Report: Bitcoin, cryptocurrency remain hot investments, but …

Startups and emerging companies in the bitcoin and other cryptocurrency space remain a very hot investment, according to a new report. But challenges remain even as dedicated exchanges continue to evolve.

“While blockchain technology offers the potential for increased speed, transparency and security across an array of verticals, there has to be rigorous and robust roadtesting in each unique use case before any decision is taken,” says Dr Windsor Holden of Juniper Research.

In a new report, “The Future of Blockchain: Bitcoin, Remittance, ID Verification & Smart Contracts 2016-2021,” Juniper notes that cyrptocurrency startups landed $290 million in investments through the first half of 2016. More than 30 companies landed investment backing.

The top three in funding dollars were:

Circle – the social payment provider
Blockstream – the sidechain developer
Digital Asset holdings – the distributed ledger solutions provider

“The emergence of Bitcoin and an array of alternative cryptocurrencies (‘altcoins’) has been a true phenomenon of the past 7 years or so,” Juniper adds.

“In that time, billions of dollars’ worth of these currencies has been traded on the dedicated exchanges that have sprung up to support them, while a number of merchants now support Bitcoin as a payment option.”

Deployments include applications ranging from identity to asset management and the so-calle the Ripple blockchain protocol.

According to the report, the introduction of a blockchain-based system “would substantially reduce both the risk of error and the time taken for error checking. Furthermore, it argued that in cross-border remittance, the technology could allow new entrants to offer services at significantly lower costs to consumers.”

However, there are risks.

“If smart contracts use blockchain technology, then their contents, including, potentially, bugs or flaws, are visible to all the users of that blockchain,” Juniper reported, citing “the recent case where a flaw on the DAO (Decentralised Autonomous Organization) network was exploited by a third party, resulting in the misappropriation of cryptocurrency worth nearly $80 million.”