According to a study by CB Insights, Google and Goldman Sachs are amongst the five most active blockchain investors alongside SBI Holdings, Overstock.com, and Citi. But, recently, Google and Bitcoin have shifted to bitcoin, leading multi-million dollar investments in the industry.
Since 2012, Google has invested in Storj, Blockchain, Ripple, LedgerX, Buttercoin, and Veem, focusing on the development of public blockchain networks and decentralized applications. On the contrary, Goldman Sachs has invested in Digital Asset Holdings, R3, Axoni, and Circle, funding projects that have been developing enterprise-grade blockchain networks and permissioned ledgers.
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More Investments in the Bitcoin Space by Google and Goldman Sachs
Since early 2017, Google and Goldman Sachs have geared toward bitcoin from the blockchain sector, after struggling to see much progress with permissioned ledgers and the commercialization of centralized blockchain platforms. This year, Google has led the $100 million Series C funding round of the $1.6 billion bitcoin wallet platform and cryptocurrency exchange, as well as the $40 million funding round of Blockchain.
Goldman Sachs has also revealed its long-term strategy to penetrate the cryptocurrency exchange market, dealing directly with public blockchain networks such as Bitcoin. As Paul Vigna of the Wall Street Journal wrote:
“Goldman’s effort involves both its currency-trading division and the bank’s strategic investment group, the people said. That suggests the firm believes bitcoin’s future is more as a payment method rather than a store of value, like gold.”
A Goldman Sachs representative confirmed the plans of Goldman Sachs to launch a cryptocurrency exchange in the future, with the WSJ. The spokeswoman stated that the firm is actively investigating methods to serve the global cryptocurrency market and investors in the traditional finance sector hoping to invest in bitcoin.
“In response to client interest in digital currencies we are exploring how best to serve them in this space,” the spokeswoman said.
Are Corporate Blockchain Investors Frustrated With Lack of Success?
Billions of dollars have been poured into the blockchain sector since 2016 to commercialize blockchain technology and specifically, enterprise-grade permissioned ledgers. The vision of blockchain consortia such as Hyperledger, R3, and Axoni has been to create permissioned blockchain networks that are capable of settling more transactions or data points per second, in contrast to public blockchains.
As Ethereum co-founder Vitalik Buterin explained at the Disrupt SF 2017 conference hosted by TechCrunch, public blockchains such as bitcoin and Ethereum are limited to processing around eight transactions per second. Such rate of data processing is not sufficient for large-scale conglomerates, especially if companies aim to implement blockchain technology in financial operations:
“Bitcoin is currently processing a bit less than three transactions per second, and if it goes close to four, it is already at peak capacity. Ethereum has been doing five per second, and if it goes above six, then it is also at peak capacity. On the other hand, Uber on average does 12 rides per second, PayPal several hundred, Visa several thousand, major stock exchanges tens of thousands, and in IoT, you’re talking hundreds of thousands per second.”
Essentially, in order to provide the necessary infrastructure for large conglomerates, permissioned ledger developers must reach the scalability of Visa, at least, and settle thousands of transactions per second.
The blockchain industry is approaching the end of 2017, and still, most consortia and software development firms are providing similar statements they had provided at the end of 2016. Several institutions and executives in the finance sector including First Deputy Chairman of Sberbank’s Executive Board Lev Khasis remain optimistic in regards to the blockchain sector.
But, it has become evident that several investors such as Google and Goldman Sachs are becoming more impatient, and have begun to test the bitcoin and cryptocurrency market.