Cryptocurrencies and the blockchain technologies that feed them catapulted into the limelight in 2017, and traditional funding sources followed the news cycle with checkbooks in hand. Venture capitalists invested $900 million in blockchain related technologies in 2017, according to Crunchbase News, and are on pace to more than double that figure in 2018 if the first two months are any indication.
The sources of the funds, mostly the United States, the United Kingdom, Singapore, and Switzerland, come as no big surprise, but the spin comes from another element of the story. The big VC bucks are not where most of the blockchain funding is coming from. Blockchain is essentially a self-funding technology, perhaps the first of its kind since the advent of the mint. Cryptocurrencies are the financial arm of the broader blockchain movement, reliant on their geeky older brother to keep them powered up, and that’s exactly what they’re doing.
For the past year and change, according to TechCrunch, ICO funding has far outstripped the traditional VC variety. While VCs accounted for sixty-eight percent of funding to blockchain based companies in the period from 2012 to 2018, the more recent trend has shown that percentage plummeting to a mere twenty-two percent for 2017 and the first two months of 2018. Conversely, ICOs have beefed up their funding shares from thirty-two percent in the initial period to seventy-eight percent in the latter period.
The companies amplifying their market cap with this extra cash comprise some familiar names, Ripple, Coinbase, and Bitfury, to name a few, but several less well known entities have also grabbed headlines recently. iXO Foundation, which bills itself as a part of the impact economy, has made moves to tokenize charitable works such as donations and volunteering and uses blockchain technology to store these good deeds on a Global Impact Ledger. Another industry with a lot of activity in the blockchain and ICO spheres is the health sector, with multiple startups at various stages of development, such as Medicalchain and MedRec, competing for space in securely storing health records using blockchain.