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State of Blockchain Q3 2016 | 1
STATE OF
BLOCKCHAIN
Q3 2016
State of Blockchain Q3 2016 | 2
CoinDesk – Leader in Blockchain News
•	 Headquarters in Times Square, New
York, 15 FTEs.
•	 News: 20 million readers have visited
CoinDesk since 2013.
•	 Data: Bitcoin Price Index serves as an
industry reference point.
•	 Events: 2,000+ have attended our
Consensus summits.
•	 Research: 750k views of our reports,
subscriptions available in 2017.
State of Blockchain Q3 2016 | 3
About the “State of Blockchain”
For three years, CoinDesk has benchmarked the “State
of Blockchain” in our quarterly industry reports.
We cover:
•	 	 Technical trends within the top open-source developer
	 communities and major product updates from the top 		
	 funded startups.
•	 	 Digital currency markets and exchange data, consumer
	 utilization rates, public sentiment and network performance 	
	metrics.
		
•	 	 Enterprise adoption rates and new proofs-of-concept.
•	 	 Venture capital and corporate investment trends.
•	 	 Public policy updates from around the globe.
State of Blockchain Q3 2016 | 4
Report Overview
1.	 RESEARCH FRAMEWORK
2.	 EXECUTIVE SUMMARY
3.	 PUBLIC BLOCKCHAINS
A. Bitcoin
B. Ethereum
•	 Ethereum Sentiment Study
4.	 ENTERPRISE BLOCKCHAINS	
•	 Solutions Providers
5.	INVESTMENT
6.	 REGULATION & GOVERNMENT
State of Blockchain Q3 2016 | 5
RESEARCH FRAMEWORK
1
State of Blockchain Q3 2016 | 6
Defining The Blockchain Technology Market
An enterprise blockchain
is a distributed ledger that
provides:
•	 Solutions to clients who wish
to use shared cryptograph-
ic databases managed by
trusted intermediaries.
•	 Since consensus is achieved
via trusted intermediaries,
digital currencies are unnec-
essary.
A public blockchain is a dis-
tributed ledger which uses a
native digital currency that:
•	 Acts as a unit of account for
transactions on that ledger.
•	 Uses a predictably scarce
token that incentivizes ear-
ly adopters, developers and
transaction processors (min-
ers) to use, support and verify
that ledger without the need
for a trusted intermediary.
Many companies
employ hybrid
models where they:
•	 Build on public
blockchain infra-
structure.
•	 Provide technology
for permissioned
networks.
State of Blockchain Q3 2016 | 7
The Internet-Intranet Comparison
We believe both public and enterprise blockchains have useful applications,
much like the Internet and corporate intranets.
PUBLIC BLOCKCHAINS ENTERPRISE BLOCKCHAINS
public (inter-)
The Internet
private (intra-)
Intranets & IT
Graphic Source: Coinbase
State of Blockchain Q3 2016 | 8
‘Public’ (Open) vs ‘Enterprise’ (Permissioned) Blockchains:
Generalized Features Comparison
PUBLIC ENTERPRISE
Note: Some features can vary from platform to platform.
Permissioned read and/or write
Faster
Approved participants
Known identities
Any asset
Open read/write
Slower
Open computer network
Anonymous / Pseudonymous
Native assets
ACCESS
SPEED
SECURITY
IDENTITY
ASSET
Data Source: Chain, Chris Skinner’s blog
State of Blockchain Q3 2016 | 9
Startup Categories: Infrastructure Layer
When producing market maps and tracking investment trends,
we look for business shifts between these models:
PUBLIC ENTERPRISE HYBRID
Data Source: Coindesk
State of Blockchain Q3 2016 | 10
Startup Categories: Application Layer
Most applications are built on public blockchains
(bitcoin, ethereum dominate), but enterprise apps are coming.
Uses the bitcoin blockchain
to facilitate cross-border
SMB commerce.
Uses the ethereum
blockchain to fight
product counterfeiting.
IBM launches internal
“shadowchain” to stream-
line dispute resolution.
Uses the bitcoin
blockchain for
data verification.
Uses the ethereum block-
chain to fight fraud in the
diamond industry.
Many enterprise projects
remain in early prototype
or incubation stages.
BITCOIN ETHEREUM ENTERPRISE
?????
Data Source: Coindesk
State of Blockchain Q3 2016 | 11
Spotlight Study: Ethereum Sentiment
Since our last report, interest and de-
velopment of ethereum has exploded…
but not without controversy.
•	 We are now dedicating a section of our
SOB coverage to ethereum and its market,
blockchain and community metrics.
•	 We conducted a “spotlight study” survey
with 240+ startup execs and enterprise
blockchain leads to assess the impact of
the DAO hack and subsequent hard fork
on ethereum sentiment.
Data Source: CoinDesk Ethereum Survey
Our goals:
•	 Determine if market events
caused direct change in sentiment
or use of ethereum’s technology.
•	 Identify effects of ethereum’s chal-
lenges on the extended block-
chain marketplace.
State of Blockchain Q3 2016 | 12
EXECUTIVE SUMMARY
2
State of Blockchain Q3 2016 | 13
Q3 2016 Summary
Investment on the decline:
VC investment reaches $114m for Q3, but
total down 18% year over year.
Blockchain consortiums thrive:
R3 hits 70 members, Hyperledger adds over
50 new members.
Digital currencies show stability:
Bitcoin and ether volatility decline;
ethereum hits at all-time lows.
Public blockchain startups adapt:
Exchanges and miners shift to ‘multi-block-
chain’ model.
Bitcoin remains media darling:
Mainstream media attention remains focused
on bitcoin, but blockchain is catching up.
Central banks are moving:
Across the globe, central banks are attempt-
ing to get up to speed on blockchain tech.
State of Blockchain Q3 2016 | 14
Trends: Public Blockchains
Data Source: CoinDesk Ethereum Survey
•	 As a percentage of total public blockchain market cap,
bitcoin’s share continues to decline amid competition.
•	 After 1,000% gains, ether’s price was tested by
technical issues, competing project (ethereum classic).
•	 Top four public blockchains (bitcoin, ether, ripple,
litecoin) begin to show price stability.
•	 ICOs see investor interest, $198m invested year to
date; vast majority dedicated to failed DAO project.
•	 China’s exchanges drive exchange volume with 95% of
bitcoin market share, but lag with ether volumes (~0.1%).
State of Blockchain Q3 2016 | 15
Bitcoin Infrastructure Landscape
Global bitcoin infrastruc-
ture has been built.
Application layer emerging
(cross-border dominates).
Data Source: CoinDesk
Sectors marked with the (*) symbol are included in our definition of ‘Universal’.
Universals*
Security &
Support
Mining
Exchanges
Consumer
Onramps*
Payment
Processing*
Wallets*
State of Blockchain Q3 2016 | 16
Ethereum Infrastructure Landscape
Data Source: CoinDesk;
Sectors marked with the (*) symbol are included in our definition of ‘Universal’.
Early ethereum infrastruc-
ture emerging.
Crowd-funded “dapps”
more common than ven-
ture-funded platforms.
Universals*
Security &
Support
Mining
Exchanges
Consumer
Onramps*
Decentralized
Apps*
Wallets*
State of Blockchain Q3 2016 | 17
Public Blockchains Display
Notable Overlap in Exchange and Mining Sectors
Most ethereum exchanges
also support bitcoin trading.
The ‘Top 10’ exchanges by Q3
volume all support bitcoin.
Some miners are devoting
computing power to both
networks. 30% of ethereum
hashing power provided by
bitcoin miners.
Few consumer onramps are
available to consumers. Coin-
base remains one of few dig-
ital currency brokerages to
offer ether.
Data Source: CoinDesk
Exchange
Consumer
Onramps
Mining
State of Blockchain Q3 2016 | 18
Ethereum Sentiment Spotlight Study: Findings
Data Source: CoinDesk’s 240+ person executive survey; full results start on slide 56
Opposed the ethere-
um hard fork (23%
weren’t sure if it was
the correct decision).
Reported no change
in their use of
ethereum due to the
hack or hard fork.
Responded the
hack did not neg-
atively impact their
sentiment towards
ethereum; those
whose sentiment
was negatively
impacted were al-
ready unlikely to use
ethereum.
Thought ethereum
has better govern-
ance than bitcoin
(while 34% feel both
communities face
governance chal-
lenges).
63% 48% 37% 33%
State of Blockchain Q3 2016 | 19
Trends: Enterprise Blockchains
•	 Hyperledger experiences 35% QoQ member growth,
reaches 81 partner organizations as Fabric begins to
see use in prototypes and proofs-of-concept.
•	 R3 maintains steady membership growth now reaching over
70 international partners, continues proofs-of-concept on Cor-
da blockchain while expanding partnership with Microsoft.
•	 DAH’s smart contract modeling language, R3’s Corda, Chain
begin to open-source previously proprietary code.
•	 Major banks and stock exchanges
continue blockchain proofs-of-concept.
State of Blockchain Q3 2016 | 20
Trends: VC Investment Ticks Up in Q3,
But Still Far Below Q1 Pace
Data Source: CoinDesk
•	 No clear trends emerging – hybrid, public and enterprise blockchain startups see inconsistent investment;
overall investment up slightly sequentially, but down YoY.
•	 VC interest in ethereum has yet to translate into investment dollars.
•	 Ripple sees quarter’s largest investment ($55m Series B ~ 50% of total funding).
180m
160m
140m
120m
100m
80m
60m
40m
20m
0m
12m
10m
8m
6m
4m
2m
0m
Q4 2015 Q1 2016 Q2 2016 Q3 2016
26m
160m
101m
114m
AVERAGEDEALSIZE($m)
TOTALINVESTMENT($m)
+515%QoQ Growth: -37% +13%
Investment
Average
Deal Size
State of Blockchain Q3 2016 | 21
Trends: Regulation
•	 US: Federal Reserve continues to investigate blockchain
regulation as US regulators seek guidance, Florida con-
sidering bitcoin regulation.
•	 Europe: EU parliament actively exploring digital currency
regulation, Russia’s ‘bitcoin ban’ bill withdrawn as author-
ities consider dropping penalty for use.
•	 Asia: Central banks for Japan, India and Philippines be-
gin to explore blockchain.
•	 Middle East: No regulatory action, but Dubai continues
to emerge as hotbed for industry with local consortium,
the Global Blockchain Council (GBC).
State of Blockchain Q3 2016 | 22
PUBLIC BLOCKCHAINS
3
State of Blockchain Q3 2016 | 23
Strengths and Weaknesses of Public Blockchains
Data Source: Ethereum, MultiChain
Immutable ledger*
Comparatively fast settlement
(eg 10 minutes or less)
Reduce security risks associated with
centralization-trusted third party
Easy to audit
Reduced need for trust
STRENGTHS WEAKNESSES
Irreversible transactions
Slow transaction clearing 
(eg 3-7 transactions/second)
More vulnerable to attacks ie 51%,
spam, DDoS
Reduced privacy
Energy consumption
*Ledgers and protocol rules may be changed via hard forks, although
as ethereum’s hard fork has shown, these changes introduce risks.
We believe public blockchains will have the greatest impact on developing economies
(reduced need for trust) and the connected device, IoT economy (immutability, auditability).
State of Blockchain Q3 2016 | 24
The SOB Focuses Primarily on Public Blockchains;
Enterprise Data is More Opaque
The majority of development work to date has been done using open-source
tools and public blockchains bitcoin and ethereum.
PUBLIC BLOCKCHAINS ENTERPRISE BLOCKCHAINS
public (inter-)
The Internet
private (intra-)
Intranets & IT
Data Source: Coinbase
State of Blockchain Q3 2016 | 25
US Media Coverage Still Dominated By Bitcoin,
Ethereum and Blockchain Trail Considerably
Data Source: Financial Times, New York Times, Wall Street Journal and Sina by searching
‘blockchain’, ‘bitcoin’ and ‘ethereum’ on respective publishers’ websites
Bitcoin
Blockchain
Ethereum
FTNYTWSJSina
136
58
22
Q2 = 405 mentions
Q3 = 328 mentions
43
14
7
167
137
27
30
78
15
Bitcoin
Blockchain
Ethereum
Bitcoin
Blockchain
Ethereum
Bitcoin
Blockchain
Ethereum
State of Blockchain Q3 2016 | 26
Price Remains Focus of Public Blockchain Searches
Related Searches: RisingRelated Searches: Top
BTC
Q2 & Q3
2016
ETH
Q2 & Q3
2016
Data Source: Google Trends search ‘bitcoin’ and ‘ethereum’. Numbers represent search interest relative to the highest
ranking term for a given time period. A value of 100 is assigned to the most popular search term in the Trends analysis.
While a value of 50 means the term is half as popular as the leading search term.
State of Blockchain Q3 2016 | 27
Top 5 Digital Currencies Show Strength, Consistency
Bitcoin, Ethereum, Ethereum Classic, Dash and Monero
have added the most market capitalization year to date.
