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After a volatile 2017 for virtual currencies, one may expect a somewhat more cautious response to blockchain, the underlying distributed ledger technology that enables bitcoin. After all, the fervor of investment into bitcoin has predictably come back down to earth.
However, it would appear that momentum is continuing unabated for blockchain projects and ICOs (initial coin offerings), as the potential for blockchain continues to be realized.
This week we take the temperature of the blockchain and ICO landscape to gauge where they are headed in 2018 and beyond.
By far the majority of blockchain projects comes from the United States. According to Bravenewcoin.com, 40% of blockchain projects originated in the U.S., and the closest country after the U.S. is the U.K. at 17% of blockchain projects. However, a wildcard here is Brexit, which has the potential to move fintech initiatives to mainland European countries. In that scenario, the U.K. could fall behind as investment and innovation recalibrates to Germany or France.
There are also a notably high number of Asian countries closing in on the dominant North American and European ones.
Blockchain has many appealing attributes as a distributed ledger system for non-cryptocurrency use cases. One of the most sought after features is greater security, closely followed by a lower costs and greater transactional speeds and efficiency, according to a survey conducted by Deloitte.
These are not necessarily surprising goals since there is a universal need for for speed, security and cost reduction across all businesses. The question remains — will the promise of blockchain meet these lofty expectations?
Whether blockchain meets current expectations may be irrelevant in the near future, as spending on blockchain projects is set to increase dramatically over the next few years. Aite Group forecasts that capital market spending on blockchain will almost double from 2017’s $210 million spend to $400 million in 2019.
However, 2018 ICO funding levels have already dwarfed these figures...
Thus far, there have been 43 ICOs in 2018, which have cumulatively raised over $1 billion. Finance projects have accounted for the highest amount of fundraising to date, representing nearly 20% of ICO funding this year and $123 million in funds raised. This was closely followed by communications and mining, at $104 million and $100 million respectively.
This marks a change from 2017 where the top three categories for ICO funding were infrastructure, finance and trading. Also, it is early to say, but there may be a move away from more frivolous — and plain fraudulent — ICOs, as regulators such as the SEC become increasingly stringent on the quality and availability of these offerings.
It would appear that the crypto community at large would also welcome better oversight of the ICO landscape.
In a survey conducted by Autonomous Research of executives familiar with ICOs, nearly three quarters agreed that the quality of ICOs would be helped by regulation, with just 10% stating the quality would be hurt. Reflecting the somewhat anti-establishment roots of the crypto community, a further 18% stated that ICOs cannot be regulated.
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