Blockchain in Capital Markets as of January 2021
February 17, 2021
Some exciting events have happened in the blockchain space worth taking a step back to explore a bit.
(Photo by Austin Distel on Unsplash)
We’ve seen an explosion of interest in the blockchain space lately across capital markets. Here are some of the highlights that stuck out :
- Hedge funds are once again looking to the blockchain space for long term investments.
- Blockchain startups receiving venture funding is up 79% in 2020.
- This year the bitcoin blockchain reached over 300GB in size.
- McKinsey released reporting that private blockchains could reduce settlement times and systemic risk and reduce capital markets costs.
- 2020 spending on blockchain was projected to reach 4.1 Billion dollars
- In 2020 the NASDAQ announced its first securities transaction using blockchain as well.
- Blackrock is now moving portions of assets under management into digital currencies.
- There’s been a massive uptick in central banking work on digital currencies.
- Most importantly US regulators are becoming much more active in the space Including the comptroller of the currency.
This is all aside from the even more significant macroeconomic trends.
- CAGR of the software industry is expected to continue to grow by 7.4%
- The banking industry already accounts for 30% of blockchain’s value, with the financial sector as a whole comprising 60%.
There are some strong macroscopic trends we should take away from this data as observers in capital markets.
- Blockchain is becoming more valuable
- Investment in blockchain up and down the corporate lifecycle is increasing
- Blockchain is being used for meaningful securities use cases.
- Larger and more sophisticated institutions are slowly becoming more willing to invest in blockchain.
To give some context to the number of different blockchain technology companies in the financial services space, look at this infographic from as far back as five years ago.
Year over year, blockchain is becoming a more compelling force in the industry. If you think that blockchain might make sense for your use case, now might be the time to look at some open-source blockchain tools like Corda. The headwinds are there, and as Marc Andreessen famously said, blockchain is eating the world.
As a small disclaimer, the views expressed here are mine and do not reflect the opinions of R3 or any of its subsidiaries. This does not constitute financial advice.
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— David Awad is a Developer Evangelist at R3, an enterprise blockchain software firm working with a global ecosystem of more than 350 participants across multiple industries from both the private and public sectors to develop on Corda, its open-source blockchain platform, and Corda Enterprise, a commercial version of Corda for enterprise usage.
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