VC investments totaling $14.8 billion were made in the blockchain sector in 2021, as companies continue to focus on IT solutions built on the technology, GlobalData finds
Venture capital (VC) investments in the blockchain sector increased from $2.1 billion in 2020 to an impressive $14.8 billion in 2021, as both companies and investors are eager to develop IT solutions built on blockchain technology despite the lack of regulatory framework, says GlobalData, a leading data and analytics company.
GlobalData’s deals database reveals that North America led in VC investments in 2021, with $6.8 billion; followed by Latin America, with $3.4 billion; Europe, with $3 billion; Asia-Pacific, with $1.6 billion; and the Middle East, with $0.44 billion.
Chris Dinga, payments analyst at GlobalData, comments: “One sector that invests heavily in blockchain technology is banking and payments. Blockchain helps the payments industry manage remittances, central bank digital currencies and asset tokenization, but it is still a new technology that needs to be fully tested before it can be fully adopted in the payment infrastructure.”
GlobalData’s latest report, ‘Innovation in blockchain payments‘, reveals that the market for blockchain software and services was valued at $4 billion in 2020 and is predicted to reach a whopping $199 billion by 2030. Growth will be driven by the integration of blockchain within core technologies such as remittance infrastructure, real estate and the overall financial industry.
Currently, most blockchain integration projects are at an experimental stage, as a lack of regulation and skilled workers has prevented some companies from adopting this technology in their infrastructure.
Dinga continues: “Blockchain technology is still in its infancy when it comes to adoption in the financial sector. While cryptocurrency is the most popular application, it represents only one potential application of the technology. However, governments and companies are exploring different ways to adapt the technology to their needs.”
Over 90 central banks have shown interest in developing their own central bank digital currencies (CBDCs), and most of these will rely on blockchain technology. So far, only a limited number of countries have managed to launch their own digital currencies, but there is a lot of focus around China launching its own digital currency, the e-yuan. The e-yuan is already available as a pilot test for Chinese residents in selected regions.
The thing add: “If the e-yuan is successfully adopted across China, other countries will likely take notice and decide whether to follow suit. The key to success is mass adoption, and as a communist country, China can mandate that businesses and citizens use their digital currency, powers that Western democracies do not have.”
