By the end of 2019, the volume of venture investments in the blockchain of the company was reduced in comparison with the 2018 year, more than half, however, to predict a further drop prematurely.
At the turn of the decades in the blockchain-the race included the new big players. Central banks of dozens of countries are studying the possibilities of technology, and China to prepare the first release “cryptowall”.
It seems that the results of the pilot projects of the previous years deemed satisfactory, and that the time of mass implementations of the blockchain for supply chain and accounting.
The willingness of business to invest and to buy stimulates the creation of technological solutions and the blockchain of complex technology to geek out at a sufficient level of maturity to become a clear designer with clear instructions.
This is evidenced by the results of the study prepared by analytical company Mindsmith and professionals «KIWI Blockchain Technology.» Here is his abridged version.
Blockchain armed States
In previous years most high-profile examples of the use of cryptocurrency at the state level has affected Venezuela (to deal with the economic crisis) and Iran (to deal with the consequences of the us sanctions). 10 January 2020, the people’s Bank of China announced the completion of external level of the number of the yuan and, it seems, already in this year will release the secured stabilini yuan.
The use of the blockchain in financial sector of China is not limited to a draft of a national digital currency. Bank of China 4 Dec 2019, announced the issuance of bonds in the blockchain for a small business to 20 billion yuan. In addition, China leads in the number of blockchain patents as among the largest financial organizations in the world (second after USA), and among universities and research centers.
At the same time, the proliferation of digital currencies in international payments will require regulatory and infrastructure readiness on the part of other countries. At first glance, in the context of the modern realities of international adoption of the draft can last for many years.
On the other hand, today in 44 countries Central banks are considering the introduction of the blockchain at the state level, including the establishment of a national digital currency. Observed and extremely cautious attempts at rapprochement with the world of the blockchain: in 2020 the Central Bank of Lithuania plans to release the first digital collector’s coin.
India is developing a national blockchain-strategy — no wonder that in this country, blockchain developers have included in the list of the most popular professions in 2019. Some countries do not aim for a comprehensive penetration of the blockchain in the processes of government, and start some projects. So, the Central Bank of Sri Lanka will use the blockchain for KYC procedures, and Thailand for tax refund to exporters of oil.
With the rapid penetration of technology in business and everyday life the blockchain and knowledge of digital transformation become a tool of “soft power” of international diplomacy.
It is noteworthy that the attempt of States to transform themselves extends to entire regions. South African Sekunjalo and Chinese Ultrain going to create a blockchain ecosystem for Africa and the Swiss investment Fund Crypto Valley Venture Capital to promote Mauritius as a blockchain technology hub for Africa.
One of the key trends in the development of technology continues to be the use blockchain solutions in the field of voting. Perhaps the debate about the readiness of the technology for the elections will continue in preparation for the presidential elections in the United States in 2020.
Banks drivet financial evolution
It seems that the question of the applicability of the blockchain technology by financial institutions is not worth it. It is important not to be late: banks are launching pilot projects or join existing platforms.
Institutional organizations are making big bets on digital assets: ING while working on their integration in its offer, HSBC is already planning to transfer $20 billion of assets to the new custody platform based on the blockchain in 2020.
Only over the last few months of 2019 have been numerous pilot projects among major international banks: Commerzbank, Credit Suisse and UBS held the first transaction on the platform of the Deutsche Börse-HQLAx, Northern Trust is testing blockchain for the sale of bonds in parts for the mass of investors, Santander has repaid released on the blockchain in September 2019 bond at $20 million, JP Morgan uses the blockchain for automated margin payments, and HSBC has carried out two transactions for letters of credit between the companies of the Persian Gulf.
In addition to their own experiments, banks continue to buy promising FINTECH companies: for example, the Philippines UnionBank invested in Philippine Digital Asset Exchange (PDAX).
Russian banks are not far behind. The savings Bank and the Singapore exchange, the company Trafigura has signed a pilot deal for the blockchain to supply West Siberian oil, Raiffeisenbank launched a blockchain-based platform for automation of calculations with suppliers and buyers, and Alfa-Bank jointly with X5 Retail Group has launched a service Distributed Treasury and Cash Management to manage payments and liquidity pool within the holding.
