In the era of the COVID-19 pandemic, digital currencies are becoming more and more popular, driving the development of blockchain technology. Investors looking for opportunities are more and more willing to look at companies from this sector.
According to Crunchbase data, investments in cryptocurrency and blockchain companies are record-breaking in 2021 and already three times exceed the amounts invested in 2020. Since 2017, American companies have received almost USD 12.4 billion from venture funds, and including companies from outside the USA – 19.4 billion.
This promising sector faces constant opportunities and challenges. In early June 2021, El Salvador was the first country in the world to adopt bitcoin as legal tender.
What prospects can be seen for companies in the crypto industry
Startups dealing with cryptocurrencies try to introduce them to the mainstream by facilitating the use, buying, selling and exchange of cryptocurrencies between the parties.
Experts point out that the cryptocurrency investor base is still largely made up of retail investors, while major financial institutions are only in the process of exploring the technology and its benefits.
Even so, we hear more and more about banks, payment processors, and large companies officially announcing that they will accept bitcoin and other cryptocurrencies in their transactions.
The wider public takes time to understand and feel comfortable with cryptocurrencies just as people had to get used to the idea of online banking and payment cards beforehand.
Crypto funds are increasingly seen by investors as a separate, interesting asset class. Despite the many challenges related to the regulatory side and volatility, this young market may explode in the future, yielding above-average rates of return. We have already observed a similar mechanism when computer companies, then Internet companies, mobile phone companies and on-line payments were established.
Investing at this early stage, investors are certainly counting on returns of several dozen times rather than several dozen percent, generating the so-called “X’s” (300 to 700% = 3 to 7X).