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Exclusive: Blockchain at the Stage of Tech Convergence

Exclusive interview with Paul Sin: Part 2

How does Deloitte Blockchain Lab envision the future of blockchain? Dr. Paul Sin believes that blockchain is at the stage of technology convergence with IoT, big data and artificial intelligence. He also explained the three challenges for enterprises to implement their own blockchain and various blockchain auditing services offered by Deloitte.

From your experience, what are the pain points for enterprises in implementing their own blockchain?

Since these are enterprise permissioned blockchains, one of the challenges is the commercial model. We need to figure out how these people share the cost of the platform. Going forward, [we need to look at] how they can recover their investments.

The second challenge is regulatory concerns, we need to comply with all the different regulations such as the GDPR in Europe, China’s cybersecurity law, Hong Kong’s PDPO. Liability issues are also a concern. If you are creating a KYC network, for example, if Bank A opens an account for terrorists and Bank B finances the terrorists based on the records from Bank A, who will bear the liability for terrorist financing? This will also be something we will need to sort out. We classify these problems as the governance model.

The third challenge will be the interoperability of the technologies being used by more than 20 platforms on trade finance and supply chain across the world that are in production. You need to exchange data across different distributed ledger technologies, you need to interoperate on Corda, Hyperledger, Ethereum, and also connect the Internet of Things (IoT) with blockchain so that the physical products can be linked to the digital record of the blockchain. You also need to create advanced analytics models that will make use of the data on the blockchain. There is a lot of technology convergence happening at the moment in the market. This is a challenge but also an interesting part of the technology.

Which blockchain-as-a-service (BaaS) platforms are the most popular from your experience working with enterprises, and what are the reasons behind choosing them?

We generally recommend open-source platforms for our clients because it enhances adoption. Even though we deploy blockchain on hybrid cloud infrastructure, we try not to use managed blockchain services unless they are truly open. Some cloud providers have BaaS with open-source technology; those would be the ones we are more comfortable working with. Some blockchain services providing blockchain on a proprietary platform—if one party is on that platform, the whole ecosystem must be using that vendor—those are not recommended. If you see some corporations working with certain well-known vendors who provide proprietary managed blockchain on the cloud, they will have a lot of challenges with adoption. A corporation may find that only they are on the blockchain and no other corporations are willing to join, mostly because the platform is proprietary. This is the reason why it is not attractive from the perspective of supporting the whole ecosystem.

From a corporate perspective, it can certainly save time developing and deploying the technology, so using blockchain managed by the cloud is understandable.

How do you envision the future of blockchain and what is your outlook for enterprise blockchain adoption?

We are now getting to the stage of convergence, as I mentioned earlier, it is now feasible to exchange data with each other without compromising on the authenticity and authorization mechanism. We are also working on technology convergence, where IoT puts data on the blockchain to share among exclusive members, we create a big data pool for the whole ecosystem and we run AI engines on top of that to create insights for analytics. This is what we are working on at the moment.

Other Big Four auditing firms—PwC, KPMG, EY— have launched blockchain auditing services. Does Deloitte have blockchain auditing services currently?

Yes, we have blockchain auditing services. Blockchain auditing is a very confusing term, there are different kinds of blockchain auditing. If a company has certain assets, stored in a crypto format, you will need financial auditing, which is a kind of blockchain auditing. There are also ICOs, STOs, stablecoin issuances, etc., and those need audit firms to audit liquidity, for example. We also conduct IT audits for blockchain platforms, to make sure they are not breaching any technology risks or guidelines, from regulators as well as data privacy auditors.

What are your views on consensus as a service?

I believe this is more for public blockchains because in public blockchains, consensus is very resource-consuming, and it does not make sense to build ASIC server farms in order to create consensus. For permissioned blockchains that we use, the underlying consensus mechanism is very light in terms of power consumption. Many new permissioned blockchains support plug-and-play consensus mechanisms, all of which are open-source, and do not need to do any outsourcing for them.

