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1State of Blockchain Q1 2016
About CoinDesk
• World leader in digital currency and blockchain news
• The Bitcoin Price Index serves as an industry refe...
State of Blockchain Credits
Creator and producer: Dr Garrick Hileman
Cambridge Centre for Alternative
Finance at the Unive...
Contents
I. Taxonomy and Conceptual Framework
II. Q1 Industry Overview
III. Q1 State of Bitcoin
a. M&A and Investment
b. U...
5State of Blockchain Q1 2016
I. Taxonomy and
Conceptual Framework
Taxonomy: ‘Blockchain Tech’/’DLT’ vs ‘The Blockchain’
6State of Blockchain Q1 2016
“Blockchain technology” “The Blockchain...
‘Public’ (Open) vs ‘Private’ (Closed) Blockchains:
Generalized Features Comparison
7State of Blockchain Q1 2016
Public Pri...
Strengths and Weaknesses of Public Blockchains
Image via ExtremeTech.
Sources: Ethereum, MultiChain
Strengths Weaknesses
I...
Regulated Market Operators (eg stock exchanges) are
Drawn to Private Blockchain Solutions
9State of Blockchain Q1 2016
Sou...
Blockchains
PrivatePublic
PlatformSoftwareBlockchains Can Be Further Distinguished Between
‘Platform’ and ‘Software’ Provi...
11State of Blockchain Q1 2016
II. Q1 Industry Overview
Debate emerges over speed of
blockchain adoption – will major
changes take place soon (eg within
two years) or 5-10 years ...
Key Bitcoin And Blockchain Adoption Metrics:
Price Up 82%, Trading Volume Increased 424%
13State of Blockchain Q1 2016
End...
Bitcoin and Blockchain Metric Highlights
14State of Blockchain Q1 2016
Data sources and notes: CoinDesk,Blockchain, Bitcoi...
Both Total VC Investment and Average VC Deal Size
Rebounded Significantly From Q4 Low…
Millions($)
Millions($)
State of Bl...
54%
29%
41%
50%
22%
10%
3%
17%
0%
10%
20%
30%
40%
50%
60%
Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016
...
$20m
$30m
$20m
$31m
$75m
$50m
$30m
$13m
$60m
0
10
20
30
40
50
60
70
80
2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 201...
Bitcoin/Blockchain Had A Better Q1 Than Overall VC
Environment, Which Continues to Soften
18State of Blockchain Q1 2016
Da...
• Bitcoin startups are defined as ones that focus on payments, exchange
trading, remittances or any other ‘currency’ activ...
Bitcoin
77%
Blockchain
21%
Hybrid
2%
No. of companies
Bitcoin
59%
Blockchain
28%
Hybrid
12%
Total VC Raised
Blockchain and...
In Q1 Blockchain and Hybrid Startups Overtook
Bitcoin Startups in Total VC Investment for First Time
21State of Blockchain...
Chile Added a VC-backed Bitcoin Startup in Q1;
24 Countries with Bitcoin and Blockchain Startups
Sources: CoinDesk
Switzer...
Early Blockchain Investment Concentrating in the US,
UK, Israel, Argentina, Sweden and Germany
23State of Blockchain Q1 20...
Bitcoin VC Investment Now Falling Behind Early-
Stage Internet Investment
24State of Blockchain Q1 2016
Note: Internet fig...
Half of Total VC Investment Goes to Silicon Valley;
SV is Also HQ for Many of the Largest Startups
25State of Blockchain Q...
Largest Q1 % VC Investment Increase in Latin America;
Middle East, Africa and North America also Surged
26State of Blockch...
27State of Blockchain Q1 2016
III. Q1 State of Bitcoin
28State of Blockchain Q1 2016
3.a M&A and
Investment
One Acquisition in Q1
29State of Blockchain Q1 2016
Q1 Merger & Acquisitions
Acquirer Acquiree
Jan 2016
• One of the large...
Biggest Q1 Bitcoin-Related VC Deals Were
Significantly Smaller Than Blockchain Deals
30State of Blockchain Q1 2016
$16m $7...
Q1 2016 Bitcoin Investment Rounds
31State of Blockchain Q1 2016
Source: CoinDesk
Close Date Company Size ($m) Round Select...
Bitcoin Venture Investment Falls Into Seven Distinct
Industry Sectors
32State of Blockchain Q1 2016
Payment
Processing
Wal...
Sector Trends: Q1 Total Investment Dominated by
Financial Services Companies
33State of Blockchain Q1 2016
Data sources: C...
Sector Trends: 50% of Q1 Total Investment Raised
by Financial Services Companies
34State of Blockchain Q1 2016
Payment Pro...
0
5
10
15
20
25
30
Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016
35State...
Mining, Universal and Payment Processor Sectors
Saw Zero Investment in Q1
36State of Blockchain Q1 2016
• Infrastructure a...
37State of Blockchain Q1 2016
3.b Use Cases and
Commerce
Some Companies are Pivoting Beyond Bitcoin and
Blockchain Business Models
38State of Blockchain Q1 2016
(Formerly Coinalyt...
0
50000
100000
150000
200000
250000
300000
1/1/16 1/8/16 1/15/16 1/22/16 1/29/16 2/5/16 2/12/16 2/19/16 2/26/16 3/4/16 3/1...
R² = 0.988
0
2
4
6
8
10
12
14
16
18
20
Millions16 Million Bitcoin Wallets Forecasted by End of 2016
(+25% YoY)
40State of ...
Blockchain’s New Wallet Growth Rate Has
Climbed Last Two Quarters
41State of Blockchain Q1 2016
Data source: Blockchain
51...
79
112
104
32
52
48
62
88
0
20
40
60
80
100
120
Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016
Increase i...
With A-List Investors and Next-Generation Crypto,
Can Zcash Challenge Bitcoin on the Dark Web?
43State of Blockchain Q1 20...
44State of Blockchain Q1 2016
3.c Media and
Sentiment
Q1 Positive Bitcoin News
45State of Blockchain Q1 2016
Bitcoin prices relatively stable: volatility at
second lowest level...
Q1 Negative Bitcoin News
46State of Blockchain Q1 2016
Bitcoin network scalability issues: Higher-
than-average fees and s...
Both Western and Eastern Media Coverage of Bitcoin
Fell Q-o-Q
47State of Blockchain Q1 2016
Q1 News Published Mentioning B...
Google Searches: ‘Ethereum’ and ‘Onecoin’ Rising
Rapidly In 2016
48State of Blockchain Q1 2016
Q1 2016
Related Searches:To...
49State of Blockchain Q1 2016
3.d Price and Trading
Bitcoin Prices Relatively Stable in Q1
Source: CoinDesk Bitcoin Price Index, daily datacollectedat 00:00 UTC
State of Bloc...
Q1 Bitcoin Volatility Second Lowest In Past Two Years
51State of Blockchain Q1 2016
Source: CoinDesk
Date Quarterly Price ...
52State of Blockchain Q1 2016
Theories Why Bitcoin’s Price Has Stabilized
1. Uncertainty over
bitcoin scalability
debate
Z...
Bitcoin +4% Against US Dollar YTD But Lagging Other
Commodities, Currencies
53State of Blockchain Q1 2016
YTD% -15 -10 -5 ...
