Blockchain technology has rapidly evolved from a niche cryptographic experiment into a mainstream topic at venture capital forums, startup incubators, and corporate strategy meetings. Investors sense a potential paradigm shift and are eager to position themselves early—but not at the cost of expensive missteps. While many institutional players are "watching closely," they often express similar concerns: too few viable projects, sky-high valuations, and above all, a lack of clarity on what exactly makes a blockchain investment worthwhile.
As someone who has followed blockchain since the early Bitcoin days, I aim to unpack the current investment landscape through an investor’s lens—focusing on real value, practical use cases, and long-term potential.
Categories of Blockchain Projects Investors Encounter
Most blockchain-related ventures fall into one of two broad categories: cryptocurrency-adjacent initiatives and technology-driven solutions.
1. Cryptocurrency and Mining-Based Ventures
Bitcoin remains the most mature implementation of blockchain technology. However, for early-stage investors, the window for high-return opportunities in Bitcoin-centric ecosystems—such as exchanges or mining hardware—is largely closed. Established players dominate these spaces, with some miners already nearing public listings.
Niche areas like Bitcoin mining pools still offer limited entry points. That said, proof-of-work (PoW) mechanisms face growing scalability and sustainability challenges. From an institutional perspective, pure "coin-flipping" ventures lack repeatable business models and regulatory clarity, making them poor fits for traditional portfolios.
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The Three Layers of Blockchain Technology
Beyond cryptocurrencies, blockchain projects can be structured across three technical layers:
- Layer 1: Core Infrastructure – Includes consensus algorithms (like PoW, PoS), cryptographic protocols, and distributed ledger architecture.
- Layer 2: Middleware & Services – Encompasses API providers, blockchain-as-a-service (BaaS) platforms, and protocol abstraction tools.
- Layer 3: Industry Applications – Real-world implementations in finance, supply chain, intellectual property, healthcare, and more.
Understanding this hierarchy helps investors assess where value is created—and where risks lie.
Evaluating Layer 1: Blockchain Infrastructure & Protocol Projects
Projects like Bitcoin, Ethereum, Hyperledger Fabric, and domestic efforts such as JingTong, XiaoYi, and BuBi represent foundational infrastructure. For non-technical investors, deciphering whitepapers can feel like reading ancient scripture. Even seasoned technologists debate fiercely over nuances in consensus design, bandwidth efficiency, and security trade-offs.
A critical insight: Today’s blockchain systems operate at the application layer of the TCP/IP model—similar in level to email protocols. Many core blockchains are open-source, meaning skilled developers can fork and modify existing codebases with relative ease.
This accessibility leads to a market reality: countless Chinese startups offer slightly modified versions of Ethereum. While building upon prior work isn’t inherently flawed—innovation rarely happens in isolation—the key differentiator lies in meaningful optimization tailored to specific performance, security, or compliance needs.
Yet here's the catch: Most base-layer platforms are community-governed and company-less. You can't invest equity into Bitcoin or Ethereum directly; there's no cap table, no shareholder agreement. Purchasing tokens isn't traditional venture investing—it's speculative participation.
And while Initial Coin Offerings (ICOs) provide an alternative funding path (e.g., Ethereum raised ~$18 million in 2014, now worth billions), they introduce volatility and governance issues. Relying on retail speculators instead of strategic VCs often results in erratic valuations and questionable fund allocation.
Alternatively, some firms generate revenue by building private chains for banks or enterprises—think JingTong’s collaboration with HNA Group or Yunxiang’s smart city initiatives. But this model resembles IT services more than scalable tech ventures. As blockchain knowledge spreads, custom development may become commoditized—much like mobile app creation today.
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The Reality of Full-Stack Blockchain Startups
Many so-called “infrastructure” companies in China attempt to do everything: protocol development, POC delivery, private chain deployment, and even application building. While this diversification supports survival, it dilutes focus.
Seasoned investors know that early-stage teams have finite bandwidth. Attempting to build an entire “blockchain ecosystem” without mastering one layer first—à la乐视 (LeEco)—is unsustainable. True success will come from specialists who deeply understand cryptographic design, distributed systems, and enterprise integration.
Long-term, we expect a few strong players to emerge—operating specialized public or consortium chains optimized for high throughput, regulatory compliance, or cross-industry interoperability. These will serve as foundational rails for future applications.