KPMG Launches Blockchain-Integrated Supply Chain Platform in Australia, China & Japan

KPMG, a Big Four audit firm, announced on Nov. 28 that it has rolled out a blockchain-enabled track and trace platform dubbed KPMG Origins in Australia, China, and Japan.

The platform leverages emerging technological innovations, such as blockchain and internet of things sensors (IoT), as well as data analytics tools.

Its primary function is to provide traceability and transparency to trading partners in different industries, such as manufacturing, agriculture, financial services, and resources. KPMG Origins enables trading partners to share authentic product information across their supply chains with end-users and further reduce operational complexities.

Ken Reid, a senior official at KPMG Australia, asserted: “The supply chains of the 21st century are faster, more interconnected, and require sharing greater amounts of data than ever before. From agriculture to financial services, the complexity of supply chain ecosystems creates operational risks, reconciliation challenges as well as safety concerns. KPMG Origins’ goal is to solve these problems by providing independent third-party verification and certification of data and processes.”

Trailing of KPMG origins

KPMG Origins is being trailed by a couple of organizations, such as SunRice, a notable food exporter in Australia, CANEGROWERS, the peak body for Queensland’s sugarcane growers, and Mitchell Wines.

Expressly, CANEGROWERS mulls utilizing KPMG Origins to show sustainable and authentic credentials of Queensland’s sugar. This approach is expected to make growers more profitability as their environmental sustainability incentives will be recognized.

Matt Kealley, CANEGROWERS senior manager, acknowledged: “There is increasing demand for growers to demonstrate their sustainability practices, yet there is no way for them to be recognized or rewarded for their investment. […] A blockchain solution, such as KPMG Origins, could provide a platform that will enable end-users to capture the sustainability credentials of the product directly from the grower to the customer. By working together as an industry to explore cutting-edge tech such as blockchain, we are exploring ways to get value back to growers and the Queensland sugar industry.”

KPMG Origins has been established to prompt global trade by offering different industries a comparative advantage.

"The Wars to Come," Blockchain – A Game Changer for Auditors

Every industrial revolution was driven by different automation. The “Steam Engine” began the “First Industrial Revolution”, Previous industrial revolutions were driven by “Factory Machines and Fossil Fuels”. Whereas, the on-going automation revolution is based on “Data-Driven Artificial Intelligence” (AI) and “Blockchain Technology”.

If “data is the fuel “of the Fourth Industrial Revolution, “blockchain will be the engine” driving it forward. Both of them have a positive relationship because blockchain distributed ledger nature allows for safe and secure storage of data. Working together not only will advance their own adoption & implementation but will shape the next Industrial Revolution.

“Blockchain is a decentralized ledger of transactions across a peer-to-peer network that cannot be changed, tampered with, or lost due to blockchain’s decentralized and distributed nature. The blocks in a Blockchain consist of digital information (“block”) stored in a public database (“chain”).

Blockchain technology was first introduced as the core technology behind digital currency bitcoin, but it has now evolved far beyond bitcoin and has the potential to transform and disrupt a multitude of industries, from financial services to the public sector to healthcare.

Among various use cases are payment processing, online voting, executing contracts, signing documents digitally, creating verifiable audit trails and registering digital assets.

Blockchain Impact on Accounting & Auditing World

Blockchain-based world would create new requirements for audits with new risks. A blockchain ledger would provide an assurance baseline that eliminates the need for traditional auditing entirely as blockchains, by definition, create up-to-date immutable, historical records.

This technology has the potential to impacts all record-keeping processes, including the way transactions are initiated, processed, authorized, recorded and reported. All information is recorded in real-time which is immutable and it brings transparency in financial reporting and accounting process with certainty over the provenance (origin) of those transactions.

Distributed ledgers working together with artificial intelligence can automate a range of processes, from payments through to foreign exchange trades and the filing of tax returns.

“Auditors will need the skills and capabilities to review blockchains as they are created.”