60
65
70
75
80
85
90
95
100
105
110
4-Jan 11-Jan 18-Jan 25-Jan 1-Feb 8-Feb 15-Feb 22-Feb 29-Feb 7-Mar 14-Mar 21-Mar 28-Mar...
0
20
40
60
80
100
120
0
50
100
150
200
250
300
Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-1...
China’s Bitcoin Exchange Market Share Almost 90%;
CNY/BTC Captures 95% of Total Volume
56State of Blockchain Q1 2016
Note:...
Percentage of Bitcoin Owned by the Top 500 Richest
Addresses Increases From 30% to 32%
57State of Blockchain Q1 2016
Note:...
Total Number of Altcoins Decreased in Q1 But
Altcoin Market Cap Share Increased to 17%
58State of Blockchain Q1 2016
Data ...
Dropped from
Top 10
Q1
Rank
Q4
Rank
Stellar 11 8
Peercoin 15 7
Overall, Top 10 Altcoins (by Market Capitalization)
Continu...
Top Performing Cryptocurrencies in Q1
State of Blockchain Q1 2016 60
Q1 Rank Name
Price on
1/1/16
(BTC)
Price on
3/31/16
(...
61State of Blockchain Q1 2016
3.e Technology
‘SegWit’ Bitcoin Scalability Proposal Boosts Confidence
and Tables (For Now) Block-Size Crisis
62State of Blockchain Q1 20...
Ethereum
?
Linux
Vitalik Buterin Satoshi NakamotoLinus Torvalds
Bitcoin
Bitcoin’s Block-Size Stalemate Highlights Possible...
AntPool
25%
F2Pool
24%
BitFury
14%
BTCC Pool
11%
BW.COM
6%
Slush
6%
KnCMiner
5%
21 Inc
2%
Unknown Pools Remain at 1%, Mini...
Network Difficulty Growth Rate Remains Constant at
67% QoQ
65State of Blockchain Q1 2016
Notes: Difficulty represents the ...
Number of Bitcoin Nodes Increased Significantly to
7,139, Up 26% from 5,657 End of Q4
66State of Blockchain Q1 2016
Data s...
67State of Blockchain Q1 2016
3.f Regulation and
Macro
EU Institutions Seek Greater Oversight of
Cryptocurrency Activity
68State of Blockchain Q1 2016
• The Commission is seekin...
Bitcoin Startups Stuck in Limbo as BitLicense
Process Drags On
69State of Blockchain Q1 2016
• Only one BitLicense issued ...
Select Country Regulatory Updates
70State of Blockchain Q1 2016
Japan Australia Russia
• Japan legislature
proposes defini...
71State of Blockchain Q1 2016
IV. Q1 State of Blockchain
72State of Blockchain Q1 2016
4.a Investment
Biggest VC Deals in Q1 Were Both Blockchain-Related
73State of Blockchain Q1 2016
$60m $55m
(Series A) February 2016(N/A) ...
Q1 2016 Blockchain Investment Rounds
74State of Blockchain Q1 2016
Source: CoinDesk
Close Date Company Size ($m) Round Sel...
Q1 2016 Blockchain Investment Rounds (cont.)
75State of Blockchain Q1 2016
Close Date Company
Size
($m)
Round Select Inves...
76State of Blockchain Q1 2016
4.b Media and
Sentiment
Q1 Top Blockchain News
77State of Blockchain Q1 2016
Microsoft’s Azure Blockchain-as-a-Service
(BaaS) adds 21 new partners...
Google Search of Blockchain Shows An Increasing
Trend In Q1, Up 32% over Q4
Note: Each vertical row represents an increase...
From Cryptotarians to Execs: ‘Bitcoin’ – ‘Blockchain’
Terminology Change Reflects Shifting User Base
79State of Blockchain...
‘Ethereum’ Joins the Top Blockchain-related Google
Searches, While ‘R3’ Slips
80State of Blockchain Q1 2016
Q1 2016
Relate...
Mainstream Media Coverage of Blockchain
Increased Q-o-Q, Especially in Chinese Media
81State of Blockchain Q1 2016
0 50 10...
Number of Blockchain Announcements by
Traditional Institutions Continued to Increase in Q1
82State of Blockchain Q1 2016
2...
Blockchains Herald the Arrival of New
Economic Public Goods
83State of Blockchain Q1 2016
Larry Summers
Former US Treasury...
4.c Use cases
84State of Blockchain Q1 2016
Homestead: Ethereum’s First Production Release
85State of Blockchain Q1 2016
• Homestead follows Frontier,
Ethereum’s inau...
Ethereum is Winning in Both Enterprise &
Consumer Markets
86State of Blockchain Q1 2016
• “Most of the debate has shifted ...
Hyperledger Project Has Grown to 40 members
87State of Blockchain Q1 2016
Dec 2015 Mar 2016Feb 2016
Source: The Hyperledge...
Hyperledger Project Update (contd.)
88State of Blockchain Q1 2016
• Recently established a Technical
Steering Committee (T...
0
5
10
15
20
25
30
10/11/15
17/11/15
24/11/15
01/12/15
08/12/15
15/12/15
22/12/15
29/12/15
05/01/16
12/01/16
19/01/16
26/0...
Other Than Microsoft and IBM, Database Firms
Remain Conspicuously Quiet About Blockchain Tech
Sources: ServerWatch, Micros...
R3 Actively Trialing Blockchain Technology
State of Blockchain Q1 2016 91
20th Jan 2016
• R3 completes blockchain test wit...
R3 Reveals Eight Focus Areas For Blockchain
Bank Trials
State of Blockchain Q1 2016 92
Source: CoinDesk
Federal Reserve System Officials Highlight
Blockchain’s Potential
State of Blockchain Q1 2016 93
Governor Lael Brainard
14...
94State of Blockchain Q1 2016
4.d Regulation
CFTC Commissioner: Agency Should Revisit
Rules for Distributed Ledgers
95State of Blockchain Q1 2016
Source: CoinDesk
J Ch...
US Bank Regulator to Examine Distributed
Ledgers in FinTech Framework Push
96State of Blockchain Q1 2016
US Office of the ...
SEC Chair: Agency ‘Actively Exploring’ Blockchain
Regulation
97State of Blockchain Q1 2016
Source: CoinDesk
Mary Jo White
...
European Parliament Event Explores Coding
Regulation Into Blockchain
98State of Blockchain Q1 2016
Source: CoinDesk
• Some...
About CoinDesk
• Find out more at www.coindesk.com
• Follow us on Twitter: @CoinDesk
• Subscribe to our daily email newsle...
Disclaimer
• CoinDesk makes every effort to ensure the information used these slides is
accurate and up to date. We cannot...
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State of Blockchain Q1 2016

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CoinDesk’s Q1 2016 State of Blockchain report summarizes key trends, data and events from the first quarter of 2016.

