In the first quarter of 2016, for the first time in the history of distributed ledgers, bitcoin startups raised less money in investment than blockchain startups not related to the cryptocurrency.
Bitcoin startups only accounted for 16 % of all the investments, while the remaining 84 % went to other blockchain startups, shows a graphic from CoinDesk’s Q1 2016 State of Blockchain report.
The calculations are based on the conception that all the companies working in the field of blockchain technology can be divided into three categories: bitcoin companies (such as BitPay), blockchain enterprises (like Factom) and “hybrid” ones (itBit). And the trend seems to be against bitcoin.
Not only is the situation unprecedented (earlier bitcoin used to attract investors more than other projects within the industry), it is also quite opposite to the results of the last quarter of 2015: at that time 98 % of all investments in the industry went to bitcoin projects and just 2 % to other blockchain projects. The second and third quarters of 2015 showed a more balanced situation with the corresponding figures being 53 and 47% respectively.
Other spheres of blockchain that used to seem marginal are now coming to the forefront and driving the industry forward. What is more, it is not just the startups, but also many traditional institutions deciding to research and develop the blockchain technology. While there were 34 organisations that announced launching various blockchain-related projects in the last quarter of 2015, in 2016 there are already 56 of them.
Bitcoin projects are still retaining the leading position in terms of all-time investment (59 %), but this advantage may soon vanish.
In effect, the trend may even change the vector of bitcoin organisations’ development. “We continue to anticipate that more bitcoin startups will pivot towards blockchain and hybrid business models,” reads the report.
The redistribution of investment is going on together with a general investment rise in the industry. Throughout 2015 investment was deflating, but in 2016 apparently the trend has changed. In comparison with the last quarter of 2015, there is more than a five-fold growth, accompanied by an equally dramatic rise of the average virtual currencies investment deal size (from $ 2.6 million at the end of 2015 to $ 11.5 million at the beginning of 2016).
Andrew Levich