Blockchain Feature- Immutability & Transparency

In Blockchain immutable accounting records are created. Manipulating transaction entries to falsify or eliminate them is practically impossible. Since all the information is stored as a block and every block is associated with others, anyone trying to change one block needs to alter the associated blocks which becomes a daunting task for the hacker.

Auditors spent a lot of time in the verification of the transactions trail to ensure there is sufficient evidence and information is transparent. The use of Blockchain will save time that traditionally goes in manual auditing & detailed analysis. That time can be utilized in formulating more strategic work & delivering future business value.

Blockchain Feature- Real-Time

Gone are those days when auditors had to wait for it for the end of the year or month to carry out the audit.

In blockchain all the information is recorded on “Real-Time” i.e it is time-stamped. By the use of blockchain technology, it is now possible to perform an audit whenever it is required improving the pace of financial reporting and auditing.

A blockchain-based ledger lays out the entire history of related transactions, updated in real-time and visible to all parties involved — creating a clear, auditable record that is virtually impossible to falsify or destroy, promising to radically improve the fight against challenges like fraud and money laundering.
Malcolm J. Murray, Fellow and VP, Gartner

With access to unalterable audit evidence, the auditor could have real-time data access via read-only nodes on blockchains. Blockchain combined with artificial intelligence could transform the way in which fraud investigations and forensic accounting are undertaken.

The real-time systems would highlight and investigate anomalies and unusual transaction patterns as they emerge. It cannot eliminate fraud completely; however, it may help identify fraud in real-time.

Blockchain Challenges “New world of digital risk”

Blockchain-based world would create new requirements for audit with new risks. While block chain’s design brings transparency, immutability and security in the transactions, but still the occurrence of frauds cannot be eradicated. The Blockchain environment is still susceptible to various technology risks.

The auditors will need to audit whether the distributed ledger systems are working correctly.
Professor Nigel Smart, University of Bristol

In Blockchain the data is validated by a majority of other users on the system. If the majority of the users on the distributed ledger become corrupt, it is possible to break the chain.

The DAO–HACK

Blockchain can also be vulnerable to programming mistakes, for instance in June 2016, Swiss-based DAO – actually called “The DAO” lost virtual currency when a hacker found a loophole in the coding that allowed him to drain funds from The DAO. In the first few hours of the attack, 3.6 million ETH were stolen, the equivalent of $70 million at the time. Once the hacker had done the damage he intended, he withdrew the attack.

The DAO was a digital decentralized autonomous organization and a form of investor-directed venture capital fund. It launched in April 2016 after a crowdfunding campaign. The DAO had an objective to provide a new decentralized business model for organizing both commercial and non-profit enterprises.

The DAO’s hack was not due to a problem inherent on the Ethereum blockchain; it came from a coding loophole exploited by an intelligent hacker. Had the code been written correctly, the hack could have been avoided

There is currently no standard way to validate blockchain-based business processes and the related control environment.

The reality is that no system is flawless – not even blockchain.

Assess the Reliability of the Blockchain Consensus Protocol

Auditor needs to understand and assess the reliability of the consensus protocol for the specific blockchain taking into risk consideration of whether the protocol could be manipulated.

Evaluate Management’s Accounting policies for Digital Assets

Auditor will also need to evaluate management’s accounting policies for digital assets and liabilities, which are currently not directly addressed in international financial reporting standards or in the U.S. generally accepted accounting principles.

Auditors will always be needed to design the appropriate audit strategies in complex systems making decisions about what level of audit is required, how data should be captured, and the type of audit analytics that should be applied.

No way to Reverse Transactions

In a case, if a user accidentally or deliberately transfers an amount (in the form of digital currency) to the wrong or unauthorized address (recipient) account, then there’s currently no way to reverse the transaction.

To avoid such situations, Auditors are therefore required to assess whether effective automated controls General information technology controls (GITCs) related to the blockchain environment are in place to validate transactions before they are executed.