At the end of 2019, the Depositary of Sberbank has introduced into commercial operation in the blockchain a decentralized Depository system for electronic accounting of the mortgages sold on the platform “Mastercam” together with the Association of FINTECH. Until the end of the year was the planned integration of five major Russian banks and depositories.
In addition, in 2019 there were two new patents: VTB patented technology to create multimetering settlement and payment systems on the blockchain, and the first savings Bank in Russia has received a patent for a method and system of execution of REPO transactions on the basis of smart contracts.
Blockchain gets into the real sector
The blockchain is actively tested for supply chains in 2016, now seems the time has come for mass deployments. One of the pioneers, Walmart launched in Canada platform for the tracking and payment for 70 transport companies and several hundred retailers. Major car manufacturers Volvo and Ford use the blockchain for traceability of supply of cobalt, used in lithium-ion batteries. They agreed with two of the largest factories for the production of battery — CATL in China and LG Chem in South Korea, and for the technical side of the question answer from Oracle and IBM.
Nestle launches pilot on the block chain to track the origin of coffee, and in another joint project with Carrefour will be monitored baby milk. Amazon, Infosys and other 26 companies will use the blockchain to control the supply of tea, Ministry of Commerce of Thailand — to monitor organic rice. JPMorgan is testing a system of vehicles on the blockchain, but Lamborghini will use the blockchain to verify the car.
Russian companies also use the blockchain in the supply chain: the Railways is testing a technology to control the supply of wheelsets for freight wagons, the “Group Polyplastic” applies blockchain platform Bitfury Exonum to combat illicit trafficking of plastic pipes and GK MIRRICO together with QIWI Blockchain Technologies to create an ecosystem of providers and consumers of petrochemical products.
Projects run the largest grid companies and industry associations. Spanish energy company Iberdrola beginning in 2019 with the experiment on tracing the source of energy to ensure the consumer’s “green” character of energy supply. In the early summer Energy Web Foundation, a global Association of more than 100 industry players in the energy market, such as Total, Shell, GE, Siemens, Duke Energy and PG & E, launched the first public blockchain, specialized for the energy sector.
Russian Waves Enterprise is testing the blockchain in electricity with JSC «rosseti». The project recorded data about electricity consumption directly from the meter to the individual household, it is possible to monitor energy consumption in real time and pay bills using smart contracts.
Indian power distribution companies BRPL launches with Power Ledger pilot P2P Commerce and the international chamber of Commerce promotes green solutions in aviation with AirCarbon.
It is expected that the volume of investments in the blockchain in the power industry will reach $3 billion by 2025. By the early fall of 2019 in such projects had already invested about $600 million.
Technology commoditities formed ecosystem
We are seeing the beginning of a process to reduce the cost of development of the blockchain, which will lead to more intensive transformation of business processes in companies.
Microsoft launched Microsoft Azure Blockchain Tokens for token release «templates», Bitfury — enterprise platform Exonum Enterprise, and Enterprise adapts Waves Waves. All of these platforms are designed to deploy rapidly the necessary decisions for the business. The world’s largest provider of CRM solutions announced its Salesforce to use Blockchain data from blockchain on top of existing business processes related to marketing and sales.
Remarkably, on the market of the blockchain are competing not only technology companies but also international firms, which are usually taken as audit: mass adoption in logistics encourage KPMG to launch a platform for the tracking of supply chains in Australia, China and Japan, and EY just in recent days 2019 is a beta version of its service for the development and testing of smart contracts and tokens.
In 2019 actively developed industry-specific blockchain-unions and the ecosystem, including various professional organizations.
12 Jul one of the world’s leading supplier of software solutions based on artificial intelligence and blockchain to supply chain management CargoSmart has combined 5 of the 10 largest international container carriers under the auspices of the Global Shipping Business Network: CMA CGM, COSCO SHIPPING Lines, Evergreen Marine, OOCL and Yang Ming.
July 15 the largest operators of personal data of South Korea, such as Samsung, Woori Bank, KEB Hana Bank, SK Telecom, KT, LG UPlus and Koscom announced the creation of a consortium for the joint development and promotion of a system of mobile identity-based blockchain.
In addition to the associations of industry players in 2019 was formed by the integration of the ecosystem. For example, Waves Enterprise opened a joint innovation center SKOLKOVO expert blockchain center and began cooperation with one of the largest domestic system integrator, LANIT.
