For a long time, pundits have posited that cryptocurrencies and blockchain technology will truly take off once institutional investment into the industry starts pouring in. In 2021, institutional investors picked interest in decentralized finance (defi), the metaverse, and NFTs (non-fungible tokens). However, the slump in the prices of cryptos witnessed in 2022 put the brakes on the momentum of capital flow into blockchain technologies, although institutional interest has remained strong.
According to Amberdata’s cofounder and COO Tongtong Gong, the rate at which institutional investors are exhibiting interest in blockchain technology is at an all-time high and is growing rapidly. Amberdata is a data analytics company offering trading research, backtesting, compliance and accountancy, risk management and other related services for those interested in blockchain technology.
According to Gong, several companies have made contact with Amberdata seeking help in understanding the cryptocurrency markets as well as gathering available information on blockchain tech. These institutional clients include NASDAQ, Citibank and the National Australia Bank.
The interest shown in the services offered by Amberdata has been so high that the company has quickly grown from a 10-person operation to a staff of 60 in eight short months. Gong is quick to point out that not all companies that show interest ultimately invest in cryptos and blockchain firms. Rather, some of those clients simply want to know what is going on in this space and make informed decisions about their current or future positions on these novel technologies.
One of the major areas of interest for institutional investors is defi. The investors are intrigued by the exciting possibilities of smart contracts that automatically execute and regulate transactions without requiring a human expert to oversee what’s going on.
Digital rights management is also an area of interest, especially with regard to NFTs. The technology behind NFTs makes it easy for content/asset creators to earn annuities or royalties from their assets while also streamlining the way digital assets transfer from one owner to another or are used.
Institutional investors are interested in exploring how elements of decentralized finance can be implemented in the traditionally centralized finance world, such as in mortgage finance as well as transborder money transfers. Gong says that Amberdata’s team is getting more clients interested in getting insights into how DeFi attributes can be taken up by the centralized finance (CeFi) world.
For now, what is important is that companies perform their due diligence because the problems that the cryptocurrency world has faced in recent years aren’t any different from what the traditional financial sector faced, such as the challenges that Lehman Brothers brought to the mortgage finance world. This due diligence is more necessary given that there are plenty of players, such as Stronghold Digital Mining Inc. (NASDAQ: SDIG) in the different segments of the crypto and blockchain industry, including such as Stronghold Digital Mining Inc. (NASDAQ: SDIG)
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