Data Source: CoinMarketCap
Q3 RANK NAME MARKET CAP Q1 RANK PRICE YTD
1 Bitcoin $9,578,049,977 Same 41%
2 Ethereum $1,093,626,017 Same 904%
3 Ripple $262,064,965 Same 2.4%
4 Litecoin $181,141,735 Same -22%
5 Monero $136,223,748 +3 11%
6 Ethereum Classic* $104,907,607 - 74%
7 Steem* $95,227,547 - -48%
8 Dash $78,026,273 -3 148%
9 NEM $46,377,074 +3 17%
10 MaidSafeCoin $39,431,776 -4 308%
Note: *Ethereum Classic and Steem Price YTD starts are relative to the mining of their genesis blocks, July 24, 2016 and April 18, 2016, respectively.
State of Blockchain Q3 2016 | 28
China Continues to Drive Bitcoin Price,
While Largely Ignoring Ether & Other Digital Currencies
Meanwhile BTC has established itself as a “reserve currency”
for trading alternative currencies like ETH.
BTC Transaction Volume by Currency
Note: Labels for currency pairs with less than 1% market share are omitted. Data Source: Bitcoinity
ETH Transaction Volume by Currency
CNY
95.4%
BTC
73.8%
EUR
9.7%
USD
16.0%
OTHERS
0.4%
CNY
0.1%
EURO
0.6%
USD
3.5%
OTHERS
0.5%
State of Blockchain Q3 2016 | 29
Bitcoin’s Market Share Declines
Amid Rising Interest in Alternative Protocols*
Data Source: CoinMarketCap
Note: Altcoin market cap share is calculated by dividing the sum of all non-bitcoin digital currency market caps by the combined mar-
ket caps of all digital currencies (including bitcoin). For example, a market cap share of 7% for altcoins indicates that bitcoin by itself
represents 93% of the market cap of all digital currencies combined.
NumberofAltcoins
MarketPenetration%
676
674
672
670
668
666
664
662
660
658
25%
20%
15%
10%
5%
0%
Dec-15 Mar-16 Jun-16 Sep-16
675
669
666
664
Total Number of Altcoins Altcoin Market Share
6%
17%
19%
21%
State of Blockchain Q3 2016 | 30
Bitcoin and Ethereum Networks Dominate, While
Ripple, Zcash Also Draw Notable Developer Interest
More developers have set up ethereum’s network nodes,
but bitcoin still boasts the largest developer community
Zcash has attracted significant early interest.
5135
6868
676 450
121
0
1000
2000
3000
4000
5000
6000
7000
8000
Bitcoin Ethereum Litecoin Monero Ripple
NumberofNetworkNodes
Network Size
Data Source: CoinMarketCap
Developer Communities
6868
676 450
121
5135
COMMITS RELEASES CONTRIBUTORS
Bitcoin 11781 161 400
Ethereum 7484 98 78
Ripple 11166 60 54
Litecoin 7871 194 279
Ethereum Classic 97 0 8
Monero 2808 10 68
Zcash 9619 14 322
Augur 3604 5 12
Steem 1069 34 14
MaidSafeCoin 1791 13 22
State of Blockchain Q3 2016 | 31
A. BITCOIN
State of Blockchain Q3 2016 | 32
Q3 2016 Summary
Bitcoin scaling advances –
Segregated Witness could see Q4 activa-
tion.
Cross-border commerce on rise –
Select startups show bitcoin gaining traction
in remittance market.
China dominates trading –
More than 90% of exchange volume for
BTC/CNY trading pairs.
Price volatility hits 2016 lows –
Despite major hack, bitcoin proves largely
stable as store of value.
Bitcoin competitive against fiat –
Price rises 30%, outperforming many devel-
oped market currencies.
State of Blockchain Q3 2016 | 33
Bitcoin Network Metrics
Q3 2016 Q2 2016 Q3/Q2 Δ Q3 2015 QoQ Δ
BITCOIN PRICE
• Market Capitalization ($m) (EoQ) $9,676 $10,570 -8.5% $3,761.8 2.6x
• Price ($/BTC) (EoQ) $608.44 $672.48 -9.5% $236.25 2.6x
• Bitcoin Supply (m) (EoQ) 15.9 15.7 1.3% 14.3 1.1x
VC INVESTMENT ACTIVITY
• Deal ($m) $114 $101 12% $85 1.3x
• Deal # 12 11 9.1% 15 .8x
TRANSACTION METRICS
• Average Daily BTC Transactions 219,624 221,018 -1% 135,885 1.6x
• Exchange Traded Volume ($m) $74,479 $98,867 -25% $17,553 4.2x
• Average Fee per Block ($) $359.13 $272.86 31.6% N/A N/A
• Total Transaction Fees ($) $3,509,279 $3,054,166 15% $1,559,374 2.3x
• Average Transactions Per Block (EoQ) 1,767 1,546 14% 794 2.2x
NETWORK GROWTH METRICS
• Blockchain Size (GB) 85 74 15% 46 1.8x
• Nodes 5,135 5,515 -7% 6,050 .8x
• Unique Address Count (EoQ) 391,458 375,377 4% 247,211 1.6x
• New Wallet Growth (EoQ) 1,146,402 1,133,688 1% 1,188,890 1.0x
MINING METRICS
• Network Hash Rate (TH/sec) (EoQ) 1,882,661 1,634,680 15% 465,548 4.0x
• Block Difficulty (GH) (EoQ) 241 209 15% 59 4.1x
• Average Mempool Transaction Count 4,335 4,081 6% N/A N/A
• Average Mempool Size Growth (bytes/sec) 1,217 1,232 -1% N/A N/A
• Unknown Mining Pools (%) 17% 5% 230% 5% 3.2x
State of Blockchain Q3 2016 | 34
Bitcoin: Key Market Events
Data Source: CoinMarketCap
676.52
663.54
656.67
565.26
578.16
622.21
595.8
605.06
$500
$550
$600
$650
$700
$750
Jul-01 Jul-16 Jul-31 Aug-15 Aug-30 Sep-14 Sep-29
Bitcoin Price Performance
July 8th
Bitcoin Prices
Volatile in $600s
As Traders Await
Halving.
July 20th
Ethereum Executes
Blockchain Hard Fork
to Return DAO Funds. Sept 2nd
Bitfinex Reim-
burses First
Bitcoin Exchange
Hack Victims.
Sept 19th
Bitcoin Price
Still Bruised
After Bitfinex
Hack
Aug 2nd
Bitcoin Drops
Nearly 20% as
Exchange Hack
Amplifies Price
Decline.
Sept 9th
Bullish market sentiment
and low liquidity driving
up bitcoin prices.
State of Blockchain Q3 2016 | 35
The Bitcoin “Halvening”: Muted Impact on Mining
Although the bitcoin block reward fell from 25 bitcoins to 12.5 bitcoins in Q2, both the price
and network hashrate has remained unaffected, quelling network security concerns.
Network difficulty increased 15% since Q2 2016.
Data Source: Blockchain.info. Notes: Difficulty represents the number of necessary hash calculations to mine a new block.
Hashrate(billions)
250B
200B
150B
100B
50B
0B
80%
70%
60%
50%
40%
30%
20%
10%
0%
Q3-2015 Q4-2015 Q1-2016 Q2-2016
59
99
165
241
Mining Difficulty (EoQ) Percentage Increase in Mining Difficulty
15%
209
Q3-2016
26%
59%
73%
20%
State of Blockchain Q3 2016 | 36
Bitcoin Has Outperformed Most Major Currencies
and Commodities YTD (+29% vs. US Dollar)
Notes: Chart depicts YTD performance against USD. Data Source: XE Currency.
State of Blockchain Q3 2016 | 37
Exchange Volume Declined After $65M Bitfinex Hack…
Data Source: CoinDesk, Bitcoinity
USDinbillions
120
100
80
60
40
20
0
200
180
160
140
120
100
80
60
40
20
0
1/1/16
33
27
111
45
Monthly Bitcoin Trading Volume USD Monthly Bitcoin Trading Volume BTC
57
BTCinmillions
60
42
46
35
2/1/16 3/1/16 4/1/16 5/1/16 6/1/16 7/1/16 8/1/16 9/1/16
State of Blockchain Q3 2016 | 38
Yet Bitcoin Volatility Dipped to All-time Lows
Data Source: CoinDesk
QUARTERLY PRICE
HIGH
QUARTERLY PRICE
LOW
$209.13 (24th August)
$237.4 (2nd October)
$358.77 (15th January)
$417.01 (1st April)
$552.82 (2nd August)
$309.98 (12th July)
$465.5 (15th December)
$458.28 (7th January)
$768.24 (16th June)
$703.69 (2nd July)
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
DATE
33%
96%
28%
84%
27%
PEAK-TO-
TROUGH %
State of Blockchain Q3 2016 | 39
Average Daily Transaction Volume
Nearly Doubles Vs. 2015
Note: 100 most popular addresses. Data Source: Blockchain
Q3 YTD average daily transactions increased 98% YoY
Number of Transactions per Day
111,826
221,018
State of Blockchain Q3 2016 | 40
But Blocks are Getting Full
Data Source: Blockchain
Bitcoin blocks in Q3 were more regularly approaching capacity (1MB)
when compared to figures from the same period last year.
Q3 2016
Jul-01 Jul-16 Jul-31 Aug-15 Aug-30 Sep-14 Sep-29
1
0.8
0.6
0.4
0.2
0
Q3 2015
Jul-01 Jul-16 Jul-31 Aug-15 Aug-30 Sep-14 Sep-29
1
0.8
0.6
0.4
0.2
0
State of Blockchain Q3 2016 | 41
And Block Size Limits May Constrict Momentum
As transaction volumes approach the current block size cap,
it may be creating a choke point that slows adoption.
Block Size Limits
Higher Fees
Transaction Delays
BITCOIN ADOPTION
FLYWHEEL EFFECT
Larger
Transaction
Volumes
Greater
Payments
Utility
Greater
Infrastructure
Investment
Greater
Liquidity
Higher
Bitcoin
Price
More
Hedging
Tools
CURRENT
CHOKEPOINT
State of Blockchain Q3 2016 | 42
Bitcoin Scalability Advances: SegWit, Lightning, Schnorr
Data Source: CoinDesk, Pieter Wuille (2015) Segregated witness and deploying it for Bitcoin Presentation
Segregated Witness – alters how signature data is handled on
the network without raising block size limit.
•	 Projected to be live on network by end of Q4.
•	 Requires that 95% of miners to upgrade and run software for
roughly two weeks worth of blocks.
Lightning Network – a top layer for the bitcoin network that
would enable millions of transactions with less frequent settlement.
•	 Requires Segregated Witness to be activated.
•	 Faces concerns regarding privacy and scalability.
Schnorr Signatures – would enable multi-party (multisig) transac-
tions to be written to ledger with single signature.
•	 Remains in early stages but prominent bitcoin developers (Peter
Wiulle, Greg Maxwell) continue to explore.
•	 Would replace current ECDSA signature scheme.
State of Blockchain Q3 2016 | 43
Bitcoin Interest is Expanding Globally, Supporting the
Thesis That Its Utility Is Highest in Emerging Markets
Data Source: Google Trends search ‘bitcoin’ and ‘ethereum’. Numbers represent search interest relative to the highest
ranking term for a given region and time. A value of 100 is assigned to the region where the relative popularity of the
search term is highest. While a value of 50 means the term is half as popular as the leading search term.
Ghana
South Africa
Nigeria
Malaysia
Venezuela
United Kingdom
Germany
Canada
United States
100
82
72
63
51
31
29
27
27
Bitcoin Q2 & Q3 2016
State of Blockchain Q3 2016 | 44
And Cross-Border Payments Volumes Have Spiked
Data Source: Digital Currency Group
Rising volumes and improv-
ing liquidity on regional ex-
changes are driving growth
in cross-border payments.
•	 Recent analysis of four bitcoin
payments companies showed
a spike above $70m in Q3
cross-border volumes.
•	 2015 volumes were negligible.
•	 Growth accelerated as busi-
nesses shifted focus from B2C
to B2B.
Monthly Volume Cumulative Volume
State of Blockchain Q3 2016 | 45
Cross-Border Payments
Source: Digital Currency Group
B. ETHEREUM
State of Blockchain Q3 2016 | 46
Q3 2016 Summary
Enterprise interest grows –
Microsoft, Santander and others demo
ethereum tech projects.
Block difficulty increases –
Second-highest QoQ increase in ethereum’s
history.
Ether price stabilizes –
But this coincides with waning exchange
transaction volumes.
Ether volume declines in Q3 –
Figures down 10x since Q2 highs.
Dual ether markets co-exist –
Alternative ethereum blockchain (ethereum
classic) continues to hold minority market share.
Increase in ethereum active nodes –
Ethereum has the most active nodes of any
public blockchain network.