Key Evaluation Criteria for Infrastructure Projects:
- Design Philosophy: Should blockchain be fully open? In regulated sectors like finance, controlled access (similar to Apple’s App Store review model) may be preferable over fully permissionless systems.
- Consensus Mechanism: Fully decentralized models face hurdles in regulated environments. Solutions like PBFT variants or permissioned nodes (as seen in JingTong or XiaoYi) align better with real-world governance needs.
- Real-World Adoption: How many live deployments exist? Are there verifiable use cases backed by institutions?
Focusing on Application-Layer Investments
For most institutional investors, the sweet spot lies in Layer 3: blockchain-powered applications. Here, the investment thesis shifts from pure technology to business value creation.
Take anti-counterfeiting solutions: using QR codes or NFC chips on products is straightforward. Blockchain adds immutable traceability—but it cannot verify the authenticity of input data. If counterfeit goods enter the system at the source, the entire chain becomes misleading. The real challenge lies in securing data at origin—a problem requiring physical verification, not just cryptographic ledgers.
Similarly, digital copyright protection benefits from blockchain’s ability to timestamp and sign digital assets. But legal recognition by copyright offices and courts remains essential. Technology alone doesn’t confer enforceability.
Another trending area is decentralized mutual aid platforms, where blockchain enhances transparency in fund flows and membership rules. While valuable, these projects treat blockchain as a trust layer—not a complete solution.
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Why Blockchain Applications Remain Scarce
A core bottleneck exists: technologists lack domain expertise, while industry veterans don’t understand blockchain. This gap results in shallow proof-of-concept projects rather than scalable solutions.
Companies like Jingqu Tech aim to bridge this divide—providing infrastructure access, technical guidance, funding, and industry connections to domain-specific entrepreneurs. Their role? To connect dots between technology and real-world operations.
Ultimately, success hinges on execution: user adoption, regulatory alignment, partnership development—all within the entrepreneur’s wheelhouse.
Blockchain is not a magic bullet. It upgrades the toolset—from a knife to a machine gun—but victory still depends on the soldier.
Is Blockchain a Bubble?
Let’s dispel a myth: You cannot store large datasets like videos or social media feeds directly on-chain. Public blockchains have limited block sizes (typically megabytes). Writing massive data would bloat the chain beyond feasibility.
Think of Bitcoin as DOS—functional but primitive. Ethereum introduced smart contracts, akin to Windows 95. We’re still in the early graphical interface era of decentralized computing.
Yes, there’s hype. Just as during the dot-com boom of 2000, many today misuse “blockchain” as a buzzword to attract capital. But beneath the noise lies genuine innovation.
Blockchain solves a fundamental issue: trustless value exchange via cryptography. It complements today’s internet by adding verifiability, immutability, and peer-to-peer fairness.
Quantum computing threats? They’re decades away—and encryption will evolve in response (e.g., quantum-resistant algorithms). Even if “blockchain” ceases to be the term we use, its core principles—decentralization, transparency, disintermediation—will endure.
Frequently Asked Questions (FAQ)
Q: Can blockchain eliminate fraud entirely?
A: No. Blockchain ensures data integrity after entry but cannot guarantee truthfulness at input. Source verification remains critical.
Q: Are all blockchain startups viable investments?
A: Far from it. Only those solving real problems with clear product-market fit and executable roadmaps deserve serious consideration.
Q: Should investors avoid infrastructure projects?
A: Not necessarily—but expect longer timelines and higher technical risk. Focus on teams with deep expertise and strategic partnerships.
Q: Is now a good time to invest in blockchain?
A: Yes—if you're selective. Prioritize applications with revenue models over speculative token plays.
Q: How does regulation impact blockchain investing?
A: Significantly. Projects with compliance-by-design approaches (e.g., identity verification, audit trails) are better positioned for longevity.
Q: Will private blockchains replace public ones?
A: Unlikely. Both serve different purposes—private chains for enterprise control, public chains for open innovation and decentralization.
In conclusion, blockchain is not a bubble—but it does contain speculative bubbles. The underlying technology holds transformative potential across industries. Smart investors won’t chase hype; they’ll back teams building practical solutions atop sound architecture. The future belongs not to maximalists or skeptics alone—but to those who apply discernment and vision.