From enterprise blockchain adoption to the rise of decentralized finance, it seems like the blockchain landscape is constantly evolving in different ways. While impressive, it’s important to understand how blockchain is being applied within various industries. In order to highlight blockchain’s current global impact, a Swiss blockchain investment firm, CV VC, is releasing a new report together with Big Four firm PricewaterhouseCoopers Switzerland and Cointelegraph.
Titled “CV VC Global Report H1/2020,” this report provides a detailed overview of companies applying blockchain technology across eight different sectors, including art, crypto banking, crypto exchanges, custody providers, market makers, platform and protocols, token issuance companies, and venture capital. While a preview of the report discussing blockchain’s impact in the art industry was released on July 21, the full paper was published on Sept. 14.
Nicolai Reinbold, a report co-author and the incubation and ecosystem manager at CV VC, told Cointelegraph that the goal of the new report is to map out the global blockchain ecosystem, outlining the main activities of top organizations in each sector:
“Experts are featured in short sections covering trends and future insights. Each sector will also include an eventual in-depth online panel discussion, hosted by Cointelegraph, with experts from each respective industry mentioned.”
According to Reinbold, the CV VC Global Report consists of data taken from company sources, crypto exchanges, media reports and social media channels. While this is the first report of its kind, subsequent editions will be published every six months to reveal the most up-to-date trends in industry growth and development. Featured below are brief summaries of what readers can expect from the report.
The growing role of crypto banks and brokers
Cryptocurrency companies have started to expand their offerings to provide features like interest and loans using digital assets. As such, crypto banks and brokerage firms have been playing an important role in driving mainstream adoption of cryptocurrency. In order to highlight this, the CV VC Global Report includes an entire section on crypto banks and brokers.
One of the most interesting insights mentioned here comes from Mathias Imbach, a co-founder of Sygnum — a digital asset bank. According to Imbach, a regulatory digital asset ecosystem is critical for the development of crypto assets. “This market is forecast to be worth USD 24 trillion by 2027 and has the disruptive potential to reshape the securitization business model in the coming years,” he said.
Crypto exchanges set the value of cryptocurrencies
The report also discusses the important role of cryptocurrency exchanges, comparing them to traditional stock exchanges since they are able to buy and sell cryptocurrencies. It’s important to note, however, that there are many different types of crypto exchanges, each focusing on different functions.
For example, Roger Darin, a board member of the Bitcoin Association Switzerland and a co-founder of the fintech chapter of SICTIC — a business angel organization in Switzerland — explained that the crypto space currently needs a safe place to buy and sell security tokens, since many crypto assets are categorized as such:
“Ideally, that place is in a jurisdiction that investors associate with stability, prosperity and financial trustworthiness. It should be as easily accessible to retail investors as it is to banks and professional investors.”
Darin further pointed out that the decentralized finance sector is also on the rise, which will help shape the landscape for individuals looking to buy and sell crypto assets.
Custodians are crucial for crypto adoption
Cryptocurrency custodian services have also been on the rise as regulatory developments are implemented in various regions. Yet according to the report, the crypto custody market is often overlooked. While this may be, custody providers are critical for the adoption of crypto, particularly within the institutional space.
Adrien Treccani, the founder and CEO of METACO — a crypto custody provider — noted that adoption by large global institutions like Libra and PayPal are highlighting the need for trusted entities to manage crypto assets.
Fortunately, the announcement from the U.S. Office of the Comptroller of the Currency now allows all nationally chartered banks in the United States to provide custody services for cryptocurrencies. This is a huge step forward for cryptocurrency custody providers and will encourage more digital asset firms to apply to become qualified.
Market makers drive liquidity
A market maker, or liquidity provider, is a company that quotes the buy and sell price of a token, which is crucial for providing a functioning market. The digital asset ecosystem can only succeed if exchanges, token issuers and liquidity providers collaborate to ensure liquid markets.
Anton Golub, the founder and CEO of flov technologies — a financial technology company with a focus on liquidity provision of digital assets — discussed why liquidity is the missing element in the digital asset ecosystem. According to him, while the tokenization of assets with value has risen, liquidity still lacks:
“There exists one crucial hurdle that obstructs this future development. The crucial success factor of the digital asset ecosystem is liquidity. At the moment, we see that most tokens are not easily tradable due to the lack of liquidity and the vast potential of decentralized financial systems threatens to wither.”
Creating a digital transformation
Another important element in today’s blockchain ecosystem is the platforms and protocols that are being actively developed. For example, a major development in the blockchain space is the current rise of proof-of-stake networks.
Charles Hoskinson, the CEO and founder of Cardano — a PoS blockchain platform — discussed the importance of how Ethereum is making the transition to a PoS consensus mechanism through the development of Ethereum 2.0. While this may be, he explained that the developers will continue to seek proof-of-work projects to utilize their skills.
Tokenization through various platforms
As tokenized assets continue to gain popularity, token issuance platforms have become crucial. To put this into perspective, Daniel Rutishauser, the CEO of Tokengate — a Swiss-based token issuance platform — is convinced that token economies will enable new business models and open participation in a global economy:
“Small and medium-sized enterprises cannot participate in the existing capital market. Nowadays, it is quite hard for retail investors to find investment possibilities with a solid performance. The issuance of digital securities is a way to bridge the two and to establish financial inclusiveness within a smaller ecosystem.”
Venture capitalist trends
This final section of the report contains insights from Olaf Hannemann, a co-founder and the chief investment officer of CV VC. Hannemann points out that changes were evident in venture capital markets, even before the COVID-19 pandemic, especially those focused on blockchain investments.
It’s mentioned that funds have indeed slowed down during COVID-19, causing venture capitalists to focus on the financial conditions of their portfolio companies. This had a negative impact on companies getting ready to raise capital.
General trends that were seen before the pandemic are also highlighted. For example, a recent PwC report shows that while global quarterly deal activity increases, funding and deals have declined in Q2 2020 by 13% and 9% year-over-year, respectively.
In relation to blockchain technology, one of the most interesting points mentioned is that general tech funds continue to grow in their exposure to blockchain technology. However, this often results from a drive toward sectors that utilize blockchain as an underlying catalyst technology, focusing on its role in digital health, fintech and AI sectors.