State of Blockchain Q3 2016 | 47
Ethereum Network Metrics
Q3 2016 Q2 2016 Q3/Q2 Δ Q3 2015 QoQ Δ
ETHER PRICE
• Market Capitalization ($m) (EoQ) $1,118 $1,019 10% $48 23.3x
• Price ($/ETH) (EoQ) $10.78 $10.50 3% $0.73 14.8x
• Ether Supply (m) 85 82 4% 74 1.2x
VC/ICO ACTIVITY
• Deal ($m) $29.8 $171.9 -83% N/A N/A
• Deal # 11 7 57% N/A N/A
TRANSACTION METRICS
• Average Daily ETH Transactions 35,836 63,952 -44% 5,870 6.1x
• Average Gas Price (Gwei) (EoQ) 30 22 36% 52 .6x
• Average Gas Limit Per Day 1.5 4.7 -68% 3.1 .5x
NETWORK GROWTH METRICS
• Blockchain Size (GB) 53 27 96% N/A N/A
• Nodes 6,868 N/A N/A N/A N/A
• Total Unique Addresses (EoQ) 647,482 423,227 53% 13,636 47.5x
• Number of Contract Addresses (EoQ) 199,234 N/A N/A N/A N/A
MINING METRICS
• Network Hash Rate (GH/s) (EoQ) 5,880 3,985 48% 315 18.7x
• Block Difficulty Growth (TH) (EoQ) 83 55 51% 6 13.8x
• Average Block Time (sec) (EoQ) 14 14 3% 18 .8x
• Average Block Size (bytes ) (EoQ) 1,437 2,367 -39% 742 1.9x
• Daily Block Reward (EoQ) 31,623 31,986 -1% 25,094 1.3x
State of Blockchain Q3 2016 | 48
$8
$9
$10
$11
$12
$13
$14
$15
$16
Jul-01 Jul-16 Jul-31 Aug-15 Aug-30 Sep-14 Sep-29
0.0158
0.0188
0.0199
0.0208
0.0188
0.0202
0.0188
0.0196
0.0230
0.0213
0.015 BTC
0.017 BTC
0.019 BTC
0.021 BTC
0.023 BTC
0.025 BTC
Jun-30 Jul-21 Aug-11 Sep-01 Sep-22
Ethereum Price Performance
Ethereum: Key Market Events
Data Source: CoinDesk Bitcoin Price Index, daily data collected at 00:00 UTC
July 20th
Ethereum Executes
Blockchain Hard
Fork to Return DAO
Funds.
July 25th
Alternative
Ethereum
Blockchain
Gains Support
as Price
Declines.
Aug 22nd
One Month After
Ethereum Fork,
Millions in DAO
Funds Unclaimed.
Sept 21st
Thomson Reuters
Demos New Ethereum
Blockchain Use Cases.
State of Blockchain Q3 2016 | 49
Poloniex, Kraken Emerge as Market Leaders for
Ethereum Trading, But Volume on Decline
Ethereum 24-hour exchange volume decreased 24% to $9.5m in Q3 from $12.8m in Q2.
Data Source: CoinMarketCap
7.1m
5.6m
2.5m
0.7m
2.0m
0.4m
1.6m
0.4m 0.4m 0.5m
0.7m
0.3m
Ethereum Exchange 24-Hour Volume (EoQ)
12.8
9.5
Ethereum Exchange 24-Hour Volume (EoQ)
Q2 2016 Q3 2016
State of Blockchain Q3 2016 | 50
Enterprises Continue to Show Interest in Ethereum
Data Source: DailyFintech
Thompson Reuters releases ethereum identity tool Block-
OneID.
BHP Billiton, the world’s largest mining firm, reveals it will
use ethereum to record, maintain mining samples.
Santander demos CashETH, a prototype that envisions how
the Spanish banking giant could ”open-source” its cash.
Microsoft launches ethereum smart contract working group,
codenamed ‘Kinakuta’.
State of Blockchain Q3 2016 | 51
But Its Public Blockchain Has Split,
Creating Two Distinct Token Markets
Data Source: Vitalik Buterin, Github
Two ethereum blockchains emerge:
•	 18th June – The DAO, the largest ethereum smart contract, is compro-
mised, with unknown attackers stealing $60m in user funds.
•	 20th July – Ethereum’s community decides to edit its blockchain history
to return the stolen funds to The DAO’s investors, creating a new block-
chain in the process.
•	 24th July – Angered by the decision to edit the original blockchain, a
small minority restarts the blockchain ethereum’s community abandoned.
Ethereum Classic now has a sep-
arate market:
•	 The price of its token (ETC) con-
tinues to hover around $1.
•	 ETC has traded for as much as
$3.30.
•	 ETC was the 5th largest currency
by market cap at the end of Q3.
State of Blockchain Q3 2016 | 52
ETHEREUM SENTIMENT STUDY
State of Blockchain Q3 2016 | 53
Ethereum Sentiment Study: Demographics
Data Source: CoinDesk
Our 243-person survey included technical leaders
from startups and enterprises who attended our
annual Consensus summit.
Of these respondents:
•	 86% believe blockchain technology (broadly speaking)
would have an impact on financial services, while 14% said
it was “too early to tell”.
•	 70%+ believe blockchain tech would also have an impact on
governments and businesses outside of financial services.
•	 52% of bulls believe it would be 5-10+ years before block-
chain tech was widely adopted.
State of Blockchain Q3 2016 | 54
Ethereum Sentiment Study: Demographics
Data Source: CoinDesk
When it came to ethereum in particular:
•	 63% reported they were “very familiar” with the ethereum
protocol; 70% said they were “very familiar” with the DAO
hack and hard fork.
•	 58% reported using the ethereum protocol – 37% used
the public blockchain, 19% used a permissioned version
of ethereum, and 6% used a public fork of ethereum such
as ethereum classic, krypton, or shift.
•	 67% planned to consider using the ethereum protocol in
the future – 49% planned to use the public blockchain,
with 26% planning to use a permissioned version and
12% planning to use a public fork.
State of Blockchain Q3 2016 | 55
One in Three Were Negatively Impacted
By the Ethereum Fork or DAO Hack
Data Source: CoinDesk Ethereum Survey
Were you or your organ-
ization directly impacted
in any way by the June
2016 DAO hack (i.e. lost
tokens, proof-of-concept
delayed or reconsidered
due to the hack)?
•	 75% of those affected lost
money in the DAO.
•	 11% said it made them lose
confidence in ethereum.
•	 20% said it set back a pro-
ject or proof-of-concept.
“The hard fork hardened my opinion re:
ethereum’s governance problems.”
“We delayed anchoring into ethereum
because of the fork.”
Data Source: CoinDesk Ethereum Survey
State of Blockchain Q3 2016 | 56
One in Three Disagree with the Decision to Hard Fork
Data Source: CoinDesk Ethereum Survey
How do you feel about
the decision to hard fork
the ethereum (ETH) block-
chain?
•	 Majority of those who disa-
greed with the decision were
already skeptical of ethereum
and “not considering” using the
technology in the future.
•	 The decision to hard fork may
get more popular over time; for
those who changed their minds
at some point, “agrees” out-
numbered “disagrees” 7:1.
“I was worried the hard fork might undermine
the authority of the core dev team (or rather,
make it seem like they have too much power),
but those concerns seem to be overblown,
and all seems to be going well for now.”
State of Blockchain Q3 2016 | 57
In Terms of Perception, the Drama Has Taken Its Toll:
Bad for Ethereum, Good for Bitcoin
Data Source: CoinDesk Ethereum Survey
How has the DAO hack and the ethere-
um hard fork affected your sentiment
towards using:
•	 Sentiment skewed negative for both ETH and ETC.
•	 49% negative vs. 26% positive for ETH.
•	 50% negative vs. 15% positive for ETC.
•	 “bad precedent”, “broke immutability”, “lack of
quality control & testing”, but “pragmatic”.
•	 Many believed this cast bitcoin in a more positive
relative light.
•	 39% positive vs. 17% negative.
•	 “only production ready blockchain”, “stability and
predictability are key”.
•	 Muted impact on sentiment towards other public
blockchains.
State of Blockchain Q3 2016 | 58
For the Majority Whose Sentiment Was Negatively
Impacted, Governance Was the Primary Concern
Data Source: CoinDesk Ethereum Survey
If the the DAO hack and/or
Ethereum hard fork negative-
ly impacted your sentiment
on using Ethereum, what are
your specific concerns?
•	 47% concerned with how the
ethereum blockchain and pub-
lic protocol was governed.
•	 38% concerned with the block-
chain’s compromised immuta-
bility.
•	 33% fear regulatory risks due to
the coordinated response.
State of Blockchain Q3 2016 | 59
Despite Setback, Ethereum Perceived to Have Better
Governance Than Bitcoin (Though Both Have Flaws)
Data Source: CoinDesk Ethereum Survey
Please select the choice you believe best re-
flects your opinion of current Ethereum and
Bitcoin governance:
“ETH vs BTC vs ETC rivalries
need to stop; these technolo-
gies are too new to take sides.
Instead of coming together,
there are obvious lines being
drawn.”
“I’d be more optimistic if univer-
sities embraced and increased
resources not only for bitcoin
but ethereum, and other DLTs.”
State of Blockchain Q3 2016 | 60
Public/Enterprise Ethereum Users
See Different Strengths in the Technology
Data Source: CoinDesk Ethereum Survey
Respondents Use Public (ETH) Version
of Ethereum for These Reasons.
Respondents Using Private/ Permissioned
Version of Ethereum for These Reasons
•	 Both groups emphasized the quality of the ethereum community.
•	 Ethereum users placed more emphasis on Turing Completeness.
•	 Enterprise users emphasized developers, flexibility and maturity.
State of Blockchain Q3 2016 | 61
Ethereum’s Developers Continue Upgrades
Data Source: CoinDesk
“Casper” – Two prominent ethereum developers (Vitalik Buterin,
Vlad Zamfir) continue work on new blockchain consensus algorithm.
•	 Would see ethereum migrate from bitcoin-like proof-of-work to
more decentralized proof-of-stake alternative.
•	 Zamfir, Buterin remain split on best paths forward.
Formal verification – soundness of smart contracts continues to
be both practical and enterprise concern.
•	 Startups are working to provide specialized software to mathe-
matically check for issues.
EMV upgrade – ethereum language compiler continues to face
performance issues, problems with IoT compatibility.
•	 Compiler works in 256-bit ’chunks’, too slow for appliances with
smaller bit registers.
•	 Plan is to migrate to new EVM (EWASM) unveiled at Devcon2 con-
ference in Shanghai.
State of Blockchain Q3 2016 | 62
Our Respondents Predict Ethereum’s ‘Proof-of-Stake’
Switch Will Occur in 2017
Data Source: CoinDesk Ethereum Survey
How likely do you
think it is that the
following will be
deployed by the
Ethereum commu-
nity by the end of
2017?
•	 82% believe that ethereum’s most challenging hard fork – a switch to a new consensus algorithm
called “Casper” – has a 50% or greater chance of being implemented in 2017.
•	 Our respondents believe the Mist browser is the most likely 2017 release, with 62% saying they be-
lieve this is somewhat or very likely vs. 11% that believe it is unlikely.
•	 Respondents were split on the release timing of the Swarm storage platform, and two scaling solu-
tions: state channels and sharding.
State of Blockchain Q3 2016 | 63
Hard Fork? That’s the Easy Part
Data Source: CoinDesk Ethereum Survey
We asked whether there was anything more
technically challenging on the development
roadmap than ethereum’s switch to proof-of-
stake:
“While some acknowledged the Casper
switch was the biggest milestone in the
near-term roadmap, respondents over-
whelmingly noted that “sharding” was
the most technically complex project
being tackled.”
“by far the hardest”, “represents a sea
change in how these systems work
entirely”, “there is not enough capacity
on the network before worrying about
sharding and parallelism”.
What is Sharding?
(From CoinDesk’s research report ‘Un-
derstanding Ethereum’)
Sharding is a scaling solu-
tion where portions of the full
ethereum blockchain are held
on separate servers in order to
distribute the network’s com-
putational load and improve
its performance. This solution
could allow businesses, indi-
viduals or entities to run a pub-
lic or private blockchain (with
distinct transaction validators)
on a platform that uses the
security and functionality of a
public platform.
State of Blockchain Q3 2016 | 64
ENTERPRISE BLOCKCHAINS
4
State of Blockchain Q3 2016 | 65
The Internet/Intranet Comparison
We believe both public and enterprise blockchains have useful applications,
much like the Internet and corporate intranets.
PUBLIC BLOCKCHAINS ENTERPRISE BLOCKCHAINS
public (inter-)
The Internet
private (intra-)
Intranets & IT
Data Source: Coinbase
State of Blockchain Q3 2016 | 66
Blockchain Interest Grows Globally;
Among Major Players, R3 Leads Media Mentions
Data Source: Google Trends search for ‘Blockchain’. Financial Times, New York Times, Wall Street Journal and Sina.
Google Trends search ‘bitcoin’ and ‘ethereum’’. Numbers represent search interest relative to the highest point on
the chart for the given region and time. A value of 100 is the peak popularity for the term. A value of 50 means that
the term is half as popular. Likewise a score of 0 means the term was less than 1% as popular as the peak.
