Security startups using blockchain outperform peers leaning on other emerging technologies

A team of researchers from Switzerland have published a study examining how the financial performance of firms compares to their peers when utilizing various emerging technologies. The study, titled "Assessing the Financial Impact of Information Security Startups," concluded that cybersecurity companies leveraging blockchain technology exhibited superior financial results compared to those focused on artificial intelligence (AI) and cloud security operations.

According to the data, companies utilizing blockchain technology achieved impressive returns on investments, with log returns reaching nearly 200%, significantly outperforming other startups. In contrast, AI-focused firms saw annualized arithmetic returns of approximately 70%, while those prioritizing privacy showed the lowest returns at 9%.

The report highlighted that the blockchain sector displayed the highest expected annual arithmetic and log returns at 177.27% and 105.42%, respectively, which aligns with the performance of cryptocurrencies during the study period.

Experts observed that blockchain-based companies typically went public within three years of receiving initial funding, whereas AI and other technology firms usually took around four years to do so, with some e-signature companies taking up to a decade.

Although the United States attracted the majority of blockchain investment, it ranked second in facial recognition, penetration testing, and QR codes.

Several factors may explain blockchain's dominance in the study over other emerging technologies. The researchers analyzed data from 2010 to 2022, a period crucial for the growth of blockchain and digital currencies.

With AI gaining commercial traction in 2023, driven by new releases and increased adoption rates, extending the research data to that year might alter the results in favor of AI-based firms.

Starting in 2023, there was a notable shift of capital from Web 3 into AI companies, attributed to the global acceptance of AI technology. This trend was influenced by the "crypto winter" and the demise of several major Web 3 entities in 2022.

AI job postings began to incorporate Web 3 elements, indicating a competition among firms to recruit AI experts. Some digital currency companies even rebranded themselves to emphasize their focus on AI. Additionally, there has been an intense race for AI chips among countries and large tech companies.

To ensure compliance with regulations and address emerging challenges, AI integration with enterprise blockchain systems has been suggested. This integration would ensure data quality and ownership while maintaining data security and immutability.