A lot has happened since we released the PitchBook Fintech Analyst Report: Bitcoin/Blockchain in fall 2016. This analyst note provides an update on the blockchain subsector of fintech, and goes in-depth where we see specific opportunities and substantial investor interest. For background on the topic, this previous report provides a primer on the history of blockchain and how the technology works. The plateauing venture capital investment figures undersell the continued growth and broader acceptance of the technology. Investor interest in direct-protocol investment has never been greater. As of May 2, 2017, one unit of Bitcoin now costs $1,473 and one unit of Ether—the cryptocurrency powering the Ethereum protocol—costs $78. This represents price increases of 44% and nearly 1,000% respectively YTD. Furthermore, high-profile institutions have partnered to explore the technology. Most notably, the Enterprise Ethereum Alliance’s formation in late February bodes well for the future of the technology and for developing a standard enabling a wide range of applications.
Bitcoin remains a trusted store of value, even as the developer community takes a hard look at its perceived flaws.
Ethereum is quickly evolving into the primary focus for enterprises looking to code business logic into the blockchain.
Even so, VC investors have tapered their participation in deals
in blockchain companies as alternative forms of fundraising at the company and fund level emerge such as initial coin offerings (ICOs) offering specialized tokens, and VC-backed crypto hedge funds.