The collapse of FTX has spoiled the crypto party has never before. Little scams and hackings were common, but a mainstream player admitting to wrongdoing and playing around with investor funds has shaken the faith and trust of the global community.
Here is a look at the funding scenario in the year gone by and a birds-eye view of how the two inter-related industries are playing out.
A CoinGecko report reveals a fall in crypto investments by over 40% last year when compared with 2021. The total investments were worth around $20 billion, which is higher than 2020. The year 2021 holds the record with around $37 billion invested.
There is more interest from institutional investors in both crypto and blockchain.
Data from ResearchAndMarkets.com shows the blockchain industry’s status and direction in the banking and finance services sector. Here adoption of blockchain can be divided based on type of blockchain – public, private or other types.
The latest news is the entry of Goldman Sachs, which has launched its digital asset and tokenization platform, GS DAP. This will be based on its private blockchain Canton and will issue digital bonds.
Public blockchains are however the most popular in banking and finance, taking a share of 62% in 2021. Public blockchain is the faster growing segment in these markets, where the US takes the lead with over 37% share in 2021.
The fastest growing regions will be South America and the Middle East, with over 60% CAGR until 2026. The most opportune segment in banking and finance is fund transaction management.
The game scenario of blockchain and crypto
A letter in the New Scientist points to how the introduction and subsequent developments of crypto and blockchain, which were born together with Bitcoin in 2009, can be viewed.
The Perez cycle, a pattern made popular by economist Carlota Perez, says the letter writer, explains the current status. Perez’s work is titled “Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages”.
The four phases identified by Perez, with each lasting 50-60 years are: Irruption, Frenzy, Synergy, and Maturity.
In a simple view, the pattern is as follows:
- New tech introduced -> Hype -> Adoption by chancers, speculators, scamsters -> Revelation and collapse -> Tech dismissed
- Adoption by mature users if the tech is good -> Building of real value
The crypto industry has passed the Frenzy phase, brought to a close by FTX. The years ahead could thus bring about synergy, given that the blockchain tech has proved its concept as sound and valid.
Sources:
https://www.newscientist.com/letter/mg25734211-200-dont-let-crypto-woes-derail-the-blockchain/
https://www.vccircle.com/investmentin-crypto-companies-drops-by-42-in-2022
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