Impossible to recover the Account if Private key is lost

If in any case, a user loses his private key (e.g. through a software or hardware malfunction), then the user loses his access to his virtual currency account. All his amounts will remain inaccessible forever and cannot be recovered easily.

Auditors need to review effective disaster recovery procedures are in place and verify whether controls that address the risks associated with blockchain can be relied upon.

No Reporting Authority

If an entity experiences a phishing attack, there is no central authority to report any incident since in blockchain there is no central administration. This situation can also translate into a risk of fraud.

When faced with such risk, Auditors will be expected to determine whether internal controls to prevent and detect phishing attacks are indeed operating effectively.

Top Auditing Firms have Undertaken Blockchain Audit Initiative

An auditor will need to stay abreast of recent developments in this space to consider how to tailor audit procedures to take advantage of blockchain benefits as well as address incremental risks.

EY has recently announced the launch of its “Blockchain Analyzer tool” to help audit teams assemble an organization’s entire transaction data from multiple blockchain ledgers. It also supports testing of multiple cryptocurrencies managed or traded by exchanges and asset managers.

PwC has also launched”Blockchain Validation Software”, which combines risk & control framework with continuous auditing software. It will test for anomalies in real-time.

The Committee of Sponsoring Organizations of the Treadway Commission, or COSO, is developing voluntary guidelines for companies to strengthen their oversight of blockchain-technology projects. The guidance is expected to be released in the first quarter of 2020.

Blockchain technology has the potential to upend Audit, Assurance and Control functions —Auditors need to stay attuned to emerging use cases — As Role and skillsets of Auditors will change as new Blockchain-based techniques and procedures emerges.

Get ready for “The Wars to Come”

KPMG Advocates for Institutional Custody as Estimated $9.8 Billion of Crypto Stolen Due to Lack of Security

One of the big four accounting firms, KPMG estimated that at least $9.8 billion in cryptocurrencies have been stolen by hackers since 2017 due to security issues or poorly written code. According to the KPMG report, the cryptocurrency market will need to see huge improvements for the $245 billion industry to keep growing.

The first cryptocurrency developed in 2008, Bitcoin, has emerged and has since gained popularity for almost 12 years. Through these years, the cryptocurrency has found itself vulnerable to hacks that have led to seeing huge losses from investors.

Due to the exponential rise for the demand for major cryptocurrencies such as Bitcoin and Ether, KPMG emphasized that safeguarding digital assets would be a critical step for the industry to flourish.

Co-author of the report and Co-leader of KPMG’s crypto-asset services Sal Ternullo said, “Institutional investors especially will not risk owning crypto assets if their value cannot be safeguarded in the same way their cash, stocks, and bonds are.”

A few of the first companies to offer cryptocurrency custody services were mentioned, including Fidelity Investments, exchanges run by the Intercontinental Exchange, Coinbase, and Gemini. According to KPMG, the industry must adhere to heightened rules on storing cryptocurrencies for customers, and follow financial transaction rules, including know-your-customer (KYC) and anti-money-laundering (AML) regulations.

Gemini announced the launch of its own cryptocurrency insurance company in January 2020, which resulted in becoming crypto custody with the broadest coverage at the moment. This development makes it possible for users and customers of Gemini exchange to be able to purchase additional insurance from their different crypto assets. They also have hot wallet insurance coverage for holding individual cryptos.

“As crypto-assets proliferate, custodians have a tremendous opportunity to profit — both by earning management fees for delivering straightforward custodian services, and also by offering adjacent services only possible in the emerging crypto ecosystem,” read the report.

Coinbase Custody launched its institutional-grade crypto asset storage service to clients in Europe in January 2020. Coinbase Custody was launched in 2017 for institutional clients such as hedge funds and family offices. Its assets under management have over $7 billion in cryptocurrency assets, with its acquisition of Xapo’s institutional custody business in August 2019.

KPMG Launches Patent Pending Crypto Analytics Suite KPMG Chain Fusion for Institutions

KPMG has announced the launch of its patent-pending crypto analytics suite, KPMG Chain Fusion to streamline crypto-related services for financial services and FinTech companies.

