State of Crypto 1Q 2020: DCG Founders Survey

Q: What is public enemy #1 for digital currencies & blockchain?

REGULATORY PROGRESS

The industry made some progress with global regulators in 2019. Chinese regulation remains volatile, but President Xi Jinping called for prudent oversight to support blockchain development and delivered stablecoins a boost, with the People’s Bank of China announcing the development of a digital yuan. In Europe, France is piloting a central bank digital currency (CBDC) and announced that crypto-crypto trades were no longer taxable, while the German government gave banks its blessing to serve crypto companies. In total, about 50 countries are exploring some form of digital currency.

BANKING & ADVERTISING CHALLENGES

Many crypto exchanges and payment companies still struggle to open or maintain bank accounts, even where it’s sanctioned by the regulator. “With the absence of clear regulatory guidelines in some markets, banks have become the de-facto regulators of the crypto industry,” said Marcus Swanepoel, CEO of Luno, a cryptocurrency platform in Africa, Europe, and Asia. Many banks are de-risking across their businesses and associate crypto companies with money laundering concerns. While those risks exist, blockchain monitoring tools that reduce them — from the likes of Chainalysis and Elliptic — are sometimes misunderstood or underutilized.

FINDING PRODUCT MARKET FIT

“Finding Product-Market Fit” was named by most respondents as both their greatest accomplishment and their biggest challenge in 2019. This echoes the macro-level sentiment — that the industry’s ability to develop compelling, in-demand use cases will determine the next stage of adoption and growth.

Q: LEFT — Your greatest accomplishment this past year was:
Q: RIGHT — Your greatest challenge in this past year was:

Q: Do you worry about your competitors?

COMPETITION

Industry competition stabilized over the last year, with less than half of respondents believing competition is on the rise. In contrast, at the end of 2018, two-thirds of survey respondents believed the level of competition was rising.

Q: Is the level of competition in the industry rising or falling?

BLOCKCHAIN BEHIND THE SCENES

At a quick glance, several DCG portfolio companies don’t scream blockchain. They operate traditional business models and their marketing materials make little or no mention of decentralized technology. We count among these businesses some of our most compelling investments.

BLOCKCHAIN BEYOND BUZZWORDS: PERCENT OF TOTAL DCG INVESTMENTS (NEW AND FOLLOW-ONS) BY YEAR WHOSE NAMES DO NOT INCLUDE “BIT, CRYPTO, BLOCK, COIN OR CHAIN”

THE HUNT FOR THE BEST USE CASES

The challenge for the industry in 2020 and beyond is proving compelling use cases where the technology generates value — beyond what legacy systems offer.

Q: What do you view as the biggest opportunity for blockchain?

Q: What do you view as the biggest opportunity for digital currencies?

INFRASTRUCTURE & GEOGRAPHICAL DEVELOPMENT

Survey respondents expect it will take 3–5 years for the industry’s infrastructure to mature to the point required for mass adoption.

Q: How long will it take for the infrastructure to mature?

Q: In what area of the world do you see the most development in blockchain and digital currencies?

LOOKING AHEAD

Roughly 60% of our executives plan to raise capital in 2020. Product development is where capital is most needed, followed by team growth and marketing and sales budgets. This is already reflected in job openings; as of the end of January, our companies were hiring for 130 marketing, sales, and business development roles, compared with 45 posts for those functions a year earlier.

Q: Is the BTC halving fully priced in?

FINAL THOUGHTS

At DCG, we provide capital and a robust community for our portfolio companies to help them navigate the challenges of operating in a nascent space. We routinely gather our executives, in virtual and in-person sessions, to tackle shared concerns and trends — many of which were highlighted in this survey.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Digital Currency Group

Digital Currency Group

4.1K Followers

We build and support bitcoin and blockchain companies by leveraging our insights, network, and access to capital