Investors going gaga for blockchain technology

VCs ploughed $290m into blockchain start-ups in the first half of 2016, research has found

Blockchain start-ups bagged nearly $300m (£226.5m) of investment in the first half of 2016, according to Juniper Research.

In the six months to June, some $290m of venture capital cash was poured into more than 30 start-ups working in the field of Bitcoin or blockchain technologies, the analyst found.

More than a third of that investment went into three companies - social payment provider Circle, sidechain developer Blockstream, and distributed ledger solutions provider Digital Asset holdings - Juniper Research said.

The research comes as emerging technologies such as Blockchain - regarded as the main technical innovation of Bitcoin - and IoT begin to make an impact in the channel.

Chris Gabriel, CTO of Logicalis, said he is just finishing a course on blockchain technology at MIT.

"If you look at blockchain, and some of the digital currency stuff, and how it will affect finance, insurance and risk, and how that integrates with IoT, is that less work for us to do in the channel, or is it a really exciting opportunity? It just needs a shift," Gabriel said last week as he reacted to Cisco's latest restructuring drive.

Juniper Research said nascent blockchain deployments are becoming increasingly diverse, with applications ranging from identity to asset management. Several banks are already adopting the Ripple blockchain protocol, it noted.

However, the analyst warned that if smart contracts use blockchain technology, bugs and flaws are visible to all users of that blockchain, creating a potential security issue.

"While blockchain technology offers the potential for increased speed, transparency and security across an array of verticals, there has to be rigorous and robust road-testing in each unique use case before any decision is taken," said research author Dr Windsor Holden.