Recent trends in the Blockchain and Cryptocurrency space, and should you look for investment and business ideas there?
Blockchain, a decentralized, distributed ledger for digital information, was one of the most disruptive technologies that defined the last decade. It powers cryptocurrencies and NFTs and can radically change multiple sectors, including payments, cybersecurity, and healthcare. According to Research and Markets, about 55 percent of Indian businesses are adopting blockchain technology.
A blockchain is a distributed database that is shared among the nodes of a computer network. As a database, a blockchain stores information electronically in digital format. Blockchains are best known for their crucial role in cryptocurrency systems, such as Bitcoin, for maintaining a secure and decentralized record of transactions. The innovation with a blockchain is that it guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party.
The year 2021 has so far been the best year for domestic crypto, blockchain startups as investors are lining up to cash in on India’s large customer base, pouring in millions of dollars into these startups. According to a report in the Economic Times, the total risk funding in Indian crypto and blockchain startups shot up to $587.16 million as of October 17 this year, compared to $37 million in the previous year, the highest ever, as per data shared by industry tracker Tracxn.
The bulk of the capital has come from international investors as they backed companies with significant traction, industry players said. “We are in a macro bull market rally. There's a lot of capital on the sidelines for high traction firms. There's also a lot of liquidity; for example, the Coinbase listing in April generated new wealth, which is looking for new places to be deployed,” the publication quoted Joel John, an investor at digital asset venture capital firm Ledgerprime as saying.
Crypto exchange platforms CoinDCX and Coinswitch Kuber — the two new crypto unicorns in India — have alone raked in almost 60% of the capital raised this year. Indian investors are also starting to formulate plans for dedicated crypto funds and experiment with some investments. Industry sources told the financial daily that a few VCs are in the process of setting up India-focused blockchain and crypto funds that will have a corpus size of $15-$50 million.
Elevation Capital, which has backed startups like Paytm and Swiggy, is deploying actively this year into crypto and blockchain. It has completed multiple deals across crypto investing, nonfungible tokens (NFTs) and gaming, and decentralized finance, a spokesperson said. It also has a dedicated team and expert group working on crypto and is looking to continue being active in this space.
This year, Sequoia India doubled down on its investment in CoinSwitch Kuber and participated in a round, and invested in a crypto treasury management platform Coinshift. John of Ledgerprime said bullish international investors are “not being reckless” and are making calculated bets by exposing a relatively small portion of their overall portfolio.
For instance, Silicon Valley venture fund Andreessen Horowitz recently made its entry into India by pumping in $80 million in crypto platform Coin-Switch Kuber at a valuation of $1.9 billion. The firm runs a Crypto Fund III which is about $2.2 billion in size.
Retail and institutional buyers have also joined the crypto industry in droves. India has emerged as one of the fastest-growing cryptocurrency markets globally, the financial daily mentioned citing a recent report by Chain analysis, a New York-based blockchain data platform.
“Large institutional-sized transfers above $10 million worth of cryptocurrency represent 42% of transactions sent from India-based addresses vs 28% for Pakistan and 29% for Vietnam,” it said. “Those numbers suggest that India’s cryptocurrency investors are part of larger, more sophisticated organizations.”
The uptick has happened in the backdrop of regulatory flux in India and talks of a potential ban earlier this year. However, there have been several positive signals from the government that has shifted the conversation away from a ban. “Relative to nine months ago, we now have multiple Indian crypto unicorns and massive traction for Web 3.0 in the Indian tech sphere,” the ET report quoted Balaji Srinivasan, former chief technology officer of global crypto major Coinbase as said.
“I see Web 3.0 becoming as central to Indian tech as Web 2.0 was to American tech. Web 3.0 is how technology leaves Silicon Valley and puts India — and everyone else — on a completely level playing field. It is India’s opportunity to leapfrog all legacy tech players with Web 3 versions of social media, messaging, finance.”
