While cryptocurrencies and non-fungible tokens (NFTs) took center stage in 2021, with Bitcoin (BTC) repeatedly breaking all-time highs and an NFT taking $91.8 million at auction, blockchain technology continued to evolve away from the spotlight. Now that we have entered a new year on Wall Street, there are many indicators that blockchain will finally begin to realize its potential in the coming months. Kimberly Rosales, an expert on this high-growth technology, explains how blockchain will be a major fuel for Wall Street’s engine.
There is evidence of major companies around the world preparing their business models to adapt to a blockchain-based future, and the liberating nature of the distributed digital ledger can bring to products and services. In particular, payments provider Square (SQ) changed its name to Block at the end of last year, a nod to co-founder Jack Dorsey’s (CEO of Twitter) enthusiasm for blockchain.
As different research shows, the blockchain market in the US will grow exponentially over the decade, with Grand View Research anticipating the market to grow at a CAGR of 82.4% through 2028 from its 2020 value of $3670 million.
When we think of blockchain, it’s easy to think of cryptocurrencies and listings like Coinbase, but the technology is much more widespread and is already being effectively implemented across a wide range of industries.
“Perhaps most significantly, blockchain has become an excellent form of funding for startups and small businesses, helping founders crowdfund their startups and get loans more efficiently,” Rosales asserts. “While this won’t affect Wall Street today, it could lead to a new wave of thriving companies launching IPOs in the coming months and years.”
CME Group could experience strong growth in the next twelve months, considered the world’s largest futures and options exchange. The firm offers equity, index, and currency derivative securities, among other financial instruments. Significantly, CME is also the only exchange that has created a market for BTC futures contracts.
This makes the stock a big player when it comes to harnessing the potential of blockchain. As blockchain use, cases continue to grow and investors become more accepting of the emerging technology and cryptocurrencies that rely on its framework, CME Group will directly benefit from the scale of the industry.
You can see that the stock has performed exceptionally well since it hit the Nasdaq. CME’s market cap now stands at an impressive $81 billion, with plenty of room to grow along with the scale of the cryptocurrency and blockchain market.
Another stock that performed exceptionally well in 2021 is Nvidia. While Nvidia is known as a designer and manufacturer of high-end graphics cards and processing chips, it may also be the company best positioned to help blockchain reach its potential in the medium-term future.
According to Rosales, Nvidia may be the only current company with the scale, hardware, software, developers, and ecosystem to participate meaningfully in powering the long-awaited metaverse, which will be built on the foundation of blockchain-based components.
Like companies such as Meta (formerly Facebook) and Block, Nvidia has prioritized the future of technology and the metaverse itself. In late 2020, the company even launched its own beta testing platform Omniverse.
And finally, there is DocuSign. Although relatively new to Wall Street, DocuSign is a clear market leader when it comes to e-signature technology. Significantly, e-signatures are a key time and money-saving tool for both businesses and individuals, with an estimated $36 reduction in the cost of doing business per transaction.
The company has been actively using blockchain since 2015. Customers actively register their deals on an Ethereum-based blockchain, and the company’s CEO, Dan Springer, has repeatedly emphasized the importance of blockchain in the future scale of the business.
“The reason blockchain is such a popular property on Wall Street is because the technology can do things that were unimaginable until recently,” Rosales explains. “For example, smart contracts are self-executing, self-verifying contracts that, in theory, require no third parties, intermediaries or transaction fees.”
Smart contracts are so powerful that they could soon disrupt a variety of industries, including finance, insurance, and real estate, among many more.
Better entrepreneurial funding will invariably lead to the conversion of the best business ideas into ventures that will grow to the position where they can go public faster and at the pace that suits their ambitions.
With this in mind, blockchain will have an integral impact on Wall Street in 2022 and beyond, and investors are likely to start reaping the benefits in the coming months.