March 30, 2018 | Blog

Decrypting The Blockchain Revolution

Many people think Blockchain is a simply a platform to facilitate cryptocurrencies like Bitcoin. In fact, the technoogy has the potential to revolutionize markets and industries just as the Internet did at the turn of the 21st century.

Financial services and payments firms are the first companies directly affected by Blockchain, and hence, we see them launching Blockchain applications. But in the future, we see industries ranging from retail and gaming to healthcare and energy using the technology.

The investment opportunities are enoromous. This is the reason corporations and venture capital firms are both investing big money in Blockchain. At the same time, large banks and tech firms are forming alliances and joint ventures to develop the technology and to set standards.

As potentially disruptive as Blockchain could be, it faces several significant challenges. The technology is still new and untested. The industry lacks the technical talent to develop new applications. Scalability and privacy remain key unknowns as large enterprises continue with “proof of concept” experiments with Blockchain.

But given Blockchain’s enormous potential, investors need to start to paying attention.

Here are three major highlights from our 33-page report:

Is Blockchain technology a solution searching for a problem? Blockchain offers significant potential to improve inefficient markets hobbled by “middlemen” or intermediaries that slow transaction times and/or increase transaction costs. Blockchain can also boost trust and security, given the underlying cryptography and the distributed and decenetralized nature of the technology. The technology may be still be in the early stages, but companies and people are already putting it to good use beyond payments and digital currencies. Applications have evolved from digital currencies to include financial services, healthcare, digital media, logistics, and real estate.

The Blockchain ecosystem rapidly evolving with VCs, Big Banks, and Big Tech getting much more active. Since January 2016, we have identified and tracked more than 150 investments in U.S. based Blockchain startups by direct traditional venture capital, new-age crypto-focused funds, and corporate venture capital investment arms. We expect such investment to increase as companies continue to commercialize the technology well beyond cryptocurrencies. Large financial institutions and technology companies, like Microsoft and Oracle, have been forming industry partnerships to establish technical and regulatory standards. As the technology matures, we expect “big co” to play a bigger role in the near future, which might lead to greater M&A activity within Blockchain.

What could go wrong? Despite the growing acceptance of cryptocurrencies, Blockchain remains a fairly nascent technology. Corporations and government agencies are still evaluating Blockchain, yet we already know the technology lacks key infrastructure necessary to integrate Blockchain into their business processes. And, to gain widespread adoption, we believe companies must develop common standards. This is particularly important in cases where multiple Blockchains need to work with each other. Security and privacy are attractive attributes of Blockchain technology. Ironically, however, applying a distributed database to commercial transactions raises the question of whether organizations want to share information about counterparties, especially if such exchanges might harm reputations. Finally, the broader regulatory environment on Blockchain technology remains in flux. As the technology grows and matures, we expect regulators across the world to play catch up.

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This article does not constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.

Securities referenced in this article may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

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Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright SharesPost, Inc. 2020. All rights reserved.

PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

This article does not constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.

Securities referenced in this article may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright SharesPost, Inc. 2020. All rights reserved.