Q2 & Q3 Select Blockchain Media Mentions
R3CEV
DAH
Hyperledger
Ripple
Chain
26
25
15
10
0
State of Blockchain Q3 2016 | 67
Enterprise Firms Continue to Invest Time and Resources
in Blockchain Proofs-of-Concept
Data Source: CoinDesk
Number of proofs-of-
concept announced
publicly by major en-
terprise businesses.
Number of unique
participants in pub-
licly announced
proof-of-concept
projects.
Unique areas of
focus for announced
PoCs; Banking, in-
surance, post-trade
settlement and trade
finance emerge as
key areas of focus.
~ 70 ~ 100 ~ 25
State of Blockchain Q3 2016 | 68
Top Banks Tackle Blockchain Proofs-of-Concept
Data Source: CoinDesk
14 of the top 30 banks are engaging in blockchain proofs-of-concept.
State of Blockchain Q3 2016 | 69
Global Exchanges Engage in Blockchain
Data Source: World Federation of Exchanges, CoinDesk
21 of the 63 publicly regulated stock, futures and options exchanges
are testing distributed ledger technology.
State of Blockchain Q3 2016 | 70
SOLUTIONS PROVIDERS
State of Blockchain Q3 2016 | 71
Chain Continues Partnerships,
But Mostly Stays Quiet Ahead of Big Q4
Data Source: Chain
Chain provides permissioned and private
blockchain services for enterprise busi-
nesses.
Q3 MILESTONES
•	 Chain wins inaugural Best Fintech Innovation by
Juniper Research.
•	 Chain partners with Initiative for Cryptocurrency
and contracts (IC3).
•	 Chain and global financial firms unveil Open
Standard for blockchain.
HQ: San Francisco, CA
Founders:
Devon Gundry
Adam Ludwin
Key Executives:
Adam Ludwin, CEO
Amount Raised: $44m
State of Blockchain Q3 2016 | 72
Digital Asset Holdings Continues Acquisitions,
Develops Strategic DLT Partnerships
Data Source: DAH
Digital Asset Holdings is a blockchain
software provider focused on distributed
asset settlement.
Q3 MILESTONES
•	 Swiss FMI Six Securities Services and DAH part-
ner to develop DLT.
•	 DAH plans to open-source its smart contracting
language DAML.
•	 DAH appoints Carol Mathis (RBS) as CFO.
•	 DAH acquires smart contract firm Elevence.
HQ: New York, NY
Founders:
Dan O’Prey,
Don Wilson, Sunil Hirani
Key Executives:
Blythe Masters, CEO
Chris Church, CBDO
Amount Raised: $67m
State of Blockchain Q3 2016 | 73
Hyperledger Member Growth Skyrockets
Data Source: Hyperledger
Permissioned distributed ledger platform
to help financial institutions mitigate
settlement risk and lower reconciliation
costs.
Q3 MILESTONES
•	 Github Statistics: 100+ contributors, 65 releases,
650 commits commits.
•	 13 Q2 & Q3 media mentions.
•	 35% member growth in Q3.
•	 81 partner organizations.
Open-Source Cooperative
Managed by the Linux
Foundation
HQ: San Francisco, CA
Key Executives:
Brian Behlendorf,
Executive Director
Todd Benzies,
Sr. Program Manager
State of Blockchain Q3 2016 | 74
Hyperledger Project Update (contd.)
Data Source: CoinDesk
•	 Apache Foundation founder Brian
Behlendorf named Hyperledger ex-
ecutive director.
•	 Hyperledger elects new technical
steering committee, includes rep-
resentatives from IBM, DTCC, Intel
and JPMorgan.
•	 Hyperledger launches first block
explorer.
•	 Companies including IBM and UBS
begin to use beta version of Hyper-
ledger Fabric in prototypes.
Brian Behlendorf
Hyperledger, executive director
“We’re focused on the use
cases around permissioned
blockchain, but [are] very en-
thusiastic about non-permis-
sioned [ledgers].”
State of Blockchain Q3 2016 | 75
Microsoft Continues to Invest in its
Blockchain-as-a-Service (BaaS) Platform
Data Source: Microsoft
•	 2nd August –  Microsoft makes it (BaaS) offering
available in its DevTest Labs testing environment.
•	 1st September – Microsoft launches smart con-
tracts security working group; Named ‘Kinakuta’,
the group aims to make it easier for the industry to
share smart contract best practices.
•	 2nd September – Microsoft unveils a new version
of its consortium blockchain software Bletchley.
State of Blockchain Q3 2016 | 76
R3 CEV Reaches Over 70 Partners, Continues
Proofs-of-Concept on the Corda Blockchain
Data Source: R3CEV
R3CEV is a permissioned and private
blockchain technology provider leading a
consortium of 70+ financial institutions.
•	 Microsoft and R3 partner for work on blockchain
PoCs.
•	 Barclays demos R3’s Corda platform.
•	 R3 announces new distributed technology
framework Concord.
•	 China Merchants Bank, MetLife, Thomson Reu-
ters, Absa Bank and Toyota join R3 consortium.
HQ: New York, NY
Founders:
David Rutter, Jesse Edwards,
Todd McDonald
Key Tech Players:
Richard Gendal Brown,
Mike Hearn, Ian Grigg
State of Blockchain Q3 2016 | 77
R3 Continues Distributed Ledger Trials
Data Source: R3CEV
8 members test the exchange
of US Treasury bonds using
Intel’s distributed ledger tech
Sawtooth Lake.
15 members announce they
have completed a distributed
ledger trial for trade finance.
State of Blockchain Q3 2016 | 78
Ripple Raises $55m
While Member Growth Increases
Data Source: Ripple
Ripple allows banks to offer real-time
cross-border payments to their customers.
Q3 MILESTONES
•	 Github Statistics: 50+ contributors, 60 releases,
11,116 commits.
•	 7 Q2 & Q3 media mentions.
•	 25% member growth in Q3.
•	 19 financial partners.
HQ: San Francisco, CA
Founders:
Chris Larsen,
Arthur Britto
Key Executives:
Brad Garlinghouse, COO
Amount Raised: $93.6m
State of Blockchain Q3 2016 | 79
INVESTMENT
5
State of Blockchain Q3 2016 | 80
Blockchain Announcements Decline in Q3,
as Uptick in Consortiums Calms
Note: ‘Traditional institutions’ include governments, central banks, financial institutions and other large firms.
Data Source: CoinDesk
238
220
Announcements
Q3Q2
State of Blockchain Q3 2016 | 81
Q3 Investments Up Year-Over-Year,
But Down 17% Year to Date
Q3 investment up 13% YoY, 2016
YTD investment down 17%.
Data Source: CoinDesk
376m
458m500m
450m
400m
350m
300m
250m
200m
150m
100m
50m
0m
250m
200m
150m
100m
50m
0m
Q1 2015 Q1 2016 Q2 2015 Q2 2016 Q3 2015 Q3 2016
160m
228m
101m
145m
114m
85m
Q1-Q3 2015 Q3 2016 YTD
State of Blockchain Q3 2016 | 82
Top VC Deals Show Funding Shifting
Towards Hybrid Blockchain Technology…
PUBLIC PRIVATE HYBRID
Juzhen
Financials
Data Source: CoinDesk
$23m$10.5m $58m
State of Blockchain Q3 2016 | 83
Hybrid Startup (Ripple) Captured Most VC Investment
in Q3, But More Public Startups Are Raising Funds
Data Source: CoinDesk
Investment Amount Number of Investments
Hybrid
51.0%
Private
20.2%
Public
29.0%
Hybrid
17.0%
Private
8.0%
Public
75.0%
State of Blockchain Q3 2016 | 84
However, Data Doesn’t Suggest a Trend Toward Any
Specific Infrastructure Model
Data Source: CoinDesk
98%
16%
90%
29%
2%
84%
10%
71%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Q4 2015 Q1 2016 Q2 2016 Q3 2016
Investment Sector Distribution
Percentage of Bitcoin Investment Pecentage of Blockchain and Hybrid Company Investment
98%
2%
84%
16%
90%
10%
71%
29%
State of Blockchain Q3 2016 | 85
Decentralized Application Projects Are Raising Money
Through Public Digital Currency Sales vs. VC
Data Source: Smith and Crown, ICO Countdown
Total Historical VC Investment 2016 “ICOs”
More “decentralized application” companies are using “initial coin offerings” to raise capital,
the majority of crowdfunding has come from ETH (e.g. the DAO).
Ethereum
$8m
Bitcoin
$949m
.5m
.5m
152m
.75m
16m
.85m
.6m
1.7m
10.5m
.75m
.66m
4.5m
2m
5.5m
2m
State of Blockchain Q3 2016 | 86
Despite Global Blockchain Interest, Silicon Valley
Captures Bulk of Investment Dollars in Q3
Data Source: CoinDesk
No. of Companies
Total number of VC-backed public and private blockchain companies has increased marginally
over the past quarter, growing to 144 in Q3 2016 (5% increase), up from 137 in Q2 2016.
$ Invested
Location Value ($m)
No. of
companies
Silicon Valley 542.39 39
Rest of World 782.32 105
Total 1324.71 144
Silicon
Valley
40.9%
Rest of
World
59.1%
Silicon
Valley
27.1%
Rest of
World
72.9%
542
782
1324
State of Blockchain Q3 2016 | 87
REGULATION & GOVERNMENT
6
State of Blockchain Q3 2016 | 88
US: Blockchain Heats Up on Capitol Hill as
Lawmakers Take Active Interest in Blockchain
Data Source: CoinDesk
•	 29th July – Twenty-two US senators send a letter to the
Federal Reserve requesting guidance on blockchain.
•	 12th September – The US House of Representatives
passes a non-binding resolution that calls for the support
of blockchain technology.
•	 14th September – Representative David Schweikert pro-
poses blockchain be considered as a solution to adminis-
trative issues at the Department of Veterans Affairs.
•	 28th September – Federal Reserve chair Janet Yellen re-
veals the US central bank is investigating blockchain tech.
State of Blockchain Q3 2016 | 89
US: Is Bitcoin Money?
Florida Courts Are Driving the Conversation
Data Source: CoinDesk
•	 25th July – A Miami judge dismisses charges
against a Florida-based bitcoin seller, siding with
defense’s argument that bitcoin isn’t money.
•	 16th August – The state of Florida appeals court
decision in which case was thrown out over lack of
clarity over issue.
•	 6th September – Florida reveals it is in the early
stages of considering bitcoin regulation, and that it
could seek to recognize bitcoin as money.
State of Blockchain Q3 2016 | 90
Europe: EU Parliament Investigates
Blockchain Tech Potential
Data Source: CoinDesk
•	 29th April –  EU Parliament hosted a non-commercial
roundtable to educate members (MEPs).
•	 26th May – The European Parliament approves a
proposal for a task force dedicated to digital currency. 
•	 30th August – A member of the European Parliament
proposes $1.1m be spent on the blockchain task force.
•	 3rd October – A European Parliament think tank re-
leases a discussion paper on blockchain-based elec-
tions.
State of Blockchain Q3 2016 | 91
Europe: Russia Changes Tune on Bitcoin and
Digital Currencies Amid Blockchain Interest
Data Source: CoinDesk
•	 19th May – A bill that would ban bitcoin and digital
currencies as “money surrogates” is withdrawn af-
ter two years of deliberations.
•	 19th July – Russia’s Ministry of Finance says it is
considering allowing bitcoin use “abroad”, while still
banning its domestic use.
•	 12th August – Reports suggest Russian authorities
are seeking to drop proposed penalties for bitcoin
use.
State of Blockchain Q3 2016 | 92
Asia: Central Banks Begin Blockchain Explorations
Data Source: CoinDesk
•	 6th June – The central bank of the Philippines
reveals it is considering how to regulate digital
currency exchanges.
•	 22nd July – The Reserve Bank of India (RBI)
pushes banks to develop applications for digital
currencies and distributed ledgers.
•	 23rd August – The Bank of Japan publicly voic-
es its enthusiasm for the benefits of blockchain
tech.
State of Blockchain Q3 2016 | 93
Middle East: UAE Takes Lead on Blockchain
Data Source: CoinDesk
•	 30th May – Dubai’s Global Blockchain Council (GBC), a
public-private blockchain consortium, unveils seven new
proofs-of-concept at industry.
•	 1st June – An independent regulatory authority in Abu
Dhabi begins exploring ways to create a regulatory sand-
box for blockchain startups.
•	 9th August – Dubai launches a startup program with a
focus on investing in and developing blockchain startups.
•	 1st September – Dubai makes blockchain focal point of
efforts to curb global blood diamond trade.
State of Blockchain Q3 2016 | 94
About Coindesk
Data Source: CoinDesk
•	 Find out more at www.coindesk.com.
•	 Follow us on Twitter: @CoinDesk.
•	 Subscribe to our daily email newsletters for
the latest blockchain news.
•	 If you have data you think should be includ-
ed in future State of Bitcoin reports, email
stateofbitcoin@coindesk.com.
•	 We also welcome any feedback you have
on the report.
