Despite the falling cryptocurrency prices, the blockchain industry is doing quite well and will continue developing, according to a report of the UK venture capital investor Outlier Ventures.
A total of 343 blockchain startups have raised $1.8 billion in venture capital in the first half of 2018, which is twice higher compared to the sum raised in the whole 2017, and the industry is enjoying good health, according to a recent report of the UK venture capital investor Outlier Ventures that specializes in blockchain and tokenized companies.
“Forget what you’ve heard. Despite the negative sentiment and token bear market, if you scratch under the surface, the broader blockchain ecosystem is experiencing rapid growth and maturation. The focus on price of publicly listed tokens is misguided as a proxy for ecosystem health,” the report, headlined “The State of Blockchains Q2 2018: The Crypto Markets are Wrong”, noted.
It added that in the second quarter the market saw the development of corporate blockchain projects and favorable regulatory rulings.
On the other hand, the $1.8 billion figure is inflated by the EOS $4 billion and Telegram $1.7 billion raises. At the same time, small retail investors are drawing back, as the traditional finance has moved in. In the second quarter of 2018, the industry faced the first quarter-on-quarter drop in the amount raised through token sales.
In the first half of the year, the industry saw 343 deals 30 mergers and acquisitions.
“Tokens now acquire companies,” the report noted, referring to the Tron project acquiring BitTorrent, while an increasing number of popular consumer companies are partnering with companies from the blockchain industry.
In July, for example, the crypto mining giant Bitmain invested $50 million in the Norwegian internet browser Opera, which launched a crypto wallet within the browser. In the meantime, the smartphone maker HTC launched a device that has integrated the Ethereum-based CryptoKitties in its core offering. This trend is likely to continue.
“Over the coming two quarters, we’ll see a rising number of companies with access to large customer bases using their reach to onboard individuals to tokens that are cash-rich but are struggling for distribution,” the report noted.
At the same time, large “traditional companies” are showing significant interest in the possible applications of the blockchain technology. Walmart is integrating blockchain into its supply chain to track food, while the shipping giant Maersk and IBM are creating a blockchain shipping system.
“Some of the biggest companies in the world including consumer Internet companies like Facebook, Google, Ant Financial, and Baidu are all rolling out real-world products,” the report reads.
The crypto exchanges and crypto conversion services are also enjoying an upward trend. SBI Holdings token exchange launched in the second quarter of 2018, while Robinhood app integrated a number of altcoins in its system.
All this is happening against a regulatory background of “caution, calm and exploration”. While the banks, both commercial and central, are trying to put all kinds of obstacles or outright banning crypto trading, users have found a workaround through peer-to-peer platforms with cash exchange mechanisms. The regulatory clampdown would likely continue, despite the increasing government interest in the blockchain, or because of it.
“To sum things up: ignore the markets. This quarter has proved that institutional capital, enterprise and regulators are all coming round to blockchains and crypto-assets,” the authors of the report concluded.
It also noted that the ecosystem is maturing, becoming more diverse and serving more use cases than ever.