You'll be able to read analysis of the key trends in this article: http://www.coindesk.com/state-of-blockchain-q1-2016/

We'd appreciate feedback on our research:
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Published in: Business

State of Blockchain Q1 2016

  1. 1. 1State of Blockchain Q1 2016
  2. 2. About CoinDesk • World leader in digital currency and blockchain news • The Bitcoin Price Index serves as an industry reference point • Headquarters in New York • Consensus 2016 conference drew 1,500+ attendees, title sponsors Deloitte and Microsoft 2State of Blockchain Q1 2016
  3. 3. State of Blockchain Credits Creator and producer: Dr Garrick Hileman Cambridge Centre for Alternative Finance at the University of Cambridge Research Assistant: Joey Lim London School of Economics 3State of Blockchain Q1 2016 @GarrickHileman uk.linkedin.com/in/limjoey
  4. 4. Contents I. Taxonomy and Conceptual Framework II. Q1 Industry Overview III. Q1 State of Bitcoin a. M&A and Investment b. Use Cases and Commerce c. Media and Sentiment d. Price and Trading e. Technology f. Regulation and Macro IV. Q1 State of Blockchain a. Investment b. Media and Sentiment c. Use Cases d. Regulation 4State of Blockchain Q1 2016
  5. 5. 5State of Blockchain Q1 2016 I. Taxonomy and Conceptual Framework
  6. 6. Taxonomy: ‘Blockchain Tech’/’DLT’ vs ‘The Blockchain’ 6State of Blockchain Q1 2016 “Blockchain technology” “The Blockchain” or “DLT” (ie Bitcoin, Ethereum, etc) private (intra-) public (inter-) Intranets & IT The Internet vs
  7. 7. ‘Public’ (Open) vs ‘Private’ (Closed) Blockchains: Generalized Features Comparison 7State of Blockchain Q1 2016 Public Private Access Open read/write access to database Permissioned read and/or write access to database Speed Slower Faster Security Proof-of-Work/ Proof-of-Stake Pre-approved participants Identity Anonymous/ pseudonymous Known identities Asset Native assets Any asset Note: Some features can vary from platform to platform. Sources: Chain, Chris Skinner’s blog
  8. 8. Strengths and Weaknesses of Public Blockchains Image via ExtremeTech. Sources: Ethereum, MultiChain Strengths Weaknesses Immutable ledger Irreversible transactions Comparatively fast settlement (eg 10 minutes or less) Slow transaction clearing (eg 3-7 transactions/second) Reduce security risks associated with centralization-trusted third party More vulnerable to attacks ie 51%, spam, DDoS Easy to audit Reduced privacy Reduced need for trust Energy consumption State of Blockchain Q1 2016 8
  9. 9. Regulated Market Operators (eg stock exchanges) are Drawn to Private Blockchain Solutions 9State of Blockchain Q1 2016 Source: LSEG
  10. 10. Blockchains PrivatePublic PlatformSoftwareBlockchains Can Be Further Distinguished Between ‘Platform’ and ‘Software’ Providers Sources: Chain, Chris Skinner’s blog • Platforms (ie Facebook, iOS) enable outside developers to build applications on top • Software (eg Oracle 12c DB) is often run privately inside an organization, not open to outside developers • Unclear whether R3, DAH, etc will become platforms State of Blockchain Q1 2016 10
  11. 11. 11State of Blockchain Q1 2016 II. Q1 Industry Overview
  12. 12. Debate emerges over speed of blockchain adoption – will major changes take place soon (eg within two years) or 5-10 years away? Q1 2016 Summary 12State of Blockchain Q1 2016 Bitcoin ruled exempt from VAT by the European Court of Justice – ‘A big milestone’ for Europe as a hub for startups and transaction activity Total VC investment rebounds with growth rate increasing from 3% in Q4 to 17% in Q1, but investment still well- off previous highs It’s still “all about blockchain” – VC investment surpasses bitcoin sector as firms continue to partner with Hyperledger, Microsoft, R3CEV, etc Media attention returns with interest in blockchain technology, price rally and further speculation over Satoshi Nakamoto’s true identity Bitcoin price volatility decreases to second lowest level in two years as Ethereum (ether) price skyrockets +1,000%
  13. 13. Key Bitcoin And Blockchain Adoption Metrics: Price Up 82%, Trading Volume Increased 424% 13State of Blockchain Q1 2016 End-of-Quarter (EoQ) Year Ago Q1 2016 Q4 2015 Q1/Q4Δ Q4/Q3Δ Q1 2015 Δ Commerce Wallets (EoQ) 13,501,979 12,768,681 6% 16% 8,457,207 1.6x Transaction Volume (BTC) 412,345,683 384,835,478 7% 10% 291,817,718 1.4x ATMs (EoQ) 624 536 16% 13% 374 1.7x Price Price (EoQ) $415.16 $430.05 -3% 82% $243.39 1.7x Exchange trading volume (BTC) 415,283,897 150,025,305 277% 424% 48,927,526 8.5x Bitcoin market capitalization ($bn) (EoQ) $6.4 $6.5 -0.6% 86% $3.4 1.9x Industry All-time VC investment ($m) (EoQ) $1,109 $949 17% 3% $676 1.6x Number of VC-backed startups (EoQ) 138 127 9% 6% 103 1.3x Media Mainstream media mentions 398 521 -24% 27% 458 0.9x Blockchain Number of blockchain companies (EoQ) 59 54 9% 29% 14 4x Technology Network hashrate (billion/second) (EoQ) 1,028,361,537 743,604,444 38% 63% 346,028,956 3x Data sources and notes: seenext slide
  14. 14. Bitcoin and Blockchain Metric Highlights 14State of Blockchain Q1 2016 Data sources and notes: CoinDesk,Blockchain, BitcoinPulse,Github, Coin ATM Radar. Figures are cumulative from start of records, except transaction volume, exchange trading volume and media mentions which are figures for the quarter ending that month. Number of VC-backedstartups and VC investment unadjustedfor closed companies: Melotic, Buttercoin,BitInstant, andTradeHill. • Total number of blockchain VC deals vs bitcoin in Q1 • Bitcoin’s total market capitalization from a year ago • Total number of bitcoin ATMs from a year ago • Bitcoin network hashrate tripled from a year ago • Number of total blockchain startups from a year ago Up 2X Up 4X Up 3X
  15. 15. Both Total VC Investment and Average VC Deal Size Rebounded Significantly From Q4 Low… Millions($) Millions($) State of Blockchain Q1 2016 15 133 228 145 85 26 160 4.4 9.5 9.7 5.6 2.6 11.4 0 2 4 6 8 10 12 14 0 50 100 150 200 250 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Quarterly VC Investment ($m) Quarterly Total VC Investment ($m) Quarterly Average VC Investment Deal Size ($m) Data sources: CoinDesk
  16. 16. 54% 29% 41% 50% 22% 10% 3% 17% 0% 10% 20% 30% 40% 50% 60% Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Quarterly Percentage Growth in All-Time VC Investment …While VC Investment Growth Rate Remains Below Previous Levels 16State of Blockchain Q1 2016 Data sources: CoinDesk
  17. 17. $20m $30m $20m $31m $75m $50m $30m $13m $60m 0 10 20 30 40 50 60 70 80 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 The Trend of Declining VC Deal Size Reversed in Q1 Source: CoinDesk Millions($) State of Blockchain Q1 2016 17 Largest Quarterly VC Deals
  18. 18. Bitcoin/Blockchain Had A Better Q1 Than Overall VC Environment, Which Continues to Soften 18State of Blockchain Q1 2016 Data source: Bloomberg