State of Blockchain Q3 2016 | 95
Credits
Data Source: CoinDesk
Pete Rizzo
Editor
Bradley Miles
Researcher
@pete_rizzo_
@Bradley_Miles_
@coindesk
State of Blockchain Q3 2016 | 96
Disclaimer
•	 CoinDesk makes every effort to ensure the information used these slides is accurate and up to
date. We cannot, however, accept responsibility for any loss or inconvenience caused by reliance
on the material contained here.
•	 This presentation does not constitute financial advice or an investment recommendation in any
way whatsoever. It is recommended you perform your own independent research and/or speak
with a qualified investment professional before making any financial decisions.
•	 CoinDesk is owned by Digital Currency Group, one of the most active investors in the bitcoin and
blockchain technology industry. Many DCG investments are referenced in this report, and a full list
can be reviewed at www.dcg.co. CoinDesk is run as an independent entity, and its editorial team
does not give preferential treatment to DCG investments when they are referenced in research
reports or news posts. DCG portfolio companies referenced in this report include Align, Bitpay,
Blockstream, BTCC, Chain, Circle, Coinbase, Everledger, Fluent, Kraken, Ripple, Tierion and Zcash.
State of Blockchain Q3 2016 | 97
www.coindesk.com
STATE OF BLOCKCHAIN Q3 2016

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State of Blockchain Q3 2016

  • 1. State of Blockchain Q3 2016 | 1 STATE OF BLOCKCHAIN Q3 2016
  • 2. State of Blockchain Q3 2016 | 2 CoinDesk – Leader in Blockchain News • Headquarters in Times Square, New York, 15 FTEs. • News: 20 million readers have visited CoinDesk since 2013. • Data: Bitcoin Price Index serves as an industry reference point. • Events: 2,000+ have attended our Consensus summits. • Research: 750k views of our reports, subscriptions available in 2017.
  • 3. State of Blockchain Q3 2016 | 3 About the “State of Blockchain” For three years, CoinDesk has benchmarked the “State of Blockchain” in our quarterly industry reports. We cover: • Technical trends within the top open-source developer communities and major product updates from the top funded startups. • Digital currency markets and exchange data, consumer utilization rates, public sentiment and network performance metrics. • Enterprise adoption rates and new proofs-of-concept. • Venture capital and corporate investment trends. • Public policy updates from around the globe.
  • 4. State of Blockchain Q3 2016 | 4 Report Overview 1. RESEARCH FRAMEWORK 2. EXECUTIVE SUMMARY 3. PUBLIC BLOCKCHAINS A. Bitcoin B. Ethereum • Ethereum Sentiment Study 4. ENTERPRISE BLOCKCHAINS • Solutions Providers 5. INVESTMENT 6. REGULATION & GOVERNMENT
  • 5. State of Blockchain Q3 2016 | 5 RESEARCH FRAMEWORK 1
  • 6. State of Blockchain Q3 2016 | 6 Defining The Blockchain Technology Market An enterprise blockchain is a distributed ledger that provides: • Solutions to clients who wish to use shared cryptograph- ic databases managed by trusted intermediaries. • Since consensus is achieved via trusted intermediaries, digital currencies are unnec- essary. A public blockchain is a dis- tributed ledger which uses a native digital currency that: • Acts as a unit of account for transactions on that ledger. • Uses a predictably scarce token that incentivizes ear- ly adopters, developers and transaction processors (min- ers) to use, support and verify that ledger without the need for a trusted intermediary. Many companies employ hybrid models where they: • Build on public blockchain infra- structure. • Provide technology for permissioned networks.
  • 7. State of Blockchain Q3 2016 | 7 The Internet-Intranet Comparison We believe both public and enterprise blockchains have useful applications, much like the Internet and corporate intranets. PUBLIC BLOCKCHAINS ENTERPRISE BLOCKCHAINS public (inter-) The Internet private (intra-) Intranets & IT Graphic Source: Coinbase
  • 8. State of Blockchain Q3 2016 | 8 ‘Public’ (Open) vs ‘Enterprise’ (Permissioned) Blockchains: Generalized Features Comparison PUBLIC ENTERPRISE Note: Some features can vary from platform to platform. Permissioned read and/or write Faster Approved participants Known identities Any asset Open read/write Slower Open computer network Anonymous / Pseudonymous Native assets ACCESS SPEED SECURITY IDENTITY ASSET Data Source: Chain, Chris Skinner’s blog
  • 9. State of Blockchain Q3 2016 | 9 Startup Categories: Infrastructure Layer When producing market maps and tracking investment trends, we look for business shifts between these models: PUBLIC ENTERPRISE HYBRID Data Source: Coindesk
  • 10. State of Blockchain Q3 2016 | 10 Startup Categories: Application Layer Most applications are built on public blockchains (bitcoin, ethereum dominate), but enterprise apps are coming. Uses the bitcoin blockchain to facilitate cross-border SMB commerce. Uses the ethereum blockchain to fight product counterfeiting. IBM launches internal “shadowchain” to stream- line dispute resolution. Uses the bitcoin blockchain for data verification. Uses the ethereum block- chain to fight fraud in the diamond industry. Many enterprise projects remain in early prototype or incubation stages. BITCOIN ETHEREUM ENTERPRISE ????? Data Source: Coindesk
  • 11. State of Blockchain Q3 2016 | 11 Spotlight Study: Ethereum Sentiment Since our last report, interest and de- velopment of ethereum has exploded… but not without controversy. • We are now dedicating a section of our SOB coverage to ethereum and its market, blockchain and community metrics. • We conducted a “spotlight study” survey with 240+ startup execs and enterprise blockchain leads to assess the impact of the DAO hack and subsequent hard fork on ethereum sentiment. Data Source: CoinDesk Ethereum Survey Our goals: • Determine if market events caused direct change in sentiment or use of ethereum’s technology. • Identify effects of ethereum’s chal- lenges on the extended block- chain marketplace.
  • 12. State of Blockchain Q3 2016 | 12 EXECUTIVE SUMMARY 2
  • 13. State of Blockchain Q3 2016 | 13 Q3 2016 Summary Investment on the decline: VC investment reaches $114m for Q3, but total down 18% year over year. Blockchain consortiums thrive: R3 hits 70 members, Hyperledger adds over 50 new members. Digital currencies show stability: Bitcoin and ether volatility decline; ethereum hits at all-time lows. Public blockchain startups adapt: Exchanges and miners shift to ‘multi-block- chain’ model. Bitcoin remains media darling: Mainstream media attention remains focused on bitcoin, but blockchain is catching up. Central banks are moving: Across the globe, central banks are attempt- ing to get up to speed on blockchain tech.
  • 14. State of Blockchain Q3 2016 | 14 Trends: Public Blockchains Data Source: CoinDesk Ethereum Survey • As a percentage of total public blockchain market cap, bitcoin’s share continues to decline amid competition. • After 1,000% gains, ether’s price was tested by technical issues, competing project (ethereum classic). • Top four public blockchains (bitcoin, ether, ripple, litecoin) begin to show price stability. • ICOs see investor interest, $198m invested year to date; vast majority dedicated to failed DAO project. • China’s exchanges drive exchange volume with 95% of bitcoin market share, but lag with ether volumes (~0.1%).
  • 15. State of Blockchain Q3 2016 | 15 Bitcoin Infrastructure Landscape Global bitcoin infrastruc- ture has been built. Application layer emerging (cross-border dominates). Data Source: CoinDesk Sectors marked with the (*) symbol are included in our definition of ‘Universal’. Universals* Security & Support Mining Exchanges Consumer Onramps* Payment Processing* Wallets*
  • 16. State of Blockchain Q3 2016 | 16 Ethereum Infrastructure Landscape Data Source: CoinDesk; Sectors marked with the (*) symbol are included in our definition of ‘Universal’. Early ethereum infrastruc- ture emerging. Crowd-funded “dapps” more common than ven- ture-funded platforms. Universals* Security & Support Mining Exchanges Consumer Onramps* Decentralized Apps* Wallets*
  • 17. State of Blockchain Q3 2016 | 17 Public Blockchains Display Notable Overlap in Exchange and Mining Sectors Most ethereum exchanges also support bitcoin trading. The ‘Top 10’ exchanges by Q3 volume all support bitcoin. Some miners are devoting computing power to both networks. 30% of ethereum hashing power provided by bitcoin miners. Few consumer onramps are available to consumers. Coin- base remains one of few dig- ital currency brokerages to offer ether. Data Source: CoinDesk Exchange Consumer Onramps Mining
  • 18. State of Blockchain Q3 2016 | 18 Ethereum Sentiment Spotlight Study: Findings Data Source: CoinDesk’s 240+ person executive survey; full results start on slide 56 Opposed the ethere- um hard fork (23% weren’t sure if it was the correct decision). Reported no change in their use of ethereum due to the hack or hard fork. Responded the hack did not neg- atively impact their sentiment towards ethereum; those whose sentiment was negatively impacted were al- ready unlikely to use ethereum. Thought ethereum has better govern- ance than bitcoin (while 34% feel both communities face governance chal- lenges). 63% 48% 37% 33%
  • 19. State of Blockchain Q3 2016 | 19 Trends: Enterprise Blockchains • Hyperledger experiences 35% QoQ member growth, reaches 81 partner organizations as Fabric begins to see use in prototypes and proofs-of-concept. • R3 maintains steady membership growth now reaching over 70 international partners, continues proofs-of-concept on Cor- da blockchain while expanding partnership with Microsoft. • DAH’s smart contract modeling language, R3’s Corda, Chain begin to open-source previously proprietary code. • Major banks and stock exchanges continue blockchain proofs-of-concept.
  • 20. State of Blockchain Q3 2016 | 20 Trends: VC Investment Ticks Up in Q3, But Still Far Below Q1 Pace Data Source: CoinDesk • No clear trends emerging – hybrid, public and enterprise blockchain startups see inconsistent investment; overall investment up slightly sequentially, but down YoY. • VC interest in ethereum has yet to translate into investment dollars. • Ripple sees quarter’s largest investment ($55m Series B ~ 50% of total funding). 180m 160m 140m 120m 100m 80m 60m 40m 20m 0m 12m 10m 8m 6m 4m 2m 0m Q4 2015 Q1 2016 Q2 2016 Q3 2016 26m 160m 101m 114m AVERAGEDEALSIZE($m) TOTALINVESTMENT($m) +515%QoQ Growth: -37% +13% Investment Average Deal Size
  • 21. State of Blockchain Q3 2016 | 21 Trends: Regulation • US: Federal Reserve continues to investigate blockchain regulation as US regulators seek guidance, Florida con- sidering bitcoin regulation. • Europe: EU parliament actively exploring digital currency regulation, Russia’s ‘bitcoin ban’ bill withdrawn as author- ities consider dropping penalty for use. • Asia: Central banks for Japan, India and Philippines be- gin to explore blockchain. • Middle East: No regulatory action, but Dubai continues to emerge as hotbed for industry with local consortium, the Global Blockchain Council (GBC).
  • 22. State of Blockchain Q3 2016 | 22 PUBLIC BLOCKCHAINS 3
  • 23. State of Blockchain Q3 2016 | 23 Strengths and Weaknesses of Public Blockchains Data Source: Ethereum, MultiChain Immutable ledger* Comparatively fast settlement (eg 10 minutes or less) Reduce security risks associated with centralization-trusted third party Easy to audit Reduced need for trust STRENGTHS WEAKNESSES Irreversible transactions Slow transaction clearing  (eg 3-7 transactions/second) More vulnerable to attacks ie 51%, spam, DDoS Reduced privacy Energy consumption *Ledgers and protocol rules may be changed via hard forks, although as ethereum’s hard fork has shown, these changes introduce risks. We believe public blockchains will have the greatest impact on developing economies (reduced need for trust) and the connected device, IoT economy (immutability, auditability).
  • 24. State of Blockchain Q3 2016 | 24 The SOB Focuses Primarily on Public Blockchains; Enterprise Data is More Opaque The majority of development work to date has been done using open-source tools and public blockchains bitcoin and ethereum. PUBLIC BLOCKCHAINS ENTERPRISE BLOCKCHAINS public (inter-) The Internet private (intra-) Intranets & IT Data Source: Coinbase
  • 25. State of Blockchain Q3 2016 | 25 US Media Coverage Still Dominated By Bitcoin, Ethereum and Blockchain Trail Considerably Data Source: Financial Times, New York Times, Wall Street Journal and Sina by searching ‘blockchain’, ‘bitcoin’ and ‘ethereum’ on respective publishers’ websites Bitcoin Blockchain Ethereum FTNYTWSJSina 136 58 22 Q2 = 405 mentions Q3 = 328 mentions 43 14 7 167 137 27 30 78 15 Bitcoin Blockchain Ethereum Bitcoin Blockchain Ethereum Bitcoin Blockchain Ethereum
  • 26. State of Blockchain Q3 2016 | 26 Price Remains Focus of Public Blockchain Searches Related Searches: RisingRelated Searches: Top BTC Q2 & Q3 2016 ETH Q2 & Q3 2016 Data Source: Google Trends search ‘bitcoin’ and ‘ethereum’. Numbers represent search interest relative to the highest ranking term for a given time period. A value of 100 is assigned to the most popular search term in the Trends analysis. While a value of 50 means the term is half as popular as the leading search term.
