Reuters in a recent article discusses how big corporations are still investing in Blockchain startups in 2019. According to the article major finance and tech firms are pouring money into startups building technology to develop the crypto market, even though they’re steering clear of the volatile currencies themselves.
Venture capital investments in crypto and blockchain startups that included funds from corporates have raced to $850 million so far this year, data compiled by PitchBook for Reuters shows. The 13 deals put the flows on track for a second straight annual record.
Such bets, by companies including London Stock Exchange Group and Microsoft Corp, spiked over five-fold to a record $2.4 billion (£1.8 billion) over 117 investments in 2018. This suggests large companies see promise in the nascent technology, even as it struggles for acceptance. These companies have avoided direct investment because of worries over tightening regulation, frequent security lapses and high volatility as Reuters article states.
Firms are looking at how, and if, blockchain and related technologies can be used in ways that could spark deeper change, said Richard Hay, UK head of fintech at law firm Linklaters. According to Hay, “ There are two dynamics at play,” he said. “We can get something up and running and achieve cost savings, and also look longer term at ways of deploying the technology in more transformative ways.”
As per reuters one key driver is a growing expectation that the “tokenisation” of assets from stocks to oil – essentially digitizing them and allowing them to be traded on blockchain – will upend markets, lawyers and consultants working with fintech firms said.
Bakkt, a cryptocurrency trading platform founded last year by New York Stock Exchange owner Intercontinental Exchange Inc, raised in December over $180 million from investors including M12, Microsoft’s venture capital arm.. Last year 617 deals totaled a record $5.6 billion worldwide, the data shows, as venture capitalists assess how the technologies will impact the online economy.