KPMG Chain Fusion uses a structured data model to combine data from blockchain infrastructures, and traditional systems to provide analytics for business, risk, and compliance purposes.

KPMG has observed that the growing trend of blockchain being used as the underlying technology of assets from Bitcoin to central bank digital currencies (CBDCs) is fundamentally different from the existing traditional information systems.

The Big Four firm believes that the resiliency of the crypto ecosystem has been tested thoroughly in 2020, and institutionalization has been accelerating globally. Blockchain technology has caught the eye of many global regulators, and has had macroeconomic impacts on investment trends.

As more decentralized applications are being built on blockchain, traditional businesses are faced with the challenge of integrating different data structures into a “consistent model” that supports the business and its compliance objectives. As these traditional organizations try to adopt tokenized assets and assets with the underlying technology being blockchain, this takes the challenge one step further.

KPMG Chain Fusion enables interaction across different blockchain protocols and traditional systems by taking structuring blockchain data from different protocols from the company’s existing data structures. This will then be moved into a core data architecture. Sam Wyner, the co-lead of KPMG Cryptoasset Services team said:

“Regulators and auditors expect fully implemented controls and processes within and across a cryptoasset business – whether they are cryptoasset or traditional systems or anything in between. If you are a blockchain or digital asset-based business, you will have separate systems for everything.”

Wyner added that there is a vast difference in technologies, including whether it is a permissioned or unpermissioned blockchain in a traditional front, middle, and back office system.

KPMG advocates for crypto institutional custody

KPMG estimated that at least $9.8 billion in cryptocurrencies had been stolen by hackers since 2017, due to security issues or poorly written code. According to the KPMG report, the cryptocurrency market will need to see huge improvements for the $245 billion industry to keep growing.

Due to the exponential rise in demand for major cryptocurrencies such as Bitcoin and Ether, KPMG emphasized that safeguarding digital assets would be a critical step for the industry to flourish.

According to KPMG, the industry must adhere to heightened rules on storing cryptocurrencies for customers, and follow financial transaction rules, such as Know Your Customer (KYC) and anti-money-laundering (AML) regulations.

Blockchain Investments Declined 63% Due to COVID-19, Says New KPMG Report

Auditing firm KPMG has recently published its 2020 Global Emerging Technology Survey Report that identified a decline in investments into blockchain technology because of the coronavirus pandemic. However, the study predicts that the sector would be one of the industries, which would probably obtain the highest amount of investment in the next 12 months.

The collaborative study was carried out by HFS Research and KPMG. The report includes data from a survey of 900 executives of firms on the Forbes Global 2000 that include the largest publicly-traded firms with annual revenues above $1 billion. The study findings come from first-person interviews and survey data indicating the views of several enterprise technology leaders across the globe.

Leading Business Through the Pandemic

The study highlighted the shifting priorities of main companies across the globe and how the coronavirus has affected investments into emerging technologies.

According to the report, some firms have flourished during the COVID-19 pandemic while others have been adversely affected by the economic impact of lockdowns around the world.

As per the report, the process automation, blockchain, artificial intelligence, 5 G, and the cloud technologies industries will see reduced investments over the short term as these firms mitigate the financial risk triggered by the ongoing pandemic.

Based on data collected from two different sample groups between March-April and May-June 2020, blockchain technology has experienced a 63% decline in investment. It is alarming to see that such a reduction happens, but it is not expected to continue in the long term.

Most firms across the globe have been forced to reduce investments on these technological innovations in the short term to survive the harsh impacts of the COVID-19 crisis. As a consequence, the investment in emerging sectors like blockchain is no longer a priority in the current period. However, these companies will soon renew such investment strategies after the pandemic as they look forward to retaining a competitive edge in their respective sectors.

The data shows that more firms are intending to increase their investments in blockchain innovations over the next 12 months.