  • 27. State of Blockchain Q3 2016 | 27 Top 5 Digital Currencies Show Strength, Consistency Bitcoin, Ethereum, Ethereum Classic, Dash and Monero have added the most market capitalization year to date. Data Source: CoinMarketCap Q3 RANK NAME MARKET CAP Q1 RANK PRICE YTD 1 Bitcoin $9,578,049,977 Same 41% 2 Ethereum $1,093,626,017 Same 904% 3 Ripple $262,064,965 Same 2.4% 4 Litecoin $181,141,735 Same -22% 5 Monero $136,223,748 +3 11% 6 Ethereum Classic* $104,907,607 - 74% 7 Steem* $95,227,547 - -48% 8 Dash $78,026,273 -3 148% 9 NEM $46,377,074 +3 17% 10 MaidSafeCoin $39,431,776 -4 308% Note: *Ethereum Classic and Steem Price YTD starts are relative to the mining of their genesis blocks, July 24, 2016 and April 18, 2016, respectively.
  • 28. State of Blockchain Q3 2016 | 28 China Continues to Drive Bitcoin Price, While Largely Ignoring Ether & Other Digital Currencies Meanwhile BTC has established itself as a “reserve currency” for trading alternative currencies like ETH. BTC Transaction Volume by Currency Note: Labels for currency pairs with less than 1% market share are omitted. Data Source: Bitcoinity ETH Transaction Volume by Currency CNY 95.4% BTC 73.8% EUR 9.7% USD 16.0% OTHERS 0.4% CNY 0.1% EURO 0.6% USD 3.5% OTHERS 0.5%
  • 29. State of Blockchain Q3 2016 | 29 Bitcoin’s Market Share Declines Amid Rising Interest in Alternative Protocols* Data Source: CoinMarketCap Note: Altcoin market cap share is calculated by dividing the sum of all non-bitcoin digital currency market caps by the combined mar- ket caps of all digital currencies (including bitcoin). For example, a market cap share of 7% for altcoins indicates that bitcoin by itself represents 93% of the market cap of all digital currencies combined. NumberofAltcoins MarketPenetration% 676 674 672 670 668 666 664 662 660 658 25% 20% 15% 10% 5% 0% Dec-15 Mar-16 Jun-16 Sep-16 675 669 666 664 Total Number of Altcoins Altcoin Market Share 6% 17% 19% 21%
  • 30. State of Blockchain Q3 2016 | 30 Bitcoin and Ethereum Networks Dominate, While Ripple, Zcash Also Draw Notable Developer Interest More developers have set up ethereum’s network nodes, but bitcoin still boasts the largest developer community Zcash has attracted significant early interest. 5135 6868 676 450 121 0 1000 2000 3000 4000 5000 6000 7000 8000 Bitcoin Ethereum Litecoin Monero Ripple NumberofNetworkNodes Network Size Data Source: CoinMarketCap Developer Communities 6868 676 450 121 5135 COMMITS RELEASES CONTRIBUTORS Bitcoin 11781 161 400 Ethereum 7484 98 78 Ripple 11166 60 54 Litecoin 7871 194 279 Ethereum Classic 97 0 8 Monero 2808 10 68 Zcash 9619 14 322 Augur 3604 5 12 Steem 1069 34 14 MaidSafeCoin 1791 13 22
  • 31. State of Blockchain Q3 2016 | 31 A. BITCOIN
  • 32. State of Blockchain Q3 2016 | 32 Q3 2016 Summary Bitcoin scaling advances – Segregated Witness could see Q4 activa- tion. Cross-border commerce on rise – Select startups show bitcoin gaining traction in remittance market. China dominates trading – More than 90% of exchange volume for BTC/CNY trading pairs. Price volatility hits 2016 lows – Despite major hack, bitcoin proves largely stable as store of value. Bitcoin competitive against fiat – Price rises 30%, outperforming many devel- oped market currencies.
  • 33. State of Blockchain Q3 2016 | 33 Bitcoin Network Metrics Q3 2016 Q2 2016 Q3/Q2 Δ Q3 2015 QoQ Δ BITCOIN PRICE • Market Capitalization ($m) (EoQ) $9,676 $10,570 -8.5% $3,761.8 2.6x • Price ($/BTC) (EoQ) $608.44 $672.48 -9.5% $236.25 2.6x • Bitcoin Supply (m) (EoQ) 15.9 15.7 1.3% 14.3 1.1x VC INVESTMENT ACTIVITY • Deal ($m) $114 $101 12% $85 1.3x • Deal # 12 11 9.1% 15 .8x TRANSACTION METRICS • Average Daily BTC Transactions 219,624 221,018 -1% 135,885 1.6x • Exchange Traded Volume ($m) $74,479 $98,867 -25% $17,553 4.2x • Average Fee per Block ($) $359.13 $272.86 31.6% N/A N/A • Total Transaction Fees ($) $3,509,279 $3,054,166 15% $1,559,374 2.3x • Average Transactions Per Block (EoQ) 1,767 1,546 14% 794 2.2x NETWORK GROWTH METRICS • Blockchain Size (GB) 85 74 15% 46 1.8x • Nodes 5,135 5,515 -7% 6,050 .8x • Unique Address Count (EoQ) 391,458 375,377 4% 247,211 1.6x • New Wallet Growth (EoQ) 1,146,402 1,133,688 1% 1,188,890 1.0x MINING METRICS • Network Hash Rate (TH/sec) (EoQ) 1,882,661 1,634,680 15% 465,548 4.0x • Block Difficulty (GH) (EoQ) 241 209 15% 59 4.1x • Average Mempool Transaction Count 4,335 4,081 6% N/A N/A • Average Mempool Size Growth (bytes/sec) 1,217 1,232 -1% N/A N/A • Unknown Mining Pools (%) 17% 5% 230% 5% 3.2x
  • 34. State of Blockchain Q3 2016 | 34 Bitcoin: Key Market Events Data Source: CoinMarketCap 676.52 663.54 656.67 565.26 578.16 622.21 595.8 605.06 $500 $550 $600 $650 $700 $750 Jul-01 Jul-16 Jul-31 Aug-15 Aug-30 Sep-14 Sep-29 Bitcoin Price Performance July 8th Bitcoin Prices Volatile in $600s As Traders Await Halving. July 20th Ethereum Executes Blockchain Hard Fork to Return DAO Funds. Sept 2nd Bitfinex Reim- burses First Bitcoin Exchange Hack Victims. Sept 19th Bitcoin Price Still Bruised After Bitfinex Hack Aug 2nd Bitcoin Drops Nearly 20% as Exchange Hack Amplifies Price Decline. Sept 9th Bullish market sentiment and low liquidity driving up bitcoin prices.
  • 35. State of Blockchain Q3 2016 | 35 The Bitcoin “Halvening”: Muted Impact on Mining Although the bitcoin block reward fell from 25 bitcoins to 12.5 bitcoins in Q2, both the price and network hashrate has remained unaffected, quelling network security concerns. Network difficulty increased 15% since Q2 2016. Data Source: Blockchain.info. Notes: Difficulty represents the number of necessary hash calculations to mine a new block. Hashrate(billions) 250B 200B 150B 100B 50B 0B 80% 70% 60% 50% 40% 30% 20% 10% 0% Q3-2015 Q4-2015 Q1-2016 Q2-2016 59 99 165 241 Mining Difficulty (EoQ) Percentage Increase in Mining Difficulty 15% 209 Q3-2016 26% 59% 73% 20%
  • 36. State of Blockchain Q3 2016 | 36 Bitcoin Has Outperformed Most Major Currencies and Commodities YTD (+29% vs. US Dollar) Notes: Chart depicts YTD performance against USD. Data Source: XE Currency.
  • 37. State of Blockchain Q3 2016 | 37 Exchange Volume Declined After $65M Bitfinex Hack… Data Source: CoinDesk, Bitcoinity USDinbillions 120 100 80 60 40 20 0 200 180 160 140 120 100 80 60 40 20 0 1/1/16 33 27 111 45 Monthly Bitcoin Trading Volume USD Monthly Bitcoin Trading Volume BTC 57 BTCinmillions 60 42 46 35 2/1/16 3/1/16 4/1/16 5/1/16 6/1/16 7/1/16 8/1/16 9/1/16
  • 38. State of Blockchain Q3 2016 | 38 Yet Bitcoin Volatility Dipped to All-time Lows Data Source: CoinDesk QUARTERLY PRICE HIGH QUARTERLY PRICE LOW $209.13 (24th August) $237.4 (2nd October) $358.77 (15th January) $417.01 (1st April) $552.82 (2nd August) $309.98 (12th July) $465.5 (15th December) $458.28 (7th January) $768.24 (16th June) $703.69 (2nd July) Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 DATE 33% 96% 28% 84% 27% PEAK-TO- TROUGH %
  • 39. State of Blockchain Q3 2016 | 39 Average Daily Transaction Volume Nearly Doubles Vs. 2015 Note: 100 most popular addresses. Data Source: Blockchain Q3 YTD average daily transactions increased 98% YoY Number of Transactions per Day 111,826 221,018
  • 40. State of Blockchain Q3 2016 | 40 But Blocks are Getting Full Data Source: Blockchain Bitcoin blocks in Q3 were more regularly approaching capacity (1MB) when compared to figures from the same period last year. Q3 2016 Jul-01 Jul-16 Jul-31 Aug-15 Aug-30 Sep-14 Sep-29 1 0.8 0.6 0.4 0.2 0 Q3 2015 Jul-01 Jul-16 Jul-31 Aug-15 Aug-30 Sep-14 Sep-29 1 0.8 0.6 0.4 0.2 0
  • 41. State of Blockchain Q3 2016 | 41 And Block Size Limits May Constrict Momentum As transaction volumes approach the current block size cap, it may be creating a choke point that slows adoption. Block Size Limits Higher Fees Transaction Delays BITCOIN ADOPTION FLYWHEEL EFFECT Larger Transaction Volumes Greater Payments Utility Greater Infrastructure Investment Greater Liquidity Higher Bitcoin Price More Hedging Tools CURRENT CHOKEPOINT
  • 42. State of Blockchain Q3 2016 | 42 Bitcoin Scalability Advances: SegWit, Lightning, Schnorr Data Source: CoinDesk, Pieter Wuille (2015) Segregated witness and deploying it for Bitcoin Presentation Segregated Witness – alters how signature data is handled on the network without raising block size limit. • Projected to be live on network by end of Q4. • Requires that 95% of miners to upgrade and run software for roughly two weeks worth of blocks. Lightning Network – a top layer for the bitcoin network that would enable millions of transactions with less frequent settlement. • Requires Segregated Witness to be activated. • Faces concerns regarding privacy and scalability. Schnorr Signatures – would enable multi-party (multisig) transac- tions to be written to ledger with single signature. • Remains in early stages but prominent bitcoin developers (Peter Wiulle, Greg Maxwell) continue to explore. • Would replace current ECDSA signature scheme.
  • 43. State of Blockchain Q3 2016 | 43 Bitcoin Interest is Expanding Globally, Supporting the Thesis That Its Utility Is Highest in Emerging Markets Data Source: Google Trends search ‘bitcoin’ and ‘ethereum’. Numbers represent search interest relative to the highest ranking term for a given region and time. A value of 100 is assigned to the region where the relative popularity of the search term is highest. While a value of 50 means the term is half as popular as the leading search term. Ghana South Africa Nigeria Malaysia Venezuela United Kingdom Germany Canada United States 100 82 72 63 51 31 29 27 27 Bitcoin Q2 & Q3 2016
  • 44. State of Blockchain Q3 2016 | 44 And Cross-Border Payments Volumes Have Spiked Data Source: Digital Currency Group Rising volumes and improv- ing liquidity on regional ex- changes are driving growth in cross-border payments. • Recent analysis of four bitcoin payments companies showed a spike above $70m in Q3 cross-border volumes. • 2015 volumes were negligible. • Growth accelerated as busi- nesses shifted focus from B2C to B2B. Monthly Volume Cumulative Volume
  • 45. State of Blockchain Q3 2016 | 45 Cross-Border Payments Source: Digital Currency Group B. ETHEREUM
  • 46. State of Blockchain Q3 2016 | 46 Q3 2016 Summary Enterprise interest grows – Microsoft, Santander and others demo ethereum tech projects. Block difficulty increases – Second-highest QoQ increase in ethereum’s history. Ether price stabilizes – But this coincides with waning exchange transaction volumes. Ether volume declines in Q3 – Figures down 10x since Q2 highs. Dual ether markets co-exist – Alternative ethereum blockchain (ethereum classic) continues to hold minority market share. Increase in ethereum active nodes – Ethereum has the most active nodes of any public blockchain network.
