【State of Blockchain Investment 2019】
Although terms like blockchain, cryptocurrencies and cryptography have only entered into the mainstream vernacular in the last two or three years, the space has actually been developing for over a decade now. Consequently, there's already been a fair share of cycles, with the most recent one culminating in the astronomical rise and subsequent crash of cryptocurrency prices (inclusive of bitcoin's 20k price tag) at the beginning of 2018.
CB Insight's "Blockchain Trends in Review" sheds insight on what exactly is left after the dust has settled, while identifying several trends that indicate where the industry will likely go from here.
1. At current run rates, 2019 will only see $1.6B invested across 454 deals, a significant decline from the $4.1B invested in blockchain last year.
Unsurprisingly, many investors were burned after the downturn, pulling back on their investments and adopting a more stringent veil of skepticism as the large majority of blockchain projects failed to deliver on their promises. That said, early crypto-focused investors, namely based in the US or China, continue to reaffirm their commitment to the space with a projected investments $1.6B, which actually exceeds the amount invested in 2017. Most of the deals processed in 2019 thus far are attributed to early-stage, suggesting that blockchain is still a very nascent category.
2. While both types of funding are on the decline, VC has eclipsed ICOs.
While ICOs were popularized as an alternative form of financing, many blockchain projects saw themselves going back to traditional equity financing in 2019 as the majority of investors turned a cold shoulder to coin offerings post-crash. Traditional equity financing has outstripped ICOs in every quarter since Q3’18. Furthermore, increasingly stringent regulations around the globe mandating strict KYC/AML guidelines and added compliance measures have effectively eviscerated the "quick and easy" appeal of ICOs.
3. Market capitalizations of tokens and cryptocurrencies suggest renewed interest in the space post-crash.
Crypto prices have more than tripled since the beginning of 2019, loosely indicating a widening appetite for blockchain technology. Perhaps the biggest stamp of approval came from the announcement of Project Libra, a stablecoin-powered payment network led by a consortium of corporate juggernauts such as Facebook, Uber, Visa, Spotify, and Vodafone. There's a still a long road to commercial adoption, not to mention overcoming potential regulatory hurdles, but the move if nothing else serves as a strong signal to current and prospective stakeholders evaluating the widespread use of distributed ledger technology.
-Jun Wakabayashi
Analyst, AppWorks