Blockchain Technology Building A Brighter Future

One of the main takeaways in the report highlights the evolution of blockchain and how the adoption rate of technology is significantly breaking into mainstream industries. The findings show the capabilities of blockchain and how it is becoming a significant tool for enterprise-level business.

The technology is already central to a significant proportion of business-to-consumer (B2C) and business-to-business (B2B) commerce, legal processes, and products. From medical data and prescription management, online purchasing, sharing of cross-jurisdictional criminal records to the management of entire countries’ registers, blockchain has huge potential.

KPMG Unveils Blockchain-Based Climate Accounting Tool To Help Drive Environmental Sustainability

Multinational professional services firm and one of the Big four auditing firms, KPMG is set to offer a blockchain-based tool dubbed the Climate Accounting Infrastructure (CAI) to help organizations more accurately measure, mitigate, report, and offset their greenhouse gas emissions.

Per the official KPMG announcement, the patent-pending Climate Accounting Infrastructure will be able to analyze climate risks associated with asset valuations and help organizations better assess and employ systems to offset their emissions.

The CAI as noted by the company will come in handy in helping organizations to meet their sustainability practice goals alongside helping them in the much-anticipated reporting of the sustainability practices each firm is expected to demonstrate in alignment with the environmental, social, and corporate governance (ESG) demands of capital markets investors.

The capability will use blockchain to securely store environmental data in a financial system as part of organizations’ climate risk assessments and asset valuations, including as part of their real estate portfolios. The capability will thus present a trusted and transparent system to measure, account for, and report on emissions data.

Arun Ghosh, KPMG’s US Blockchain leader said in a statement:”As investors broaden their focus beyond financial factors to include ESG practices, organizations are increasing efforts to reducing carbon footprints, alongside transparent disclosure of progress. Trusted reporting capabilities, such as those enabled by Climate Accounting Infrastructure, will be critical to meet stakeholder expectations and to comply with emerging regulations.”

KPMG has been very prominent in rolling out blockchain-based innovations for more functional enterprise integration. Besides announcing the launch of its patent-pending crypto analytics platform to streamline crypto-related services for financial services and FinTech companies back in June, the company currently has in operation a blockchain-enabled track and trace platform dubbed KPMG Origins in Australia, China, and Japan. The track and trace blockchain infrastructure find strong use in the supply chain industry to enhance global trade.

KPMG Partners with Coin Metrics to Boost Institutional Crypto Adoption

KPMG, a Big Four audit firm, has teamed up with Coin Metrics, an open-source public blockchain project, to enhance institutional adoption of blockchain and crypto-assets.

This strategic alliance between KPMG and Coin Metrics aims to offer proprietary analytics, trusted data & insights, and crypto-asset services to attain this objective.

Supporting public blockchains

Through the partnership, Coin Metric’s full-suite of institutional data products and infrastructure will be joined with KPMG’s Chain Fusion to propel public blockchains. The alliance is based on KPMG’s Chain Fusion and Coin Metric’s FARUM and ATLAS.

In June, KPMG launched KPMG Chain Fusion as a patent-pending crypto analytics suite to streamline crypto-related services for financial services and FinTech companies. It uses a structured data model to combine data from blockchain infrastructures, and traditional systems to provide analytics for business, risk, and compliance purposes.

As per the announcement:

“The combined offering includes Coin Metrics’ holistic blockchain network risk management tool, FARUM, which allows organizations to monitor and manage network attacks, transaction reorganizations, fee volatility, and unusual network event risks.”

FARUM is also touted to be instrumental in offering users a glance of the past, present, and future transaction settlement probability based on hash rate markets, mining pools, and blockchain nodes.

On the other hand, KPMG’s Chain Fusion is expected to leverage ATLAS as a source of on-chain data across modules and capabilities.

Handling unmonitored blockchain network risks

According to Sal Ternullo, a co-leader of KPMG Crypto Asset Services:

“FARUM represents a significant step forward for custodians and exchanges that are exposed to often, unmonitored blockchain network risks that may impact their businesses.”