  19. 19. • Bitcoin startups are defined as ones that focus on payments, exchange trading, remittances or any other ‘currency’ activity • Blockchain startups focus on ‘non-currency’ activities, such as securities settlement, property title, asset provenance, etc; Hybrids do both. • We continue to anticipate that more bitcoin startups will pivot towards blockchain and hybrid business models. Three Startup Categories : Bitcoin (Currency/Payments), Blockchain (Non-currency) and Hybrid (Both) Hybrid State of Blockchain Q1 2016 19 Bitcoin Blockchain
  20. 20. Bitcoin 77% Blockchain 21% Hybrid 2% No. of companies Bitcoin 59% Blockchain 28% Hybrid 12% Total VC Raised Blockchain and Hybrid Startups Raised 40% of All-Time VC Funds, Up From 36% in Q4 State of Blockchain Q1 2016 20 Note: Three new deals in January (including the $60m raised by Digital Asset Holdings) are included in these two charts). Note: $60m is the last figure reported, thoughit is an estimate. Data sources: CoinDesk
  21. 21. In Q1 Blockchain and Hybrid Startups Overtook Bitcoin Startups in Total VC Investment for First Time 21State of Blockchain Q1 2016 Data source: CoinDesk 53% 53% 98% 16% 47% 47% 2% 84% 0 10 20 30 40 50 60 70 80 90 100 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Investment Sector Distribution Percentage of Bitcoin Company Investment Percentage of Blockchain and Hybrid Company Investment %
  22. 22. Chile Added a VC-backed Bitcoin Startup in Q1; 24 Countries with Bitcoin and Blockchain Startups Sources: CoinDesk Switzerland Sweden Philippines South Korea Kenya Singapore Panama JapanCanada The Netherlands India Barbados Mexico France Australia Luxembourg United States Israel Denmark Argentina Germany United Kingdom China State of Blockchain Q1 2016 22 Chile
  23. 23. Early Blockchain Investment Concentrating in the US, UK, Israel, Argentina, Sweden and Germany 23State of Blockchain Q1 2016 Millions($) Note: the US is excluded from above chart for datavisualizationpurposes (radically alters y-axis scale). US investment is split between bitcoin and blockchain. Data sources: CoinDesk 0 10 20 30 40 50 60 70 Philippines C hileD enm arkAustraliaPanam a Luxem bourgKenyaM exico India Sw itzerland G erm anyFrance Argentina SingaporeJapan South Korea Barbados IsraelC anada C hinaSw eden U nited Kingdom The N etherlands Bitcoin Blockchain
  24. 24. Bitcoin VC Investment Now Falling Behind Early- Stage Internet Investment 24State of Blockchain Q1 2016 Note: Internet figures includeonly first-sequenceventure deals. *Year-end projection extrapolatedfrom YTD run rate. All figures unadjustedfor inflation, changes in the cost of launching a startupover last two decades, etc. Further methodology discussion. Bitcoin vs Early Internet VC Investment ($m) Millions $490 $503 $250 $639 0 100 200 300 400 500 600 700 2015 bitcoin,1995 Internet 2016 Bitcoin*,1996 Internet Data sources: CoinDesk, PricewaterhouseCoopers
  25. 25. Half of Total VC Investment Goes to Silicon Valley; SV is Also HQ for Many of the Largest Startups 25State of Blockchain Q1 2016 • Total number of VC-backed bitcoin and blockchain companies has increased steadily over the past several quarters, growing from 103 in Q1 2015 to 138 in Q1 2016 (34% increase). $ Invested No. of Companies Data sources: CoinDesk Location Value ($m) No. of companies Silicon Valley 566.2 39 Rest of World 543.0 99 Total 1109.2 138 Silicon Valley 51% Rest of World 49% Silicon Valley 30% Rest of World 77%
  26. 26. Largest Q1 % VC Investment Increase in Latin America; Middle East, Africa and North America also Surged 26State of Blockchain Q1 2016 $ Invested as of Q4 • VC investment in Middle East, Latin America and Africa picked up after drought for three consecutive quarters • Strong investment in US-based companies continues Note: $ invested represents all-time total bitcoin VC investment at the end of eachquarter. Data sources: CoinDesk $ Invested as of Q1 Regions Q1 ($m) Q4 ($m) Q/Q Δ ($m) Q/Q Δ US & Canada 839.3 710.7 128.6 18.1% Europe 162.5 156.4 6.1 3.9% Asia 60.5 59.5 1.0 1.7% Middle East 21.0 14.0 7.0 50% Latin America 24.8 7.5 17.3 231% Africa 1.1 1.1 0.0 0% Total 1109.2 949.2 161.2 17% Europe 15% Africa 0% Asia 5% Middle East 2% Latin America 2%US & Canada 76% Europe 16% Africa 0% Asia 6% Middle East 1% Latin America 1% US & Canada 75%
  27. 27. 27State of Blockchain Q1 2016 III. Q1 State of Bitcoin
  28. 28. 28State of Blockchain Q1 2016 3.a M&A and Investment
  29. 29. One Acquisition in Q1 29State of Blockchain Q1 2016 Q1 Merger & Acquisitions Acquirer Acquiree Jan 2016 • One of the largest mergers of notable brands in the bitcoin ecosystem Source: CoinDesk
  30. 30. Biggest Q1 Bitcoin-Related VC Deals Were Significantly Smaller Than Blockchain Deals 30State of Blockchain Q1 2016 $16m $7m (Series A) March 2016 (Series A) February 2016
  31. 31. Q1 2016 Bitcoin Investment Rounds 31State of Blockchain Q1 2016 Source: CoinDesk Close Date Company Size ($m) Round Select Investors Headquartered Mar-2016 Bitt 16.0 Series A Overstock Christ Church Feb-2016 Simplex 7.0 Series A Bitmain; Cumberland Mining; Funders Club; Undisclosed angel investors Tel Aviv Feb-2016 SurBTC 0.3 Seed Digital Currency Group; Sauzalito Ventures; Fernando Barros Santiago de Chile Jan-2016 SatoshiPay 0.4 Seed Coinsilium; FastForward Innovations London Jan-2016 Zebpay 1.0 Series A Amit Jindal, Arjun Handa, Nagendra Chaudhary India
  32. 32. Bitcoin Venture Investment Falls Into Seven Distinct Industry Sectors 32State of Blockchain Q1 2016 Payment Processing Wallets Mining Financial Services Exchanges Infrastructure Universal Source: CoinDesk
  33. 33. Sector Trends: Q1 Total Investment Dominated by Financial Services Companies 33State of Blockchain Q1 2016 Data sources: CoinDesk VC Investment by Ecosystem Category ($m) 0 58.42 16.3 80.5 0 0 6 0 10 20 30 40 50 60 70 80 90 Payment Processor Infrastructure Exchange Financial Services Mining Universal Wallet Millions($)
  34. 34. Sector Trends: 50% of Q1 Total Investment Raised by Financial Services Companies 34State of Blockchain Q1 2016 Payment Processor 0% Infrastructure 36% Exchange 10% Financial Services 50% Mining 0% Universal 0% Wallet 4% Data sources: CoinDesk
  35. 35. 0 5 10 15 20 25 30 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 35State of Blockchain Q1 2016 Growth in Bitcoin Startup ‘Deadpool’ Slows; in Q1 Cointrader Folded Citing ‘Security’ Issue Data sources: CoinDesk
