainty in the blockchain market. But analysts point out at new developments that “have given the space a second wind”. According to the study, the main reason for new-found interest can be Facebook’s cryptocurrency Libra.

The report also reminds that total market capitalization of cryptocurrencies has doubled since the beginning of 2019. According to the study, the volume and speculation of keystone cryptocurrencies like Ethereum or Bitcoin have surged recently. The analysts talk about a renewed corporate interest in the blockchain space as such giants as Visa, JP Morgan, and Facebook enter the market. This trend can “be a good omen for blockchain startups”, the report says.

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