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Blockchain to usher in new disruptions

ICICI Securities 23 Feb 2022

What’s buzzing:

Blockchain funding hit a record US$25 billion in 2021 globally.

Context:

Investors poured more money into blockchain companies in CY21 than they did over the course of any full year in history. As per CB Insights, blockchain companies have already raised US$25 billion in 2021. The number of deals in CY21 were also at a record high at 1247. The average deal size has also gone up from US$5 mn in 2015 to US$23 mn in CY21. The US remained the top region as far as funding is concerned with funding in excess of US$6 bn in Q4CY21 (69% share in funding and 40% in number of deals). It is followed by Asia, Latin America and Europe with funding share of 14%, 6% and 6%, respectively.

Our Perspective:

Apart from known use of blockchain in cryptocurrency transactions viz. global supply chains, financial services, healthcare, government and many other industries, innovators are exploring ways to use blockchain to disrupt and transform traditional business models. Greater transparency, enhanced security, improved traceability, increased efficiency & speed and reducing costs are some of the benefits/attributes that could be driving these investments. Some of the blockchain use cases include i) invoice reconciliation & dispute resolution across banking industry ii) creating an encrypted ledger, which collects electronic health records without compromising on data security and regulatory requirements in the healthcare industry, iii) connecting suppliers and distributors across the consumer industry, iv) enabling regulatory compliance and increased data access in the insurance industry, v) managing supply chain in the auto sector, etc. Also, Web 3.0, which is the future of the internet (where user data would be residing on decentralised networks and be used by the user itself, instead of data residing on centralised networks in Web 2.0) would be residing on blockchain technology. This technology, along with tremendous interest in virtual world i.e. Meta, is driving these investments.

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