Currently, the Russian corporate blockchain ecosystem-has more than 150 players, including not only vendors blockchain solutions and system integrators, but also a variety of professional organizations, lawyers and business consultants.
Money became less, but optimism persists
According to the analysis Mindsmith, investment (equity funding) in blockchain-companies in 2019, excluding ICO fell compared to 2018 by 56% to $1.28 billion, the number of transactions over the same period decreased by 48% and amounted to 232. The indicators of funding and number of rounds still exceed 2017 ($0,63 million and 223 deals, respectively).
The main method of raising Finance industry remains the ICO. According ICObench, the number of krautsalat held from January to November 2019 fell compared with the same period of 2018 is insignificant — only 15% (up to 1898), while the amount raised through ICO funds fell by more than 6 times (up to $2,12 billion).
The largest VC deal in 2019, the industry has become a round Ripple With a company for $200 million, under which the company received a valuation of $10 billion, and status of a unicorn. A little behind the leader of the company Figure that within two rounds has attracted investments in the amount of $65 million and $103 million, respectively. During the last transaction, which took place in November 2019, the company engaged in lending secured by residential real estate and refinancing mortgage and student loans on the block chain, received a valuation of $1.2 billion, is also joining the “club” of unicorns.
Among the companies that have attracted in 2019 noticeable amount of venture capital investment: the developer of blockchain solutions for traceability of the supply chain Dorae (round, $50 million), the platform of P2P lending Compound (round And $33.1 million), a specialized platform for financial markets PeerNova (round, $31 million) and payment service Celo (round, $31 million).
In Russia, the number of venture capital transactions in the blockchain-companies are relatively small, and the volume of attracted funds is much less. For example, in may 2019, the Russian-British Aggregion startup raised $1.5 million from a group of investors, including the new Zealand Fund Techemy Haitao Capital and Chinese Capital. In October of 2019, it was announced that the transaction involving investment platform with smart contracts and BitRussia Fund Da Vinci Capital in the amount of 100 million rubles (about $1.6 million).
In 2019, continued to receive new funds specializing in investments in blockchain-companies. In March 2019, Pantera Capital has closed another venture capital Fund Pantera Venture Fund III with $160 million In April 2019 was announced the launch of the Fund Proof of Capital with offices in Hong Kong, Taipei and San Francisco. The size of the Fund was $50 million, the main investor (limited partner) made by the company HTC.
In November 2019 the European investment Fund has announced the launch of the program in which the Foundation for co-financing will provide up to 100 million euros to support European companies specializing in blockchain technologies and artificial intelligence. Total funding including private investment should amount to EUR 400 million.
In 2020, we can hardly expect the return of venture capital investments in the blockchain of a company for indicators of 2018, which was largely due to the unprecedented informational boom of 2017 and 2018 around the technology in General and crypto in particular.
Predicting a further fall would also be unreasonable. In the industry continue to receive company-unicorns and new dedicated funds. It should also be noted that a number of the most active funds established for investment in blockchain-companies in 2018 (for example, Blockchain Capital IV, Polychain Ventures), have not had time to invest all borrowed funds. The increasing interest in the possibilities of blockchain technology from the it-giants, major industry players and government authorities in different countries, as well as case studies of full-scale technology application will ensure the involvement of non-industry investors.
It is possible to count the number of ICO and the amount of funds collected under them will continue to decline. The wide dissemination of the findings that most of the ICO held in previous years, was fraudulent, as well as difficulties faced by major projects such as Libra and TON, can reduce the interest both Amateurs and professional investors.
The blockchain is starting to increasingly be used by the business, not only from among the representatives of the financial sector. Introduction to supply chain and accounting will enable businesses from the real sector to test the technology, and this, in turn, will open new opportunities to expand the potential of the technology to other processes of the company.
Technology beyond that level of maturity and demand, when you need specialized solutions, and its place in a new market trying to take not only traditional it players and international consulting and audit firm.
Successful cases of application of the blockchain States from among the economic leaders are able to bring the technology to a new level and will greatly influence the forms of interaction with business and the speed of provision of public services. 2020 could be the date when in the mass consciousness of the blockchain technology cease to be associated, primarily, with the most publicized area of use cryptocurrencies.