Large suppliers such as IBM, Microsoft, Amazon and SAP, institutions such as The World Economic Forum, some government officials and many market research firms have created enormous expectations for blockchain.
Gartner predicted a $ 176bn market by 2025 in March 2017 and $ 3.1tn by 2030 – really large numbers. Recent forecasts are only slightly less optimistic, ranging from $ 10.6bn by 2023 to $ 60.7bn by 2024 – depending on which market research company you are asking for.
On the other hand, few success stories have been found, and most of them involve cryptocurrencies. One study by John Burg, a fellow at the U.S. International Development Agency, found among 43 alleged solutions precisely zero successes.
Even cryptocurrencies have lost much of their allure as their price and associated market capitalizations have dropped over the past year by more than 80 %, partly due to government reactions to their extraordinary energy costs.
What do we hear about the near future for non-crypto blockchain applications from US startups and venture capital? Is there a large number of startups that succeed either as users or blockchain service providers with blockchain? Consider the Fintech 100–a KPMG and H2 report that includes blockchain startup descriptions. This ranks the top fintech startups by a variety of financial and other criteria, and also lists 50 “emerging” startups in alphabetical order, which are perceived as having great growth potential.
Together, the top 50, the emerging 50 and their descriptions give us a list of startups whose degree and type of blockchain involvement can be evaluated. Looking at 100, 18 in the United States, 12 in the United Kingdom, and 11 in China. 16 of these 100 descriptions mention the word blockchain at least once, often in conjunction with other technologies such as artificial intelligence, cloud
While mentioning blockchain does not mean that a startup is basing its service on blockchain, it does mean an interest in it–though only in order to attract investors. Five of these 16 are among the top 50 fintech startups, four of them in China and one in Japan. The rest are in the “emerging 50,” one of which is in the United States, two in Australia, one in the United Kingdom, one in Korea and six others.
Most of these startups are engaged in cryptocurrencies, including BlockFi, which uses a blockchain-based system to lend money to crypto owners. So among the top 100 fintech startups pursuing blockchain for non-crypto applications, there are no UK or US companies. As additional evidence that much of the interest in blockchain is limited to cryptocurrencies and less developed countries,
Is this going to change in the second half of 2019? It’s hard to say, but the large chunk of blockchain funding represented by cryptocurrencies suggests that new applications have not driven the increase in overall funding for blockchain in 2018. Instead, on cryptocurrencies, blockchain is still stuck.
A third set of data to consider is the funding that non-cryptocurrency blockchain startups have received, which, as noted, is quite small. This is confirmed by looking at individual startups with equity funding of more than $10 m. The startup with the largest amount is R3 with $107 million, followed by Paxos ($ 65 million), Harbor ($ 38 million) and Symbiont ($ 20 million).
These amounts are nowhere close to what big AI startups like Dataminr ($ 577 m) and Zymergen ($ 574 m) have received. And still smaller than Uber’s already received $ 24.2bn in 22 financing rounds.
R3 has done pretty well by some metrics, according to the company, more than 200 “financial services firms, tech firms, central banks, regulators and trade associations are using their company-grade blockchain platform, Corda.” At least one startup is starting to build around its platform a critical mass of users.
Blockchain remains a far cry from Gartner and other consultants ‘ grandiose projections. The benefits are likely to depend on the number of companies involved in blockchain projects, such as finance or supply chain management, and many may need decades to get involved. Some businesses want systems that are distributed, transparent and open, but others do not. The lagards are able to prove.