Blockchain & crypto: Euphoria or sustainable alternative investing? – YourStory

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The rise of cryptos and blockchain has been meteoric to say the least. According to Statista, the crypto market cap which touched $10 million in 2011, increased to a whopping ~$3 trillion in 2021.
The increased adoption is driven by the younger generation – 18 percent of US students own some amount of crypto currency. In India, majority of the crypto investors are under the age of 35 years. Contrastingly, the messiahs of investing like Warren Buffet have been big critics of crypto. Buffet had equated crypto to “probably rat poison squared”. The key reason being crypto is not supported by an underlying asset and has no inherent value other than speculative. Ray Dalio was also quoted saying “I don’t think digital currencies will succeed in the way people hope they would”.
Blockchain focused startups are trying to improve the buying and selling of stocks and commodities. Blockchain can help to manage sensitive data of the accounting firms. Insurance companies are looking at ways in which blockchain can drive down costs, increase speed to market, and provide better customer experience.
In October 2021, blockchain research firm Chainalysis had ranked India second globally in crypto adoption. While the non-believers have stayed out of the crypto camp, there have been increasing investments going into blockchain and cryptocurrencies. As per Tracxn data, India witnessed $638 million for crypto-currencies and blockchain investments across 48 different rounds in 2021.
Worldwide, these investments soared to around $25 billion. VC firms from the valley are increasingly turning their radar to the booming crypto and blockchain space in India, while Indian firms are also experimenting setting up dedicated funds for this space.
VC firm Antler’s India arm is excited about the Indian blockchain story and likely to invest a third of its $100-150 million corpus into 25-30 blockchain and Web3 startups in India. They are focused on blockchain for institutions and gaming, as well as infrastructure for wallets.
California-based VC firm, Draper Dragon, has set up an India office. Andreessen Horowitz also entered India through their bet on the crypto selling platform, CoinSwitch Kuber. Blockchain platform, Polygon, recently raised $450 million from Sequoia in Feb 2022. Most of the crypto exchanges like CoinDCX, CoinSwitch and Vauld have been able to raise funding. CoinDCX raised about $90 million in August 2021 led by Facebook co-founder Eduardo Saverin’s B Capital Group, whereas Sequoia India doubled its investments in CoinSwitch Kuber. Investors are also excited about Web 3.0 startups as the next phase of the internet evolves. Sequoia India has made about 20 investments in Web 3.0 startups including Betafinance, Clearpool, Coinshift and Faze.
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Blockchain and Crypto are quickly transitioning from awareness to interest to investment, with the increasing customer base of blockchain and crypto platforms, built on the back of increased advertising
Regulatory environment improving
Demographics and high-quality tech talent in India is another key factor driving this space
Multiple use cases for blockchain are driving widespread adoption and innovation
Like most financial assets, crypto needs to become a sustainable store of value and not only a speculative asset based on demand and supply. “Store of value” usually describes assets which can sustain their worth over longer timeframes without depreciating, such as precious metals or some currencies.
Currencies have value because they are regulated by a monetary authority and thus acceptable for payment of goods and services. Also, they are divisible and easily transferable.
Once crypto becomes a sustainable store of value and its underlying technology establishes multiple use cases, there is no stopping crypto and blockchain, to become a sustainable form of investing.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

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