  36. 36. Mining, Universal and Payment Processor Sectors Saw Zero Investment in Q1 36State of Blockchain Q1 2016 • Infrastructure and financial services startups received highest growths in VC investment at 62% and 60% • 10 new VC-backed financial services startups added this quarter $ Invested as of Q4 2015$ Invested as of Q1 2016 Note: $ invested represents all-time total bitcoin VC investment at the end of eachrespective quarter. Data sources: CoinDesk Sector Q1 ‘16 Q4 ‘15 Q/Q Δ ($m) Q/Q Δ ($m) ($m) Payment Processor 78.9 78.9 0 0% Infrastructure 153.2 94.8 58.4 62% Exchange 122.0 105.7 16.3 15% Financial Services 214.1 133.6 80.5 60% Mining 120.8 120.8 0 0% Universal 321.7 321.7 0 0% Wallet 99.8 93.8 6 6% Total 1110.4 949.2 161.2 17% Payment Processor 8% Infrastructure 10% Exchange 11% Financial Services 14% Mining 13% Universal 34% Wallet 10% Payment Processor 7% Infrastructure 14% Exchange 11% Financial Services 19% Mining 11% Universal 29% Wallet9%
  37. 37. 37State of Blockchain Q1 2016 3.b Use Cases and Commerce
  38. 38. Some Companies are Pivoting Beyond Bitcoin and Blockchain Business Models 38State of Blockchain Q1 2016 (Formerly Coinalytics) • Circle and Skry continue to work with bitcoin but have expanded into other areas • Circle’s fundamental value proposition now more closely resembles what FinTech companies like TransferWise offer customers
  39. 39. 0 50000 100000 150000 200000 250000 300000 1/1/16 1/8/16 1/15/16 1/22/16 1/29/16 2/5/16 2/12/16 2/19/16 2/26/16 3/4/16 3/11/16 3/18/16 3/25/16 Total no. of daily transactions No. of daily transactions excluding popular addresses Q1 Average Daily Bitcoin Transactions Increased by 23% From Last Quarter 39State of Blockchain Q1 2016 Note: 100 most popular addresses. Source: Blockchain Number of Transactions Per Day Q4 2015 daily average: 164,488 Q1 2016 daily average: 201,595
  40. 40. R² = 0.988 0 2 4 6 8 10 12 14 16 18 20 Millions16 Million Bitcoin Wallets Forecasted by End of 2016 (+25% YoY) 40State of Blockchain Q1 2016 Data sources and notes: total wallets basedon data from Blockchain,MultiBit, Coinbase, Andreas Schildbach(Android bitcoin wallet developer). Historical Coinbase data provided by BitcoinPulse.2015Q2 MultiBit figures notemade available, held constantas end of March 2015onwards. Total bitcoin wallets Forecasted bitcoin wallets
  41. 41. Blockchain’s New Wallet Growth Rate Has Climbed Last Two Quarters 41State of Blockchain Q1 2016 Data source: Blockchain 514,583 481,258 343,121 480,715 451,294 454,435 488,303 706,209 1,066,962 1,209,483 114% 50% 24% 27% 20% 17% 15% 19% 24% 22% 0% 20% 40% 60% 80% 100% 120% 0 200000 400000 600000 800000 1000000 1200000 1400000 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Number of New Wallets Added Each Quarter
  42. 42. 79 112 104 32 52 48 62 88 0 20 40 60 80 100 120 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Increase in ATMs in Each Quarter New Bitcoin ATM Deployments Growth Rate at 17% 42State of Blockchain Q1 2016 Data source: CoinATMRadar, CoinDesk
  43. 43. With A-List Investors and Next-Generation Crypto, Can Zcash Challenge Bitcoin on the Dark Web? 43State of Blockchain Q1 2016 Zooko Wilcox-O’Hearn CEO, Zcash • Zcash features ‘zero knowledge’ cryptography (zk-SNARKs) which, in contrast to bitcoin and many other cryptocurrencies, masks both transaction amounts and IDs • Still in alpha, scheduled to launch in 2016 • Possible privacy preserving applications in a future ‘cashless society’
  44. 44. 44State of Blockchain Q1 2016 3.c Media and Sentiment
  45. 45. Q1 Positive Bitcoin News 45State of Blockchain Q1 2016 Bitcoin prices relatively stable: volatility at second lowest level in two years Source: CoinDesk VC investment growth rate increases to 17% from 3% in Q4 Needham Report: Bitcoin undervalued by over $200 21 Inc’s Bitcoin Computers now shipping to 32 European countries
  46. 46. Q1 Negative Bitcoin News 46State of Blockchain Q1 2016 Bitcoin network scalability issues: Higher- than-average fees and slower transactions Bitcoin earns reputation for poor payment standards participation Bitcoin startups stuck in limbo as BitLicense process drags on Bitcoin branded a failure as media erupts following Mike Hearn exit Source: CoinDesk
  47. 47. Both Western and Eastern Media Coverage of Bitcoin Fell Q-o-Q 47State of Blockchain Q1 2016 Q1 News Published Mentioning Bitcoin Note: Numbers of stories obtained by searching‘bitcoin’ on respective publishers’ websites Sources: Financial Times, New York Times, Wall Street Journal and Sina 0 50 100 150 200 250 300 350 Sina WSJ NYT FT Q4 2015 Q1 2016
  48. 48. Google Searches: ‘Ethereum’ and ‘Onecoin’ Rising Rapidly In 2016 48State of Blockchain Q1 2016 Q1 2016 Related Searches:Top Related Searches:Rising 2015 Source: Google Trends search‘bitcoin’
  49. 49. 49State of Blockchain Q1 2016 3.d Price and Trading
  50. 50. Bitcoin Prices Relatively Stable in Q1 Source: CoinDesk Bitcoin Price Index, daily datacollectedat 00:00 UTC State of Blockchain Q1 2016 50 300 320 340 360 380 400 420 440 460 480 1-Jan 8-Jan 15-Jan 22-Jan 29-Jan 5-Feb 12-Feb 19-Feb 26-Feb 4-Mar 11-Mar 18-Mar 25-Mar 15 January Bitcoin branded a failure as Mike Hearn exits; Bitcoin price falls 15% amid network failure claims 5 March Bitcoin price dips below $400 following network disruptions 3 February Blockstream raises $55m to build out bitcoin’s blockchain; Digital Asset Holdings’s funding tops $60m with investments from Goldman Sachs, IBM 23 February Japan considers regulating bitcoin as currency 19 February Kraken bitcoin exchange acquires Coinsetter 22 January Digital Asset Holdings raises $50m from 13 financial firms 10 February IBM Director declares “We’re all in on blockchain” 29 March 10 new firms join Hyperledger project 16 March Overstock to issue its own stock on blockchain 14 March Ethereum launches first production software, Homestead
  51. 51. Q1 Bitcoin Volatility Second Lowest In Past Two Years 51State of Blockchain Q1 2016 Source: CoinDesk Date Quarterly Price High Quarterly Price Low Peak-to-Trough Percentage Δ Q2 2014 $665.73 (3rd June) $360.84 (10th April) 84% Q3 2014 $647.34 (2nd July) $374.73 (29th September) 42% Q4 2014 $427.24 (12th November) $309.87 (30th December) 27% Q1 2015 $314.59 (2nd January) $177.28 (14th January) 44% Q2 2015 $262.48 (30th June) $218.27 (14th April) 20% Q3 2015 $309.98 (12th July) $209.13 (24th August) 33% Q4 2015 $465.5 (15th December) $237.4 (2nd October) 96% Q1 2016 $458.28 (7th January) $358.77 (15th January) 22%
  52. 52. 52State of Blockchain Q1 2016 Theories Why Bitcoin’s Price Has Stabilized 1. Uncertainty over bitcoin scalability debate Zane Tackett Bitfinex 2. Rise of Ethereum Charles Bovaird Markets Weekly “[People are] mostly wondering how scaling will pan out…there’s a lot of watching and waiting [and as a result] things are pretty calm.” “The digital currency ether has been generating substantial visibility, a development that could draw attention – and trading activity – away from bitcoin.” 3. Upcoming Bitcoin Mining Reward Halving Joseph Lee Magnr “The steady bitcoin price shows strong faith in bitcoin’s underlying halving mechanism, this will be the network’s second major halving event.”
