Blockchain industry to raise $10 billion in funding in 2016

The entire Bitcoin industry raised an estimated $1 billion in venture capital funding in 2015. 2016 is likely to see significant investment in underlying blockchain mechanisms and infrastructure, though not necessarily in Bitcoin.

According to a recent Coin Journal report from the Epicenter Bitcoin podcast with Vinay Gupta, blockchain-related startups may be able to raise $10 billion in funding this year.

Looking at trends in the blockchain ecosystem, Gupta said the maturity of the ecosystem has been limited by difficulties in raising funds, but he pointed to R3, a startup that has built a blockchain for a consortium of the world’s largest banks, as having the power to turn the tide.

“I think R3 can put the whole blockchain ecosystem on a different trajectory. It legitimizes blockchain, which is a technology that is critical to the banking industry. Money will start to flow into this space for that reason,” he said.

While banks and traditional financial institutions are open to the potential and possibilities of blockchain to reduce costs and bring more efficient money, the branding of the Bitcoin blockchain and the development of virtual currencies remains negative.

However, there is still hope that banks and financial institutions will change course once they realize the advantages of an open, permissionless ledger.

Gupta said that blockchain talent is currently difficult to acquire because individual individuals lack the necessary expertise and experience in a new industry technology.

As R3 brings blockchain technology into the mainstream, there will likely be many startups with viable business models emerging. This also signals the possibility of a Bitcoin bubble.

“The bitcoin bubble has already started to form,” Gupta said. “I mean, I estimate that in 2016 alone we will see $1 billion of capital coming into the Ethereum ecosystem, and I estimate that the total amount of capital that will come into the blockchain ecosystem, including bitcoin, will be $10 billion.”

This fits into a larger trend of insurance companies and banks entering the bitcoin space as more businesses realise the potential value of blockchain technology, as evidenced by the increasing volume of deals for bitcoin startups, which raised more money in the first half of 2015 than in all of 2014.

Citing a leaked JPMorgan report, Business Insider maintains that the company is planning to aggressively pursue investment strategies in the fields of blockchain, big data, and robotics, with JPMorgan maintaining investments in these particular areas at $9 billion.

According to the Investopedia entry, as of February 22, 2016, Daniel Pinto, head of JPMorgan Chase's investment banking business, said: "Selling loans is a very tedious, time-consuming process; settlement can take weeks," and blockchain technology can provide a solution to make the whole process simpler, run faster, more secure and minimize errors.

This is relevant to the various problems that JPMorgan Chase and Digital Asset Holdings seek to solve. The problem of illiquidity in loan funding and facilitating transactions can be solved in a cost-effective manner through blockchain technology. This will solve the problem of illiquidity in the banking industry in general (the mismatch between asset market liquidity and liability funding liquidity - or maturity mismatch).

Gupta specifically highlighted Singapore’s “Smart Nation” initiative, which focuses on the adoption and deployment of blockchain technology. “It’s a very broad push for large entities to implement this technology into their systems,” he said.

As the Monetary Authority of Singapore (MAS) is busy promoting common standards and exploring various financial technology solutions to develop a "smart financial center", namely blockchain technology, the Bitcoin sector and its development path are becoming more mature.

While the departure of core developers like Mike Hearn from the Bitcoin project is seen as a failure of the project, Gavin Andresen, chief scientist at the Bitcoin Foundation, believes that in the long run, Bitcoin will become indispensable once its scalability problem is solved.

Now, in addition to facing the cultural, economic, and legal issues that arise from the development and use of a decentralized digital commodity currency, Bitcoin must also deal with technical obstacles.

Original article: http://www.dealstreetasia.com/stories/blockchain-raise-10b-funding-2016-31398/
By Shiwen Yap
Compiled by: Kyle
Source (translation): Babbitt Information (http://www.8btc.com/blockchain-raise-funding-2016-10billion)