Therefore, the partnership is seen as a stepping stone towards providing a trusted foundation for cryptoassets’ adoption.

Tim Rice, Coin Metrics CEO, acknowledged:

“FARUM is yet another way that Coin Metrics promotes transparency into the activities of open, public crypto networks. We are thrilled to bring this capability to market with KPMG by our side as we solve real business problems for crypto users.”

Earlier this month, KPMG unveiled a blockchain-based tool dubbed the Climate Accounting Infrastructure (CAI) to help organizations accurately measure, mitigate, report, and offset their greenhouse gas emissions.

New KPMG Report Suggests Potentials for Increased Maturation of the Cryptocurrency Space

Big four auditing firm KPMG has released a bi-annual report on digital technology advances dubbed the Pulse of Fintech H1’21. It dedicated a section to blockchain technology and cryptocurrencies.

Per the report, the firm unveiled that the total investments into the blockchain world were more than double the record achieved in 2020.

The blockchain ecosystem journey into the year 2021 with increasing aspirations, not just with the possibilities of firms going public, but for these continuations of a bull cycle that was ignited toward the end of 2020.

Amongst the major highlights in the report is the investors’ outlook. The industry’s growth has also notably rubbed off on those who invest in the space as they now do so with an adequate understanding of how the entire terrain functions.

“In H1’21, a significant amount of institutional money flowed into the crypto space, highlighting the broadening of the investor base. Investor awareness and knowledge of the sector is growing, with investors now having a much better understanding not only about crypto assets but also the operational and procedural side of crypto — from custody and storage to storekeeping and the competitiveness and maturity of service providers,” The KPMG report highlighted.

As Bitcoin (BTC) met the public expectation, stirring the global market cap to a high above $2.5 trillion atop an All-Time High (ATH) of $64,500. According to the KPMG report, this growth trend permeated all aspects of the ecosystem, including Non-Fungible Tokens (NFTs).

The continued maturation of the crypto ecosystem is bound to continue in the second half, as postulated by the auditing firm. Many hurdles, including those bordering on regulations, are also bound to increase in the year’s second half. In all, the report noted that the remaining half of the year would witness a “stronger separation between cryptocurrencies and the use of blockchain technologies.”

Blockchain Investments in 2021 Surpasses Past 3 Years' Total Capital Raised: KPMG

The blockchain ecosystem might still be relatively tagged as new. However, when it comes to funding and recognition by Venture Capital (VC) Firms, they are arguably fast attaining maturity.

According to a new report by Big Four auditing firm KPMG, investments pumped into blockchain startups in 2021 topped $30 billion, a figure that surpasses funding received in 2018, 2019, and 2020 combined. Investments in blockchain protocols have been steady over the past few years, with a progression that showcases more VCs are becoming aware of the potentials inherent in this space.

While a total of $8.2 billion was realized in 2018, fueled by the first massive growth trend of Bitcoin (BTC) to an all-time-high (ATH) above $17,000 in December 2017, $5.6 billion was recorded in 2019, and $5.5 billion in 2020. In 2018, the total transaction record was placed at 901 deals, while the current data published by KPMG pegs this number at 1,332 deals for last year.

“Investment in the crypto and blockchain space soared in 2021, rising from $5.4 billion in 2020 to over $30 billion. Globally, there was an incredible increase in the level of recognition for the potential role of crypto and its underlying technologies in modern financial systems,” the report reads.

The massive positive outlook in the general digital currency ecosystem has also drawn a massive crackdown from regulators worldwide. While Chinese authorities have initiated a complete ban on crypto, Russia has also been contemplating its regulatory approach to the fast-growing industry.

This year opened up to a massive bullish stance when it comes to blockchain funding and investments. While firms like FTX Derivatives Exchange topped the list of crypto firms that received backing from investors last year up to $1 billion, the company has also inked a new $400 million to push its valuation to $32 billion. Overall, current trends suggest investors are not willing to slow down in their backing of protocols that will define the future of the internet.