  53. 53. Bitcoin +4% Against US Dollar YTD But Lagging Other Commodities, Currencies 53State of Blockchain Q1 2016 YTD% -15 -10 -5 0 5 10 15 20 25 Argentina Ukraine UK India Mexico China New Zealand Switzerland Israel Bitcoin Australia Euro Norway South Africa Canada Japan Brazil Gold Silver Notes: Chart depicts YTD performance againstUSD. Data source: XE Currency.
  54. 54. 60 65 70 75 80 85 90 95 100 105 110 4-Jan 11-Jan 18-Jan 25-Jan 1-Feb 8-Feb 15-Feb 22-Feb 29-Feb 7-Mar 14-Mar 21-Mar 28-Mar FinTech Portforlio Index BPI FinTech Companies Outperformed Bitcoin in Q1; Show a Relatively Moderate-to-Low Correlation (0.38) 54State of Blockchain Q1 2016 Notes: BPI is CoinDesk’s price index. The full list of FinTech portfolio stocks can be found at Bank Innovation.The FinTech stock index is an unweighted index. BothCoinDesk BPI andFinTech portfolio index are normalised to 100on 1st January 2015. Data sources: BPI, OTCMarkets, Yahoo! Finance FinTech Portfolio Index: +1.34% Bitcoin Price Index: -4.23%
  55. 55. 0 20 40 60 80 100 120 0 50 100 150 200 250 300 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 USDBillions BTCMillions Monthly bitcoin trading volume (USD) Monthly bitcoin trading volume (BTC) Record-Setting Q1 Bitcoin Trading Volume Despite Modest Price Volatility 55State of Blockchain Q1 2016 Data sources: CoinDesk, Bitcoinity • Historically, bitcoin trading volume has spiked during periods of high volatility
  56. 56. China’s Bitcoin Exchange Market Share Almost 90%; CNY/BTC Captures 95% of Total Volume 56State of Blockchain Q1 2016 Note: Labels for currencies and exchanges with less than 1% market share are omitted. Data source:Bitcoinity Huobi 49.26% OKCoin 42.54% BTCC 2.25% Others 1.35% LakeBTC 1.18% Bitfinex 1.16% Exchange Market Share CNY 94.35% USD 4.47% Currency Share By Exchange Volume (BTC)
  57. 57. Percentage of Bitcoin Owned by the Top 500 Richest Addresses Increases From 30% to 32% 57State of Blockchain Q1 2016 Note: Block 390,000is at the start of 2016, Block 405,000is the current block Data Source: Bitcoin Rich List Percent of Bitcoins Owned by Richest Addresses Over Time PercentofBitcoinsOwned
  58. 58. Total Number of Altcoins Decreased in Q1 But Altcoin Market Cap Share Increased to 17% 58State of Blockchain Q1 2016 Data source: CoinMarketCap Note: Altcoin market cap share is calculated by dividing the sum of all non-bitcoin cryptocurrency market caps by the combined market caps of all cryptocurrencies (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 cryptocurrencies combined. 216 347 483 590 594 648 693 675 669 23% 7% 8% 9% 7% 9% 9% 6% 17% 0% 5% 10% 15% 20% 25% 0 100 200 300 400 500 600 700 800 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Total Number ofAltcoins Altcoin Market Cap Share (%)
  59. 59. Dropped from Top 10 Q1 Rank Q4 Rank Stellar 11 8 Peercoin 15 7 Overall, Top 10 Altcoins (by Market Capitalization) Continue to Show Consistency in Rankings Data source: CoinMarketCap Q1 Rank Name Market Cap Q4 Rank Δ 1 Bitcoin $6,502,885,105 Same 2 Ethereum $665,071,884 +2 3 Ripple $207,941,394 -1 4 Litecoin $146,116,272 -1 5 Dash $41,103,946 Same 6 MaidSafeCoin $29,147,634 +3 7 Dogecoin $21,035,696 -1 8 NEM $13,153,500 - 9 Bitshare $12,174,502 +1 10 Monero $11,994,246 - State of Blockchain Q1 2016 59
  60. 60. Top Performing Cryptocurrencies in Q1 State of Blockchain Q1 2016 60 Q1 Rank Name Price on 1/1/16 (BTC) Price on 3/31/16 (BTC) % Δ 2 Ethereum 0.00217 0.0284 1,309% 8 NEM 0.00000035 0.00000347 991% 6 MaidSafeCoin 0.0000338 0.000207 613% 5 Dash 0.00772 0.0167 216% 10 Monero 0.00109 0.00234 214% Data source: CoinMarketCap
  61. 61. 61State of Blockchain Q1 2016 3.e Technology
  62. 62. ‘SegWit’ Bitcoin Scalability Proposal Boosts Confidence and Tables (For Now) Block-Size Crisis 62State of Blockchain Q1 2016 Sources: CoinDesk, Pieter Wuille (2015) Segregatedwitness and deploying it for Bitcoin Presentation • Segregated witness alters how signature data is handled by the network to increase transaction capacity without raising block size limit. • This will make transactions appear smaller to current nodes on the network, so more can be included in a bitcoin block. Pieter Wuille Core Dev and Tech Engineer, Blockstream
  63. 63. Ethereum ? Linux Vitalik Buterin Satoshi NakamotoLinus Torvalds Bitcoin Bitcoin’s Block-Size Stalemate Highlights Possible Importance of Founders to Governance and Innovation • To date, the Ethereum community has avoided anything like the innovation-stalling bitcoin block size debate. • The Linux community traditionally relied on creator Linus Torvalds to settle contentious disputes. State of Blockchain Q1 2016 63
  64. 64. AntPool 25% F2Pool 24% BitFury 14% BTCC Pool 11% BW.COM 6% Slush 6% KnCMiner 5% 21 Inc 2% Unknown Pools Remain at 1%, Mining Pools Become More Concentrated 64State of Blockchain Q1 2016 Note: Labels for mining pools with 1% or less share are removed. Data source: Four-day average as of 14th April 2016 and6th January 2016on Blockchain Q1 2016 2015 • AntPool continues to grow while F2Pool maintains market share. AntPool 29% F2Pool 24% BTCC Pool 11% BitFury 9% BW.COM 8% Slush 5% Kano CKPool 4% KnCMiner 4% BitClub Network 4%
  65. 65. Network Difficulty Growth Rate Remains Constant at 67% QoQ 65State of Blockchain Q1 2016 Notes: Difficulty represents the number of necessary hashcalculations to mine a new block. Data source: CoinDesk Hashrate 6 3 10 40 66 15% 6% 20% 67% 67% 0% 10% 20% 30% 40% 50% 60% 70% 80% 0 10 20 30 40 50 60 70 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Billions Quarterly Increase in Mining Difficulty Percentage Increase in Mining Difficulty
  66. 66. Number of Bitcoin Nodes Increased Significantly to 7,139, Up 26% from 5,657 End of Q4 66State of Blockchain Q1 2016 Data source: Bitnodes
  67. 67. 67State of Blockchain Q1 2016 3.f Regulation and Macro
  68. 68. EU Institutions Seek Greater Oversight of Cryptocurrency Activity 68State of Blockchain Q1 2016 • The Commission is seeking “to help identify the users who trade in virtual currencies”, as well as end “the anonymity associated with such exchanges” • Calls for tightening regulation of both exchanges and wallet service providers • Commission preparing to potentially prohibit transactions from “high-risk countries” Source: CoinDesk • New European Parliament draft report on digital currencies calls for the creation of a task force on digital currencies • “By June at the latest [they] will propose measures to… have better control of payment forms such as virtual currencies”