  • 47. State of Blockchain Q3 2016 | 47 Ethereum Network Metrics Q3 2016 Q2 2016 Q3/Q2 Δ Q3 2015 QoQ Δ ETHER PRICE • Market Capitalization ($m) (EoQ) $1,118 $1,019 10% $48 23.3x • Price ($/ETH) (EoQ) $10.78 $10.50 3% $0.73 14.8x • Ether Supply (m) 85 82 4% 74 1.2x VC/ICO ACTIVITY • Deal ($m) $29.8 $171.9 -83% N/A N/A • Deal # 11 7 57% N/A N/A TRANSACTION METRICS • Average Daily ETH Transactions 35,836 63,952 -44% 5,870 6.1x • Average Gas Price (Gwei) (EoQ) 30 22 36% 52 .6x • Average Gas Limit Per Day 1.5 4.7 -68% 3.1 .5x NETWORK GROWTH METRICS • Blockchain Size (GB) 53 27 96% N/A N/A • Nodes 6,868 N/A N/A N/A N/A • Total Unique Addresses (EoQ) 647,482 423,227 53% 13,636 47.5x • Number of Contract Addresses (EoQ) 199,234 N/A N/A N/A N/A MINING METRICS • Network Hash Rate (GH/s) (EoQ) 5,880 3,985 48% 315 18.7x • Block Difficulty Growth (TH) (EoQ) 83 55 51% 6 13.8x • Average Block Time (sec) (EoQ) 14 14 3% 18 .8x • Average Block Size (bytes ) (EoQ) 1,437 2,367 -39% 742 1.9x • Daily Block Reward (EoQ) 31,623 31,986 -1% 25,094 1.3x
  • 48. State of Blockchain Q3 2016 | 48 $8 $9 $10 $11 $12 $13 $14 $15 $16 Jul-01 Jul-16 Jul-31 Aug-15 Aug-30 Sep-14 Sep-29 0.0158 0.0188 0.0199 0.0208 0.0188 0.0202 0.0188 0.0196 0.0230 0.0213 0.015 BTC 0.017 BTC 0.019 BTC 0.021 BTC 0.023 BTC 0.025 BTC Jun-30 Jul-21 Aug-11 Sep-01 Sep-22 Ethereum Price Performance Ethereum: Key Market Events Data Source: CoinDesk Bitcoin Price Index, daily data collected at 00:00 UTC July 20th Ethereum Executes Blockchain Hard Fork to Return DAO Funds. July 25th Alternative Ethereum Blockchain Gains Support as Price Declines. Aug 22nd One Month After Ethereum Fork, Millions in DAO Funds Unclaimed. Sept 21st Thomson Reuters Demos New Ethereum Blockchain Use Cases.
  • 49. State of Blockchain Q3 2016 | 49 Poloniex, Kraken Emerge as Market Leaders for Ethereum Trading, But Volume on Decline Ethereum 24-hour exchange volume decreased 24% to $9.5m in Q3 from $12.8m in Q2. Data Source: CoinMarketCap 7.1m 5.6m 2.5m 0.7m 2.0m 0.4m 1.6m 0.4m 0.4m 0.5m 0.7m 0.3m Ethereum Exchange 24-Hour Volume (EoQ) 12.8 9.5 Ethereum Exchange 24-Hour Volume (EoQ) Q2 2016 Q3 2016
  • 50. State of Blockchain Q3 2016 | 50 Enterprises Continue to Show Interest in Ethereum Data Source: DailyFintech Thompson Reuters releases ethereum identity tool Block- OneID. BHP Billiton, the world’s largest mining firm, reveals it will use ethereum to record, maintain mining samples. Santander demos CashETH, a prototype that envisions how the Spanish banking giant could ”open-source” its cash. Microsoft launches ethereum smart contract working group, codenamed ‘Kinakuta’.
  • 51. State of Blockchain Q3 2016 | 51 But Its Public Blockchain Has Split, Creating Two Distinct Token Markets Data Source: Vitalik Buterin, Github Two ethereum blockchains emerge: • 18th June – The DAO, the largest ethereum smart contract, is compro- mised, with unknown attackers stealing $60m in user funds. • 20th July – Ethereum’s community decides to edit its blockchain history to return the stolen funds to The DAO’s investors, creating a new block- chain in the process. • 24th July – Angered by the decision to edit the original blockchain, a small minority restarts the blockchain ethereum’s community abandoned. Ethereum Classic now has a sep- arate market: • The price of its token (ETC) con- tinues to hover around $1. • ETC has traded for as much as $3.30. • ETC was the 5th largest currency by market cap at the end of Q3.
  • 52. State of Blockchain Q3 2016 | 52 ETHEREUM SENTIMENT STUDY
  • 53. State of Blockchain Q3 2016 | 53 Ethereum Sentiment Study: Demographics Data Source: CoinDesk Our 243-person survey included technical leaders from startups and enterprises who attended our annual Consensus summit. Of these respondents: • 86% believe blockchain technology (broadly speaking) would have an impact on financial services, while 14% said it was “too early to tell”. • 70%+ believe blockchain tech would also have an impact on governments and businesses outside of financial services. • 52% of bulls believe it would be 5-10+ years before block- chain tech was widely adopted.
  • 54. State of Blockchain Q3 2016 | 54 Ethereum Sentiment Study: Demographics Data Source: CoinDesk When it came to ethereum in particular: • 63% reported they were “very familiar” with the ethereum protocol; 70% said they were “very familiar” with the DAO hack and hard fork. • 58% reported using the ethereum protocol – 37% used the public blockchain, 19% used a permissioned version of ethereum, and 6% used a public fork of ethereum such as ethereum classic, krypton, or shift. • 67% planned to consider using the ethereum protocol in the future – 49% planned to use the public blockchain, with 26% planning to use a permissioned version and 12% planning to use a public fork.
  • 55. State of Blockchain Q3 2016 | 55 One in Three Were Negatively Impacted By the Ethereum Fork or DAO Hack Data Source: CoinDesk Ethereum Survey Were you or your organ- ization directly impacted in any way by the June 2016 DAO hack (i.e. lost tokens, proof-of-concept delayed or reconsidered due to the hack)? • 75% of those affected lost money in the DAO. • 11% said it made them lose confidence in ethereum. • 20% said it set back a pro- ject or proof-of-concept. “The hard fork hardened my opinion re: ethereum’s governance problems.” “We delayed anchoring into ethereum because of the fork.” Data Source: CoinDesk Ethereum Survey
  • 56. State of Blockchain Q3 2016 | 56 One in Three Disagree with the Decision to Hard Fork Data Source: CoinDesk Ethereum Survey How do you feel about the decision to hard fork the ethereum (ETH) block- chain? • Majority of those who disa- greed with the decision were already skeptical of ethereum and “not considering” using the technology in the future. • The decision to hard fork may get more popular over time; for those who changed their minds at some point, “agrees” out- numbered “disagrees” 7:1. “I was worried the hard fork might undermine the authority of the core dev team (or rather, make it seem like they have too much power), but those concerns seem to be overblown, and all seems to be going well for now.”
  • 57. State of Blockchain Q3 2016 | 57 In Terms of Perception, the Drama Has Taken Its Toll: Bad for Ethereum, Good for Bitcoin Data Source: CoinDesk Ethereum Survey How has the DAO hack and the ethere- um hard fork affected your sentiment towards using: • Sentiment skewed negative for both ETH and ETC. • 49% negative vs. 26% positive for ETH. • 50% negative vs. 15% positive for ETC. • “bad precedent”, “broke immutability”, “lack of quality control & testing”, but “pragmatic”. • Many believed this cast bitcoin in a more positive relative light. • 39% positive vs. 17% negative. • “only production ready blockchain”, “stability and predictability are key”. • Muted impact on sentiment towards other public blockchains.
  • 58. State of Blockchain Q3 2016 | 58 For the Majority Whose Sentiment Was Negatively Impacted, Governance Was the Primary Concern Data Source: CoinDesk Ethereum Survey If the the DAO hack and/or Ethereum hard fork negative- ly impacted your sentiment on using Ethereum, what are your specific concerns? • 47% concerned with how the ethereum blockchain and pub- lic protocol was governed. • 38% concerned with the block- chain’s compromised immuta- bility. • 33% fear regulatory risks due to the coordinated response.
  • 59. State of Blockchain Q3 2016 | 59 Despite Setback, Ethereum Perceived to Have Better Governance Than Bitcoin (Though Both Have Flaws) Data Source: CoinDesk Ethereum Survey Please select the choice you believe best re- flects your opinion of current Ethereum and Bitcoin governance: “ETH vs BTC vs ETC rivalries need to stop; these technolo- gies are too new to take sides. Instead of coming together, there are obvious lines being drawn.” “I’d be more optimistic if univer- sities embraced and increased resources not only for bitcoin but ethereum, and other DLTs.”
  • 60. State of Blockchain Q3 2016 | 60 Public/Enterprise Ethereum Users See Different Strengths in the Technology Data Source: CoinDesk Ethereum Survey Respondents Use Public (ETH) Version of Ethereum for These Reasons. Respondents Using Private/ Permissioned Version of Ethereum for These Reasons • Both groups emphasized the quality of the ethereum community. • Ethereum users placed more emphasis on Turing Completeness. • Enterprise users emphasized developers, flexibility and maturity.
  • 61. State of Blockchain Q3 2016 | 61 Ethereum’s Developers Continue Upgrades Data Source: CoinDesk “Casper” – Two prominent ethereum developers (Vitalik Buterin, Vlad Zamfir) continue work on new blockchain consensus algorithm. • Would see ethereum migrate from bitcoin-like proof-of-work to more decentralized proof-of-stake alternative. • Zamfir, Buterin remain split on best paths forward. Formal verification – soundness of smart contracts continues to be both practical and enterprise concern. • Startups are working to provide specialized software to mathe- matically check for issues. EMV upgrade – ethereum language compiler continues to face performance issues, problems with IoT compatibility. • Compiler works in 256-bit ’chunks’, too slow for appliances with smaller bit registers. • Plan is to migrate to new EVM (EWASM) unveiled at Devcon2 con- ference in Shanghai.
  • 62. State of Blockchain Q3 2016 | 62 Our Respondents Predict Ethereum’s ‘Proof-of-Stake’ Switch Will Occur in 2017 Data Source: CoinDesk Ethereum Survey How likely do you think it is that the following will be deployed by the Ethereum commu- nity by the end of 2017? • 82% believe that ethereum’s most challenging hard fork – a switch to a new consensus algorithm called “Casper” – has a 50% or greater chance of being implemented in 2017. • Our respondents believe the Mist browser is the most likely 2017 release, with 62% saying they be- lieve this is somewhat or very likely vs. 11% that believe it is unlikely. • Respondents were split on the release timing of the Swarm storage platform, and two scaling solu- tions: state channels and sharding.
  • 63. State of Blockchain Q3 2016 | 63 Hard Fork? That’s the Easy Part Data Source: CoinDesk Ethereum Survey We asked whether there was anything more technically challenging on the development roadmap than ethereum’s switch to proof-of- stake: “While some acknowledged the Casper switch was the biggest milestone in the near-term roadmap, respondents over- whelmingly noted that “sharding” was the most technically complex project being tackled.” “by far the hardest”, “represents a sea change in how these systems work entirely”, “there is not enough capacity on the network before worrying about sharding and parallelism”. What is Sharding? (From CoinDesk’s research report ‘Un- derstanding Ethereum’) Sharding is a scaling solu- tion where portions of the full ethereum blockchain are held on separate servers in order to distribute the network’s com- putational load and improve its performance. This solution could allow businesses, indi- viduals or entities to run a pub- lic or private blockchain (with distinct transaction validators) on a platform that uses the security and functionality of a public platform.
  • 64. State of Blockchain Q3 2016 | 64 ENTERPRISE BLOCKCHAINS 4
  • 65. State of Blockchain Q3 2016 | 65 The Internet/Intranet Comparison We believe both public and enterprise blockchains have useful applications, much like the Internet and corporate intranets. PUBLIC BLOCKCHAINS ENTERPRISE BLOCKCHAINS public (inter-) The Internet private (intra-) Intranets & IT Data Source: Coinbase
  • 66. State of Blockchain Q3 2016 | 66 Blockchain Interest Grows Globally; Among Major Players, R3 Leads Media Mentions Data Source: Google Trends search for ‘Blockchain’. Financial Times, New York Times, Wall Street Journal and Sina. Google Trends search ‘bitcoin’ and ‘ethereum’’. Numbers represent search interest relative to the highest point on the chart for the given region and time. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular. Likewise a score of 0 means the term was less than 1% as popular as the peak. Q2 & Q3 Select Blockchain Media Mentions R3CEV DAH Hyperledger Ripple Chain 26 25 15 10 0
  • 67. State of Blockchain Q3 2016 | 67 Enterprise Firms Continue to Invest Time and Resources in Blockchain Proofs-of-Concept Data Source: CoinDesk Number of proofs-of- concept announced publicly by major en- terprise businesses. Number of unique participants in pub- licly announced proof-of-concept projects. Unique areas of focus for announced PoCs; Banking, in- surance, post-trade settlement and trade finance emerge as key areas of focus. ~ 70 ~ 100 ~ 25
  • 68. State of Blockchain Q3 2016 | 68 Top Banks Tackle Blockchain Proofs-of-Concept Data Source: CoinDesk 14 of the top 30 banks are engaging in blockchain proofs-of-concept.
