[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
In 2018, the cryptocurrency space sustained a harsh, market-wide drawdown in asset prices. Cryptocurrency prices have since recovered, and the technology underlying those crypto assets, blockchain, is expected to see billions of dollars in growth.
ABI Research took a dive into blockchain technology and reported its findings, expecting big things from the technology in the years ahead. “We forecasted [potential] blockchain revenues for the next six years,” ABI Research blockchain and digital security research director Michela Menting explained to me in an interview.
This “blockchain revenue” includes categories such as crypto assets, “financial services,” “industrial blockchain applications” and “consulting services,” as well as others, she clarified. ABI expects “the totality of blockchain revenues to reach almost $10 billion in the next couple of years,” Menting said.
Crypto's largest asset, bitcoin, sustained a dramatic price fall of well over 50% in 2018, with the other cryptocurrencies seeing similar plunges. Bitcoin's price has since recovered, however, regaining a significant amount of its former glory. The rest of the cryptocurrency market has recovered as well but not to quite the same degree.
Regarding the underlying technology, many mainstream giants have begun incorporating blockchain into their various operations. Enterprise players such as Walmart, Amazon and JPMorgan Chase have all taken steps toward the new tech.
The stated multi-billion dollar revenue expectation means that ABI foresees companies across the globe making around $10 billion in profit total from using blockchain technology, Menting clarified.
“There's a number of ways blockchain revenues are derived,” Menting explained. She noted digital asset transaction fees, consulting activities and blockchain frameworks, such as Amazon's AWS, as methods of revenue.
Menting also mentioned a trend shift from initial coin offerings (ICOs) to venture capital (VC) funding. VC players are now putting more capital into growing blockchain technology, in two specific categories, she said. The first is in the startup arena. The second includes investing in “existing businesses that are not necessarily blockchain-focused but that are, for example, opening a blockchain department or division or are partnering with a company to develop a new blockchain offering,” she explained.
“Initially, the big funding for blockchain startups was initial coin offerings, but there's a little bit of a gray area around regulation,” Menting said. “There's been a lot of fraud as well,” she added. “VC funding is viewed as a little bit more legitimate, if you will,” she noted, adding that large VC funds usually conduct considerable research into their investments. “An increase in VC funding translates broadly into increasing legitimacy in blockchain investments,” she said.
Disclaimer: I actively trade cryptocurrencies, as well as hold a small amount of BTC, ETH, LTC, XMR, NEO, ZEC, BEAM, BCH and various insignificant other altcoin positions.