  69. 69. Bitcoin Startups Stuck in Limbo as BitLicense Process Drags On 69State of Blockchain Q1 2016 • Only one BitLicense issued to date (Circle in September 2015) • As many as 21 startups are now operating under the BitLicense’s safe harbor provision, but waiting for an official confirmation that they are licensed. • Even some of the industry’s more well-funded applicants, such as Coinbase and Xapo, indicated that their applications are still being processed. Source: CoinDesk
  70. 70. Select Country Regulatory Updates 70State of Blockchain Q1 2016 Japan Australia Russia • Japan legislature proposes definition for bitcoin as “asset-like value” in a bid to regulate exchanges. • Japan legislator pushes for bitcoin consumption tax exemption. • Australian government seeks to end double taxation of bitcoin • Currently, bitcoin is considered a form of barter rather than money. • Australian businesses must pay goods-and-services tax if they sell digital currencies, and can be liable for the tax should they receive them as money. • Draft Bill seeking bitcoin ban reaches Russian legislature • Russia to propose 7-year prison sentences for digital currency issuers • Putin advisor: “Accepting bitcoin payments in Russia is a crime.” Source: CoinDesk
  71. 71. 71State of Blockchain Q1 2016 IV. Q1 State of Blockchain
  72. 72. 72State of Blockchain Q1 2016 4.a Investment
  73. 73. Biggest VC Deals in Q1 Were Both Blockchain-Related 73State of Blockchain Q1 2016 $60m $55m (Series A) February 2016(N/A) January 2016 Note: $60m raised by DAH is the last figure reported, and it is an estimate. Source: CoinDesk
  74. 74. Q1 2016 Blockchain Investment Rounds 74State of Blockchain Q1 2016 Source: CoinDesk Close Date Company Size ($m) Round Select Investors Headquartered Mar-2016 Stratumn 0.7 Seed Otium Venture; Eric Larchevêque Paris Mar-2016 Rootstock 1.0 Seed Bitmain Technology; Coinsillium; Digital Currency Group; Digital Currency Group BuenosAires Mar-2016 Elliptic 5.0 Series A Paladin Capital Group; Santander InnoVentures; KRW Schindler; Digital Currency Group; Octopus Ventures London Nov-2015 Chronicled 3.4 Seed Mandra Capital; Pantera Capital; Colbeck Capital Management San Francisco Feb-2016 Ribbit.me 1.5 Seed Hayaat Group New York
  75. 75. Q1 2016 Blockchain Investment Rounds (cont.) 75State of Blockchain Q1 2016 Close Date Company Size ($m) Round Select Investors Headquartered Feb-2016 Chainalysis 1.6 Seed Point Nine Capital; Techstars; Digital Currency Group; Funders Club; Converge VP New York Feb-2016 Blockstream 55.0 Series A AXA Strategic Ventures; Digital Garage; Horizons Ventures. AME Cloud Ventures; Blockchain Capital; Future/Perfect Ventures San Francisco Jan-2016 Digital Asset Holdings 60.0 N/A ABN AMRO; Accenture; ASX Limited; BNP Paribas; Broadridge Financial Solutions; Citi; CME Ventures; Deutsche Börse Group; Goldman Sachs; IBM; ICAP; J.P. Morgan; Santander InnoVentures; The Depository Trust & Clearing Corporation (DTCC); and The PNC Financial Services Group, Inc. New York Jan-2016 Gem 7.1 Series A Pelion Venture Partners, with KEC Ventures, Blockchain Capital, Digital Currency Group, RRE Ventures, Tamarisk Global, Drummond Road Capital, Tekton Ventures, Amplify.LA, Danmar Capital, James Joaquin Venice Source: CoinDesk
  76. 76. 76State of Blockchain Q1 2016 4.b Media and Sentiment
  77. 77. Q1 Top Blockchain News 77State of Blockchain Q1 2016 Microsoft’s Azure Blockchain-as-a-Service (BaaS) adds 21 new partners Hyperledger Project grows to 40 membersVC investment in blockchain startups exceeds bitcoin startup investment for first time R3 completes “biggest-ever” trial of blockchain solutions with 40 banks Source: CoinDesk
  78. 78. Google Search of Blockchain Shows An Increasing Trend In Q1, Up 32% over Q4 Note: Each vertical row represents an increase of 20 on thevertical index axis (‘blockchain’ banking increased from 68 endof Q4 to 91 endof Q1) Source: Google Trend searchfor “blockchain” from January to March 2016 State of Blockchain Q1 2016 78 80 0
  79. 79. From Cryptotarians to Execs: ‘Bitcoin’ – ‘Blockchain’ Terminology Change Reflects Shifting User Base 79State of Blockchain Q1 2016 2015 2016 Notes and Data source: Word clouds constructed basedon word frequency of CoinDesk articles. More info here: CoinDesk
  80. 80. ‘Ethereum’ Joins the Top Blockchain-related Google Searches, While ‘R3’ Slips 80State of Blockchain Q1 2016 Q1 2016 Related Searches:Top Related Searches:Rising 2015 Source: Google Trends searchfor ‘blockchain’
  81. 81. Mainstream Media Coverage of Blockchain Increased Q-o-Q, Especially in Chinese Media 81State of Blockchain Q1 2016 0 50 100 150 200 250 300 Sina WSJ NYT FT Q1 News Mentioning Blockchain Q4 2015 Q1 2016 Sources: Financial Times, New York Times, Wall Street Journal and Sina Note: Numbers of stories obtained by searching‘blockchain’ on respective publishers’ websites
  82. 82. Number of Blockchain Announcements by Traditional Institutions Continued to Increase in Q1 82State of Blockchain Q1 2016 22 34 56 0 10 20 30 40 50 60 Q3 2015 Q4 2015 Q1 2016 Note: ‘Traditional institutions’ include governments, central banks, financial institutions andother large firms. Source: CoinDesk
  83. 83. Blockchains Herald the Arrival of New Economic Public Goods 83State of Blockchain Q1 2016 Larry Summers Former US Treasury Secretary and Board Member • “Scientific progress is driven more by new tools and new observations than by hypothesis construction and testing” • “With the ubiquitous ability to collect data…will come more capacity to discover previously unknown relationships” • “Data collection is the ultimate public good” Source: LarrySummers.com
  84. 84. 4.c Use cases 84State of Blockchain Q1 2016
  85. 85. Homestead: Ethereum’s First Production Release 85State of Blockchain Q1 2016 • Homestead follows Frontier, Ethereum’s inaugural release, which was released to developers in July 2015 • Whereas Frontier featured only command-line interfaces, Homestead expands ease-of-use and what users can build. “Homestead’s arrival will begin to demonstrate the next generation of blockchain technology, whereby anything we can dream of can be accomplished in a decentralized manner using Ethereum.” Andrew Keys ConsenSys Enterprise Source: CoinDesk
