Venture capital (VC) firms provided blockchain technology and bitcoin companies with total funding of US$290m in the first six months of the year, backing more than 30 start-ups according to Juniper Research.
The UK-based mobile, online and digital market research firm reports that more than a third of all investment over the six month period was accounted for by three companies:, social payment provider Circle raised US$60m in June; Blockstream, the sidechain developer received US$55m in February; and Digital Asset Holdings, the distributed ledger solutions provider managed US$50m in January.
The report highlights the increasing diversification of nascent blockchain deployments, with applications ranging from identity to asset management. It notes that the banking sector as being particularly proactive; several banks have already adopted the Ripple blockchain protocol while others are piloting competing solutions.
In areas such as transaction settlement, the introduction of a blockchain-based system would substantially reduce both the risk of error and the time taken for error checking. Furthermore, the report suggests that in cross-border remittance, the technology could allow new entrants to offer services at significantly lower costs to consumers.
However, if smart contracts use blockchain technology then their contents including, potentially, bugs or flaws, are visible to all the users of that blockchain. The report cites a recent case where a flaw on the (Decentralised Autonomous Organisation (DAO) network was exploited by a third party, resulting in the misappropriation of cryptocurrency worth nearly US$80m.
According to Juniper’s research author Dr Windsor Holden: “While blockchain technology offers the potential for increased speed, transparency and security across an array of verticals, there has to be rigorous and robust road-testing in each unique use case before any decision is taken.”
The report follows the World Economic Forum’s (WEF) recent declaration that blockchain technology “will fundamentally alter the way financial institutions do business around the world” and “become the beating heart” of finance, following a year-long study of the technology.
A survey conducted by Capital One suggests around five in six plan to implement new treasury management products and services in the coming year.
The European Central Bank will extend its quantitative easing programme for nine months beyond next March, but scale back the level of bond buying from €80bn to €60bn a month.
The agreement, after three years of debate, raise questions on future investment demand, but Fitch Ratings doesnʼt anticipate major market disruption.
The European Commission fined Credit Agricole, HSBC and JPMorgan Chase a total of €485m for manipulating the price of the financial benchmark.