*5.4. Empirical Analysis*

This section answers Research Question 5: What are the links between investments in blockchain internationally and future forecasts? Table 4 outlines blockchain wallet users in millions with numbers increasing to 44.69 million users in the 2019 fourth quarter, showing demand interest increasing. A significant increase in users can be observed between the first and second quarter in 2019 to reflect the Bitcoin price fluctuations, trade war fears between U.S. and China and growing interest in cryptocurrencies.

From the supply side, Figure 7 depicts the number of venture rounds completed between 2017 and the end of February 2018 led or participated in by key investors in blockchain and innovative technologies. It identifies several key venture capital firms monopolising investments in blockchain technologies in financial markets. Figure 8 depicts the percentage of blockchain and related startups for several key countries between 2017 and the end of February 2018. The U.S. is leading investments in blockchain and related startups. The majority of the "other" percentage is due to China.


**Table 4.** Number of Blockchain Wallet users.

Source: Statista.

**Figure 7.** Venture round count completed by key investors of blockchain between 2017 and end of February 2018. Source: CB insights, PwC, ICO Insights and Token Data.

**Figure 8.** Percentage of Blockchain and related start-ups by geography between 2017 and end of February 2018. Source: CB insights, PwC, ICO Insights and Token Data.

Figure 9 depicts blockchain technology investment by different categories. According to Figure 9, the majority of blockchain investments are applications related to Bitcoin, with the highest and third-highest investments being in bitcoin exchanges and Bitcoin-based financial services. The second highest investment is in innovations in blockchain platforms. It is concerning to observe the low investments in blockchain big data, where developments would be made in handling the large amount of data maintained on blockchains. Figure 10 depicts the number of investments in each blockchain

category. This supports the picture provided in Figure 9 with numerous Bitcoin-related applications monopolizing developments with regard to blockchain technology.

The quarterly data for the sample period 2013 to 2019, for Table 5 and Figures 11 and 12, are collected from CB insights, Hutt Capital, PwC, ICO Insights and Token Data. There is negative correlation between European blockchain investments and those of Asia (largely driven by China). Table 5 provides the correlation of investments in blockchains between global investments, U.S., Europe and Asia. There is negative correlation between European blockchain investments and those of Asia (largely driven by China). There is strong correlation between global blockchain investments and Asia showing a co-movement of optimistic sentiment in blockchains and the massive investments by China.

**Figure 9.** Blockchain Technology investment by different categories. Source: CB insights, PwC, ICO Insights and Token Data.

**Figure 10.** Number of blockchain technology deals by different categories. Source: CB insights, PwC, ICO Insights and Token Data.

**Table 5.** Correlations of quarterly investments in fintech between global investment, U.S., Europe and Asia from 2013 to 2019.


Source: Calculated by the authors using CB insights, Hutt Capital, PwC, ICO Insights and Token Data sources.

We used average linear extrapolation to forecast future investments and blockchain deal counts globally. Figures 11 and 12 both exhibit a growing linear trend for investments and deal counts in 2020 and 2021, reaching 6.173 and 6.051 USD billion and 822 and 937, respectively despite the COVID-19 crisis. This is expected, as with lockdowns and social distancing measures expected to be in place for the foreseeable future, most firms are driven to digital transformations where blockchain is a key technology. In addition, with increased investment from China in the BSN and the race to implement digital currencies by central banks in several countries including the U.S., increases in blockchain investments are expected to further increase globally.

**Figure 11.** Venture capital investments in blockchain technology and future investment forecasts (\$ million). Source: Calculated by the authors based on quarterly data from 2013 to 2019 using CB insights, Hutt Capital, PwC, ICO Insights and Token Data sources.

**Figure 12.** Number of deals by venture capital firms in blockchain technology and future deal count forecasts. Source: Calculated by the authors using CB insights, Hutt Capital, PwC, ICO Insights and Token Data.