  86. 86. Ethereum is Winning in Both Enterprise & Consumer Markets 86State of Blockchain Q1 2016 • “Most of the debate has shifted from what platform to use to what kind of ecosystem of value will form around Ethereum. People are talking about how to use Ethereum, not whether to use Ethereum.” • “Ethereum is getting so much traction is that it is equally suitable to both enterprise and consumer use cases” • “If you don’t use Ethereum, you have to defend that decision” Bernard Lunn Founding Partner at Daily Fintech Advisors Source: DailyFintech
  87. 87. Hyperledger Project Has Grown to 40 members 87State of Blockchain Q1 2016 Dec 2015 Mar 2016Feb 2016 Source: The Hyperledger Project
  88. 88. Hyperledger Project Update (contd.) 88State of Blockchain Q1 2016 • Recently established a Technical Steering Committee (TSC) led by IBM CTO of Open Cloud, Chris Ferris • In-person meeting held from 22nd to 25th March, which saw sessions on matters such as project lifecycle and proposed code for members • Now developing a white paper and collecting use cases for blockchain technology with the goal of creating a repository for these assets Source: CoinDesk We are “engineer[ing] a blockchain fabric from the ground up… building a blockchain for business.” Chris Ferris IBM CTO of Open Cloud
  89. 89. 0 5 10 15 20 25 30 10/11/15 17/11/15 24/11/15 01/12/15 08/12/15 15/12/15 22/12/15 29/12/15 05/01/16 12/01/16 19/01/16 26/01/16 02/02/16 09/02/16 16/02/16 23/02/16 01/03/16 08/03/16 15/03/16 22/03/16 29/03/16 05/04/16 Microsoft’s Azure Blockchain-as-a-Service (BaaS) Continues to Gain Traction, Grows to 26 Members 89State of Blockchain Q1 2016 Source: Microsoft Azure Number of members
  90. 90. Other Than Microsoft and IBM, Database Firms Remain Conspicuously Quiet About Blockchain Tech Sources: ServerWatch, Microsoft State of Blockchain Q1 2016 90 $29.09bn $38.60bn $10.64bn $16.13bn $0.30bn $2.73bn 2014 Total Revenue • Only two large database firms have made significant blockchain tech announcements: IBM and Microsoft. • In Nov 2015 Microsoft announced “Blockchain as a Service”, incorporating blockchain projects into Azure. • IBM is supporting the Hyperledger Project through the contribution of code, resources.
  91. 91. R3 Actively Trialing Blockchain Technology State of Blockchain Q1 2016 91 20th Jan 2016 • R3 completes blockchain test with 11 banks • The test involved a distributed ledger based on Ethereum but hosted on a private Microsoft Azure platform 3rd March 2016 • R3 completes trial of five different blockchain solutions with 40 banks • The blockchain network was used to facilitate the exchange of debt instruments Source: CoinDesk
  92. 92. R3 Reveals Eight Focus Areas For Blockchain Bank Trials State of Blockchain Q1 2016 92 Source: CoinDesk
  93. 93. Federal Reserve System Officials Highlight Blockchain’s Potential State of Blockchain Q1 2016 93 Governor Lael Brainard 14 April, 2016 • Distributed ledgers “hold out the promise of addressing important frictions and reducing intermediation in the clearing and settlement process” • “For example, reducing intermediation steps in cross-border payments may help reduce costs and counterparty risks and may additionally improve financial transparency” • “In securities clearing and settlement, the potential shift to one master record shared among participants…also can lead to greater transparency, reduced costs and faster securities settlement” Source: US Federal Reserve
  94. 94. 94State of Blockchain Q1 2016 4.d Regulation
  95. 95. CFTC Commissioner: Agency Should Revisit Rules for Distributed Ledgers 95State of Blockchain Q1 2016 Source: CoinDesk J Christopher Giancarlo Commodity Futures Trading Commission (CFTC) • “I believe the CFTC should examine as necessary rules that may inhibit distributed ledger technology innovation” • Warns that the CFTC could drive jobs related to emerging technologies like the blockchain to friendlier jurisdictions should they fail to adopt a ‘no harm’ strategy as they did for the early Web.
  96. 96. US Bank Regulator to Examine Distributed Ledgers in FinTech Framework Push 96State of Blockchain Q1 2016 US Office of the Comptroller of the Currency (OCC) • White paper: How banking institutions are experimenting with new technologies like the blockchain • “Responsible innovation” – the use of new technology “that is consistent with sound risk management and is aligned with the bank’s overall business strategy” Source: CoinDesk
  97. 97. SEC Chair: Agency ‘Actively Exploring’ Blockchain Regulation 97State of Blockchain Q1 2016 Source: CoinDesk Mary Jo White Securities and Exchange Commission (SEC) • “One key regulatory issue is whether blockchain applications require registration under existing Commission regulatory regimes, such as those for transfer agents or clearing agencies. We are actively exploring these issues and their implications.” • Remarked that new financial technologies “have the potential to transform how our markets operate in virtually every respect” and “[t]hese innovations compel us to think carefully about how best to protect investors so they – and we – can have confidence in this growing and changing landscape”
  98. 98. European Parliament Event Explores Coding Regulation Into Blockchain 98State of Blockchain Q1 2016 Source: CoinDesk • Some pushed for the idea that regulation of distributed ledgers could be accomplished through the code itself, rather than a top-down approach from one agency or another, which could stifle innovation. • Others expressed doubts: Henning Diedrich Programmer at IBM Pindar Wong Chairman of VeriFi (Hong Kong) “Blockchain technology can be used to facilitate the creation decentralized entities. But how do you punish a [decentralized] company? Who will be coding the rules or instituting automated regulatory mechanisms?” “Blockchains could be used to manage a multitude of devices within an Internet of Things framework. Sending computers to jail will make no sense so some kind of governance model will be essential in this instance.”
  99. 99. About CoinDesk • Find out more at www.coindesk.com • Follow us on Twitter: @CoinDesk • Subscribe to our daily email newsletters for the latest digital currency and blockchain news • If you have data you think should be included in future State of Bitcoin reports, email stateofbitcoin@coindesk.com • We also welcome any feedback you have on the report 99State of Blockchain Q1 2016
  100. 100. 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 Abra, Align Commerce, BitGo, Bitnet, BitPay, BitX, BTCC, Chain, Circle, Coinbase, Colu, itBit, Kraken and Xapo. 100State of Blockchain Q1 2016

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