Blockchain and Cryptocurrency – Asia leading the digital denomination investment race

As cryptocurrency and blockchain go hand in hand, the evolution of one has impacted the development of the other and in an era where digital transactions have become a trend, massive investments have been directed towards advancing these technologies. Providing a secure distributed ledger system, blockchain enables business transactions to be done without any third party validation required, inadvertently reducing the costs to users over time. With cryptocurrencies gaining traction at a rapid pace, blockchain, which is the decentralized basis for these digital denominations, has received utmost priority in recent times from tech giants and countless startups in countries like China, Japan, Korea and the U.S.

China provided a remarkable push to the blockchain economics in 2016, when it included the technology into its 13th five-year plan, which was designed to pave a path for the country’s development until 2020. Becoming one of the first countries to incorporate blockchain within a state-level policy, it guided the technology’s adoption into domains such as financial services, identity monitoring and data storage where privacy and security are critical. Although the country’s policies regarding cryptocurrencies have since changed, its government has revealed clear intentions to invest heavily into realizing a blockchain driven services industry. To elaborate on these efforts, at least nine provinces in China had issued official guidelines pertaining to blockchain as of November 2017, signifying the country’s efforts to encourage investments in the field.

Earlier this year, South China Morning Post reported a 10 billion yuan blockchain fund announced by government of Hangzhou, which is claimed by China as the world’s largest fund investing in blockchain projects. Other Asian countries such as South Korea, Philippines and Thailand are taking steps to create growth friendly environments for boosting the acceptance of crypto and blockchain into their economy. Philippines, aiming to establish a $100 million blockchain hub had recently decided to issue 25 cryptocurrency exchange licenses, granted by the Cagayan Economic Zone Authority (CEZA), a government-operated economic zone. South Korea has also disclosed information about drafting its very first legislation for crypto and blockchain, besides its decision to invest about $4.4 billion in upcoming tech companies over a 12 month period.

Apart from major Asian investors like Softbank and Tencent, many American venture firms have entered the Chinese market for particularly earning a stake in the enormous blockchain pool developing the country. Andreessen Horowitz and Y Combinator are two of the key U.S. based start-up accelerators that have positioned themselves into China for exploiting immense opportunities in the area. According to 2017 China Unicorn Enterprise Development Report, China had a total of 164 unicorns in 2017 with a combined value of $628.4 billion, presenting vast investment potential for U.S. funding groups, which are also diverging into other lucrative markets in Asia. A notable transformation in the global venture capital community has been the larger contribution of Asian investors in numerous cryptocurrency and blockchain start-ups across the globe.

Incidentally, out of more than $150 billion in venture capital raised in 2017, approximately $60 billion was attributed to leading Asian firms like Softbank, Tencent, among others. Particularly, Softbank’s new Vision Fund, which has been formed to disperse over $93 billion for investing in new companies will further envelop many emerging blockchain firms. As evident, despite the domination of U.S.-backed funding in technology firms, Asian economies are gradually taking over the race for investment in blockchain and cryptocurrency advancement. Partnerships with regional as well as international venture capitalists will enable the expansion of Asian blockchain companies into a broader marketplace.