Web 3.0 refers to the next generation of internet services for websites and apps. Tanvi Ratna, CEO of the think tank Policy 4.0, said 2021 has marked a huge shift in terms of industry maturity. “The biggest reason why we have seen a growth in the crypto industry is that there was not a ban in March which was so close to happening,” she said. The government has also been positive of late and that the fund is on the lookout for exceptional entrepreneurs building projects which solve deep problems, the publication quoted Pratik Poddar, principal at Nexus Venture Partners as saying.
Here is a list of a few Indian start-ups planning to make it big in this space:
Polygon, formerly known as Matic Network, was founded in 2017 by Jayanti Kanani, Sandeep Nailwal, and Anurag Arjin. The Bengaluru-based startup aims to make blockchain mainstream. Polygon has built a decentralized platform (by adapting the Plasma framework) to provide faster and low-cost transactions on the main chain. Recently, Polygon raised an undisclosed amount of funding from tech billionaire and ‘Shark Tank’ celebrity Mark Cuban.
Ahmedabad- based SoluLab was founded by Rajat Lala and Chintan Thakkar in 2014. The blockchain startup has now expanded to the US, UAE, Canada, and Australia. SoluLab builds enterprise-class blockchain applications for healthcare, finance, education, media, and real estate industries. It provides blockchain development solutions and services such as private blockchain, apps development services, integrating IoT with blockchain projects, and leveraging the power of AI to access quality data for blockchain-based applications. SoluLab uses tools including Truffle, Ethereum, Hyperledger, and Quorum.
Bengaluru-based KrypC was founded in 2016 by Ravi Jagannathan and Karthik Balasubramanian. The B2B company helps enterprises build, deploy and manage blockchain solutions. KrypC’s products include KrypCore Studio and V-Board Framework. KrypCore Studio is a low-code blockchain application development studio that helps enterprises translate their innovative use-cases into a blockchain solution. It accelerates their innovation by eliminating time-consuming, complicated, and resource-intensive development processes, and with minimal code.
Founded by Jayneel Patel in 2008, OpenXcell is a blockchain development company based in Ahmedabad, India. It has offices in the USA and Canada as well. It offers solutions in blockchain technology, smart contracts, smart contract auditing, Hyperledger, exchanges, and wallets. OpenXcell has a team to develop and design services ranging from simple to advanced blockchain architecture, and its client base is spread across the USA, Australia, and Europe.
Originally established as Techracers, Deqode pivoted in 2019, establishing itself as a separate entity. It is led by Ankur Maheshwari and Latha Sharma, and is headquartered in California. Deqode offers a comprehensive portfolio of enterprise blockchain solutions that integrate with the existing business process to accelerate the digital journey. Its solutions include dq.wallet, dq.track, and dq.pay. Deqode has served customers across 20-plus countries, delivering more than 30 blockchain projects to enterprises in the fintech, supply chain, energy and healthcare sectors.
Madurai-based Bitdeal was founded in 2016. It has a dedicated team to design, develop and deploy cryptocurrency exchange applications on iOS and Android platforms. Its cryptocurrency exchange development services include bitcoin exchange script, cryptocurrency exchange script, P2P crypto exchange script, crypto exchange clone script, decentralized exchange script, hybrid crypto exchange script, cryptocurrency wallet development, blockchain development, and DApp development. Bitdeal provides cryptocurrency wallet development services, including hardware wallet, software wallet, web wallet, desktop wallet and paper wallet.
Founded in 2017 by Ronak and Sandip Patel, Knackroot Technologies is headquartered in Ahmedabad with a presence in Canada, Australia, and the US. It offers blockchain development and consulting services. Knackroot Technologies specializes in smart contracts, private blockchain, public blockchain, mining software, crypto exchanges, crypto wallets, trading bots, and STO. Under its blockchain consulting services, the startup offers services such as use-case analysis, platform evaluations, and product design.