In a financially difficult time, why are Blockchain startups still getting investment?

Blockchain has been heralded as a technological revolution in recent years. Companies, regulators, and financial technologists have spent countless hours examining its potential in the nine years since its introduction. The advances that resulted have begun to transform business processes, particularly in the areas of accounting and transactions. Furthermore, blockchain-powered startups are linking the broken gaps in global supply chains that were exposed by the challenging times. Thus, investors are now focused on blockchain startup funding to overcome certain issues.?

Our global financial system serves billions of people and moves trillions of dollars every day. However, the system is riddled with flaws, increasing costs through fees and delays, causing a friction through duplicate and onerous paperwork, and opening the door to fraud and criminality. To wit, every year, 45% of financial intermediaries (https://www.pwc.com/gx/en/financial-services/publications/assets/pwc-gecs-2014-threats-to-the-financial-services-sector.pdf ), such as payment networks, stock exchanges, and money transfer services, are victims of economic crime; this compares to 37% for the entire economy and only 20% and 27%, respectively, for the professional services and technology sectors. It is no surprise that regulatory costs are continuing to rise and remain a major source of concern for bankers. All of this adds up to a higher price tag, which eventually falls on consumers.

Thus, it makes us wonder why our banking system is so inefficient. Firstly, it is outdated, a mash-up of industrial technologies and paper-based processes wrapped in a digital cloak. Second, it is centralized, making it resistant to change as well as prone to system failures and attacks. Third, it is exclusionary, denying basic financial instruments to billions of people. Bankers have mainly avoided the kind of creative destruction that is necessary for economic vitality and advancement, despite the fact that it is messy. Thus, these have been the reasons why despite the challenging times' blockchain is prioritized.?

Blockchain was created as the foundation for cryptocurrencies such as Bitcoin. It is a massive, globally distributed ledger capable of recording anything of value and running on millions of machines. Since trust is established not by powerful intermediaries like banks and governments, but by network consensus, cryptography, collaboration, and clever code, money, equities, bonds, titles, deeds, contracts, and virtually all other kinds of assets can be moved and stored securely, privately, and from peer to peer.

“Blockchain is the biggest opportunity set we can think of over the next decade or so.”

- Bob Greifeld, Nasdaq Chief Executive-

Many financial institutions, from banks and insurers to audit and professional service businesses, are investing in blockchain solutions despite these difficult times because of the promise and risk of such a disruptive technology (https://www.weforum.org/reports/the-future-of-financial-infrastructure-an-ambitious-look-at-how-blockchain-can-reshape-financial-services). What is exactly causing this flood of cash and interest? The majority of businesses point to cost-cutting and friction-reduction options. After all, to manage their operations, most financial intermediaries rely on a bewildering, complex, and costly array of intermediaries. The potential savings, according to Santander, a European bank, are $20 billion per year. According to Capgemini, consumers could save up to $16 billion per year in banking and insurance fees by using blockchain-based services (https://www.capgemini.com/news/press-releases/).

In addition, the COVID-19 pandemic is posing significant challenges to society. For instance, in the last two years, governments all across the world were focusing on the challenging task of establishing high-volume vaccination campaigns on time so that life can return to normal as quickly as feasible. Professor Kristof Stouthuysen and doctorate researcher Tineke Distelmans claimed that blockchain technology can assist address several of COVID-19's difficulties, as well as aid the economy's recovery from the pandemic. This was due to the fact that blockchain technology was useful in the vaccination campaign because it allowed for the tracking of vaccines from the manufacturer to the patient. Hospitals in the United Kingdom are already utilizing blockchain technology to trace vaccine batches and monitor their refrigerated storage. Thus, it increased the investments in blockchain startups!?

The pandemic did not only wreak havoc on our healthcare systems, but it also wreaked havoc on our economy. The pandemic, for example, has had an enormous impact on global supply chains, with many businesses experiencing raw material shortages or transit disruptions. Organizations are looking for solutions to shorten their supply chains and eliminate inefficient intermediaries to be better prepared for future disruptions. Furthermore, corporations must begin to re-establish their faith in supply chain relationships in order to bring supply chains back on track. The presence of supply chain trust speeds up the movement of finances and materials, boosting the supply chain's agility.

Supply chain partners can raise trust levels by swiftly sharing information in a fully secure and transparent manner using blockchain. Walmart, for example, is utilizing blockchain-based technology to make its food supply chain more transparent, thereby alleviating food safety worries. This enables them to respond to some important questions at any time: What is the status of the shipment and when will it be delivered? Who is to blame for the snafu? Were there any bumps in the road? The system consists of a chronological chain of blocks that record information and inventory, as well as the transaction's cash movements. As a result, blockchain bridges the gap between the financial side of a transaction and the movement of products and information, allowing for more efficient transactions.

In conclusion, blockchain can be conceived of as a decentralized database for storing data that is controlled by several parties. Despite the difficult times following the pandemic, blockchain firms are gaining traction. This is mostly due to the fact that technology may improve efficiency by removing human reconciliations and circumventing intermediaries. As a result, better decision-making, more precise planning, and lower operating expenses are achieved. In the post-COVID-19 world, blockchain has the ability to change the way supply chains are organized.