While the crypto industry is still in its infancy, lately it’s been seeing a lot of growth. Venture capital funding in crypto and blockchain startups is expected to break new records in 2021. The results for the first quarter of this year has been impressive, regardless on your source of data. Research from CB Insights shows that $2.6 billion was raised by 129 blockchain-focused startups during the first quarter of 2021. PitchBook data shows that VC investment in cryptocurrency and blockchain startups hit a record $3 billion in Q1 2021 across 239 deals. No matter which figures you look at, the results for this quarter blow away the $2.3 billion raised from 341 deals for the whole of 2020. Coinbase’s direct listing a few days ago on April 14, was another indication of the success of digital assets, particularly cryptocurrencies. The Coinbase IPO really helps bring in a mainstream audience and develop their understanding both in terms of how crypto operates and the technology behind it. Viewing it from another angle, Coinbase is going to force traditional finance to wrestle with the phenomenal growth that is taking place in crypto. This is only going to intensify as more money from VCs pours in to crypto startups.
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An early Coinbase investor, Ron Conway says the crypto economy is the next multitrillion-dollar opportunity: “Coinbase is the Google for the crypto economy and opens this huge opportunity to consumers. The crypto economy is growing rapidly but is still only in its infancy.”
The first wave of companies focused primarily on Blockchain infrastructure and payments. Companies such as Coinbase and Bitpay help investors to buy, sell, storage and transfer digital assets. Ripple and Circle targeted the payments industry.
Today, we are seeing a second wave of crypto and blockchain companies building their vision of the future. We’ve been living in the internet application world, and we’re starting to see peer-to-peer networks forming, and blockchain pushing everything forward. The successful listing of Coinbase on Nasdaq, is going to turn bitcoin into a household name and make it credible for a crypto startup to IPO, versus having acquisition or ICO be the only proven exit paths. At the same time, listing will act as a catalyst for the overall growth in the crypto market‘s value and inventors around the world will be jumping in to invest early in the next generation of breakthrough technology companies.
Venture capital funds have been investing in crypto and blockchain startups for the past decade. More than 300 venture capital firms have now made two or more investments in crypto and blockchain startups. The last big investment round by venture capital companies in cryptocurrency and blockchain startups was in 2018. The renewed investment interest is primarily driven by crypto’s resurgence, which started after bitcoin’s halving in May 2020. In Q1 2021, bitcoin’s market cap soared to over $1 trillion while the entire crypto market is on course to break past the $2 trillion mark.
By default, all startups are risky and in fact, nine out of ten startups fail. But it has become reasonable to consider investing in the companies working on crypto projects, instead of just putting money into their coins. Coinbase is a great example. Since it was founded 2012, it’s share price has had a steep rise enough to rival the returns of some coins, in the same time period.
Crypto and blockchain startups have the potential to disrupt everything from payments and social media to insurance and real estate. With roughly a $37 trillion addressable market, there is a $2.8 trillion opportunity.
The opportunity for crypto and blockchain to massively disrupt the status quo, lies in the vast amount of “unbanked opportunities” around the world. The future of fintech is rooted in emerging crypto and blockchain technologies, making it a multi trillion-dollar opportunity for companies and investors in years to come.
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