Blockchain startups navigate crypto crashes to hit record $ 4.4 billion

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In the second quarter of 2021, blockchain startups emerged as the unsuspecting winners amid large drops in cryptocurrency prices, with funding for blockchain startups surpassing $ 4 billion for the first time.

Data analytics firm CB Insights reported to CNBC that a record $ 4.38 billion has been raised by blockchain companies. FinTech companies as a whole raised $ 30.8 billion.

Second quarter funding was a 50% increase over the previous quarter and was almost nine times the same period in 2020.

Blockchain is the fundamental technology upon which cryptocurrencies are typically built. Depending on how the blockchain is built, it can allow other applications to be built on it, as is the case with the Ethereum network.

Basically, however, it is a decentralized series of digital ledgers that track transactions on that particular network, such as Bitcoin transactions. Due to the structure of the registers and the way the blocks overlap, it is naturally resistant to fraud as the registrations are replicated across the global computer network.

Payment and digital currency company Circle made $ 440 million in investments, the largest amount raised in the second quarter for blockchain start-ups, followed by Ledger, a company that develops hardware wallets for digital investments and currencies at $ 380 million.

These record numbers show that crypto investors have not backed down from price declines in popular cryptocurrencies like Bitcoin and Ether, but are instead looking to alternative exposure through companies creating the technology. for cryptocurrencies and the networks they trade on.

Blockchains’ record year of funding is driven by growing consumer and institutional demand for cryptocurrencies, Chris Bendtsen, senior analyst at CB Insights, told CNBC. Despite short-term price volatility, venture capitalists are still optimistic about the future of cryptos as a primary asset class and the potential of blockchains to make financial markets more efficient, accessible and secure.

Is FinTech the new darling of crypto?

Looking at the industry a bit more broadly, fintech companies have achieved record global funding of $ 30.8 billion, mostly thanks to foreign cash flow. The amount raised was a 30% increase from the first quarter and was almost three times the amount raised by fintech companies around the same time last year.

CB Insights estimates that fintech valuations rose 28% in the second quarter.

For example, Swedens Klarna, a buy-it-now company, reached a valuation of $ 46 billion after it raised funds in June.

Fintech companies had a monumental second quarter of IPOs, with 19 companies announcing an IPO or an IPO. Most notable in the crypto space was the first Nasdaq of the Coinbase crypto exchange.

However, with the significant jumps in valuation and funding, some fear a fintech bubble. UK start-up OpenPayd CEO Iana Dimitrova noted that the increase in private funding is detrimental to the long-term sustainability of our industry.

However, not all agree.

I wouldn’t see it as a bubble, said Stefano Vaccino, founder and CEO of fintech company Yapily. We have seen an acceleration in financial services over the past 12-18 months.

For more news, information, and strategy, visit Crypto Channel.

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