  • 69. State of Blockchain Q3 2016 | 69 Global Exchanges Engage in Blockchain Data Source: World Federation of Exchanges, CoinDesk 21 of the 63 publicly regulated stock, futures and options exchanges are testing distributed ledger technology.
  • 70. State of Blockchain Q3 2016 | 70 SOLUTIONS PROVIDERS
  • 71. State of Blockchain Q3 2016 | 71 Chain Continues Partnerships, But Mostly Stays Quiet Ahead of Big Q4 Data Source: Chain Chain provides permissioned and private blockchain services for enterprise busi- nesses. Q3 MILESTONES • Chain wins inaugural Best Fintech Innovation by Juniper Research. • Chain partners with Initiative for Cryptocurrency and contracts (IC3). • Chain and global financial firms unveil Open Standard for blockchain. HQ: San Francisco, CA Founders: Devon Gundry Adam Ludwin Key Executives: Adam Ludwin, CEO Amount Raised: $44m
  • 72. State of Blockchain Q3 2016 | 72 Digital Asset Holdings Continues Acquisitions, Develops Strategic DLT Partnerships Data Source: DAH Digital Asset Holdings is a blockchain software provider focused on distributed asset settlement. Q3 MILESTONES • Swiss FMI Six Securities Services and DAH part- ner to develop DLT. • DAH plans to open-source its smart contracting language DAML. • DAH appoints Carol Mathis (RBS) as CFO. • DAH acquires smart contract firm Elevence. HQ: New York, NY Founders: Dan O’Prey, Don Wilson, Sunil Hirani Key Executives: Blythe Masters, CEO Chris Church, CBDO Amount Raised: $67m
  • 73. State of Blockchain Q3 2016 | 73 Hyperledger Member Growth Skyrockets Data Source: Hyperledger Permissioned distributed ledger platform to help financial institutions mitigate settlement risk and lower reconciliation costs. Q3 MILESTONES • Github Statistics: 100+ contributors, 65 releases, 650 commits commits. • 13 Q2 & Q3 media mentions. • 35% member growth in Q3. • 81 partner organizations. Open-Source Cooperative Managed by the Linux Foundation HQ: San Francisco, CA Key Executives: Brian Behlendorf, Executive Director Todd Benzies, Sr. Program Manager
  • 74. State of Blockchain Q3 2016 | 74 Hyperledger Project Update (contd.) Data Source: CoinDesk • Apache Foundation founder Brian Behlendorf named Hyperledger ex- ecutive director. • Hyperledger elects new technical steering committee, includes rep- resentatives from IBM, DTCC, Intel and JPMorgan. • Hyperledger launches first block explorer. • Companies including IBM and UBS begin to use beta version of Hyper- ledger Fabric in prototypes. Brian Behlendorf Hyperledger, executive director “We’re focused on the use cases around permissioned blockchain, but [are] very en- thusiastic about non-permis- sioned [ledgers].”
  • 75. State of Blockchain Q3 2016 | 75 Microsoft Continues to Invest in its Blockchain-as-a-Service (BaaS) Platform Data Source: Microsoft • 2nd August –  Microsoft makes it (BaaS) offering available in its DevTest Labs testing environment. • 1st September – Microsoft launches smart con- tracts security working group; Named ‘Kinakuta’, the group aims to make it easier for the industry to share smart contract best practices. • 2nd September – Microsoft unveils a new version of its consortium blockchain software Bletchley.
  • 76. State of Blockchain Q3 2016 | 76 R3 CEV Reaches Over 70 Partners, Continues Proofs-of-Concept on the Corda Blockchain Data Source: R3CEV R3CEV is a permissioned and private blockchain technology provider leading a consortium of 70+ financial institutions. • Microsoft and R3 partner for work on blockchain PoCs. • Barclays demos R3’s Corda platform. • R3 announces new distributed technology framework Concord. • China Merchants Bank, MetLife, Thomson Reu- ters, Absa Bank and Toyota join R3 consortium. HQ: New York, NY Founders: David Rutter, Jesse Edwards, Todd McDonald Key Tech Players: Richard Gendal Brown, Mike Hearn, Ian Grigg
  • 77. State of Blockchain Q3 2016 | 77 R3 Continues Distributed Ledger Trials Data Source: R3CEV 8 members test the exchange of US Treasury bonds using Intel’s distributed ledger tech Sawtooth Lake. 15 members announce they have completed a distributed ledger trial for trade finance.
  • 78. State of Blockchain Q3 2016 | 78 Ripple Raises $55m While Member Growth Increases Data Source: Ripple Ripple allows banks to offer real-time cross-border payments to their customers. Q3 MILESTONES • Github Statistics: 50+ contributors, 60 releases, 11,116 commits. • 7 Q2 & Q3 media mentions. • 25% member growth in Q3. • 19 financial partners. HQ: San Francisco, CA Founders: Chris Larsen, Arthur Britto Key Executives: Brad Garlinghouse, COO Amount Raised: $93.6m
  • 79. State of Blockchain Q3 2016 | 79 INVESTMENT 5
  • 80. State of Blockchain Q3 2016 | 80 Blockchain Announcements Decline in Q3, as Uptick in Consortiums Calms Note: ‘Traditional institutions’ include governments, central banks, financial institutions and other large firms. Data Source: CoinDesk 238 220 Announcements Q3Q2
  • 81. State of Blockchain Q3 2016 | 81 Q3 Investments Up Year-Over-Year, But Down 17% Year to Date Q3 investment up 13% YoY, 2016 YTD investment down 17%. Data Source: CoinDesk 376m 458m500m 450m 400m 350m 300m 250m 200m 150m 100m 50m 0m 250m 200m 150m 100m 50m 0m Q1 2015 Q1 2016 Q2 2015 Q2 2016 Q3 2015 Q3 2016 160m 228m 101m 145m 114m 85m Q1-Q3 2015 Q3 2016 YTD
  • 82. State of Blockchain Q3 2016 | 82 Top VC Deals Show Funding Shifting Towards Hybrid Blockchain Technology… PUBLIC PRIVATE HYBRID Juzhen Financials Data Source: CoinDesk $23m$10.5m $58m
  • 83. State of Blockchain Q3 2016 | 83 Hybrid Startup (Ripple) Captured Most VC Investment in Q3, But More Public Startups Are Raising Funds Data Source: CoinDesk Investment Amount Number of Investments Hybrid 51.0% Private 20.2% Public 29.0% Hybrid 17.0% Private 8.0% Public 75.0%
  • 84. State of Blockchain Q3 2016 | 84 However, Data Doesn’t Suggest a Trend Toward Any Specific Infrastructure Model Data Source: CoinDesk 98% 16% 90% 29% 2% 84% 10% 71% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Q4 2015 Q1 2016 Q2 2016 Q3 2016 Investment Sector Distribution Percentage of Bitcoin Investment Pecentage of Blockchain and Hybrid Company Investment 98% 2% 84% 16% 90% 10% 71% 29%
  • 85. State of Blockchain Q3 2016 | 85 Decentralized Application Projects Are Raising Money Through Public Digital Currency Sales vs. VC Data Source: Smith and Crown, ICO Countdown Total Historical VC Investment 2016 “ICOs” More “decentralized application” companies are using “initial coin offerings” to raise capital, the majority of crowdfunding has come from ETH (e.g. the DAO). Ethereum $8m Bitcoin $949m .5m .5m 152m .75m 16m .85m .6m 1.7m 10.5m .75m .66m 4.5m 2m 5.5m 2m
  • 86. State of Blockchain Q3 2016 | 86 Despite Global Blockchain Interest, Silicon Valley Captures Bulk of Investment Dollars in Q3 Data Source: CoinDesk No. of Companies Total number of VC-backed public and private blockchain companies has increased marginally over the past quarter, growing to 144 in Q3 2016 (5% increase), up from 137 in Q2 2016. $ Invested Location Value ($m) No. of companies Silicon Valley 542.39 39 Rest of World 782.32 105 Total 1324.71 144 Silicon Valley 40.9% Rest of World 59.1% Silicon Valley 27.1% Rest of World 72.9% 542 782 1324
  • 87. State of Blockchain Q3 2016 | 87 REGULATION & GOVERNMENT 6
  • 88. State of Blockchain Q3 2016 | 88 US: Blockchain Heats Up on Capitol Hill as Lawmakers Take Active Interest in Blockchain Data Source: CoinDesk • 29th July – Twenty-two US senators send a letter to the Federal Reserve requesting guidance on blockchain. • 12th September – The US House of Representatives passes a non-binding resolution that calls for the support of blockchain technology. • 14th September – Representative David Schweikert pro- poses blockchain be considered as a solution to adminis- trative issues at the Department of Veterans Affairs. • 28th September – Federal Reserve chair Janet Yellen re- veals the US central bank is investigating blockchain tech.
  • 89. State of Blockchain Q3 2016 | 89 US: Is Bitcoin Money? Florida Courts Are Driving the Conversation Data Source: CoinDesk • 25th July – A Miami judge dismisses charges against a Florida-based bitcoin seller, siding with defense’s argument that bitcoin isn’t money. • 16th August – The state of Florida appeals court decision in which case was thrown out over lack of clarity over issue. • 6th September – Florida reveals it is in the early stages of considering bitcoin regulation, and that it could seek to recognize bitcoin as money.
  • 90. State of Blockchain Q3 2016 | 90 Europe: EU Parliament Investigates Blockchain Tech Potential Data Source: CoinDesk • 29th April –  EU Parliament hosted a non-commercial roundtable to educate members (MEPs). • 26th May – The European Parliament approves a proposal for a task force dedicated to digital currency.  • 30th August – A member of the European Parliament proposes $1.1m be spent on the blockchain task force. • 3rd October – A European Parliament think tank re- leases a discussion paper on blockchain-based elec- tions.
  • 91. State of Blockchain Q3 2016 | 91 Europe: Russia Changes Tune on Bitcoin and Digital Currencies Amid Blockchain Interest Data Source: CoinDesk • 19th May – A bill that would ban bitcoin and digital currencies as “money surrogates” is withdrawn af- ter two years of deliberations. • 19th July – Russia’s Ministry of Finance says it is considering allowing bitcoin use “abroad”, while still banning its domestic use. • 12th August – Reports suggest Russian authorities are seeking to drop proposed penalties for bitcoin use.
  • 92. State of Blockchain Q3 2016 | 92 Asia: Central Banks Begin Blockchain Explorations Data Source: CoinDesk • 6th June – The central bank of the Philippines reveals it is considering how to regulate digital currency exchanges. • 22nd July – The Reserve Bank of India (RBI) pushes banks to develop applications for digital currencies and distributed ledgers. • 23rd August – The Bank of Japan publicly voic- es its enthusiasm for the benefits of blockchain tech.
  • 93. State of Blockchain Q3 2016 | 93 Middle East: UAE Takes Lead on Blockchain Data Source: CoinDesk • 30th May – Dubai’s Global Blockchain Council (GBC), a public-private blockchain consortium, unveils seven new proofs-of-concept at industry. • 1st June – An independent regulatory authority in Abu Dhabi begins exploring ways to create a regulatory sand- box for blockchain startups. • 9th August – Dubai launches a startup program with a focus on investing in and developing blockchain startups. • 1st September – Dubai makes blockchain focal point of efforts to curb global blood diamond trade.
  • 94. State of Blockchain Q3 2016 | 94 About Coindesk Data Source: CoinDesk • Find out more at www.coindesk.com. • Follow us on Twitter: @CoinDesk. • Subscribe to our daily email newsletters for the latest blockchain news. • If you have data you think should be includ- ed in future State of Bitcoin reports, email stateofbitcoin@coindesk.com. • We also welcome any feedback you have on the report.
  • 95. State of Blockchain Q3 2016 | 95 Credits Data Source: CoinDesk Pete Rizzo Editor Bradley Miles Researcher @pete_rizzo_ @Bradley_Miles_ @coindesk
  • 96. State of Blockchain Q3 2016 | 96 Disclaimer • CoinDesk makes every effort to ensure the information used these slides is accurate and up to date. We cannot, however, accept responsibility for any loss or inconvenience caused by reliance on the material contained here. • This presentation does not constitute financial advice or an investment recommendation in any way whatsoever. It is recommended you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions. • CoinDesk is owned by Digital Currency Group, one of the most active investors in the bitcoin and blockchain technology industry. Many DCG investments are referenced in this report, and a full list can be reviewed at www.dcg.co. CoinDesk is run as an independent entity, and its editorial team does not give preferential treatment to DCG investments when they are referenced in research reports or news posts. DCG portfolio companies referenced in this report include Align, Bitpay, Blockstream, BTCC, Chain, Circle, Coinbase, Everledger, Fluent, Kraken, Ripple, Tierion and Zcash.
  • 97. State of Blockchain Q3 2016 | 97 www.coindesk.com STATE OF BLOCKCHAIN Q3 2016