SOBAB2016

State of Bitcoin and Blockchain 2016
28th January 2016
About CoinDesk
World leader in digital currency news, prices and information
The Bitcoin Price Index serves as an industry reference point
Offices in New York, Boston and London
Consensus 2016 conference will be held on 24 May in New York in
collaboration with Digital Currency Group and Coin Center
State of Bitcoin and Blockchain Credits

Creator and producer:
Dr. Garrick Hileman

London School of Economics and
University of Cambridge
Statistical assistance:
Danqing Ying
London School of Economics
@GarrickHileman
@DanqingYing
3
Contents
1. 2015 Year in Review
2. Q4 2015 State of Bitcoin
a.
b.
c.
d.
e.
f.
Price and Trading

Media and Sentiment
Investment and M&A
Use Cases and Commerce
Technology
Regulation and Macro
3. Q4 2015 State of Blockchain

a.
b.
c.
Overview
Private (Permissioned) Blockchains
Public (Permissionless) Blockchains
4. 2016 Thought Leader Survey &

Forecasts
1. 2015 Year in Review
2015 Industry Summary
All about Blockchain; major financial

services firms invest and explore
distributed ledger tech; bitcoin
companies pivot
VC investment slowed, growth rate

dipped to 3% in Q4; too early to say
whether this is industry specific or part
of overall downturn in all VC funding
Bitcoin price up 35% in 2015; China

dominates bitcoin trading and
mining, while Chinese financial
instability drives bitcoin price gains
Payment processor and wallet

sectors stagnate with little new VC
investment; most consumers still lack
compelling reason to use bitcoin
Regulatory tempo slows in 2015; NY

BitLicense finalised as some
companies apply, others abandon NY
market; Circle granted first license
Issues like block size and

concentration of mining pools draw
heated debate among bitcoin
community on scalability and security
2015 Price Chart and Key Bitcoin & Blockchain Events
11th
$450
5th
$400
$350
17th
December
29th May
$500
January
Bitstamp
claims it lost
$5m in hot
wallet hack
March
Former JP Morgan
exec Blythe Masters
joins blockchain startup
10th
March
Bitcoin startup 21
announces $116m
all-star VC backing
$300
Silk Road operator

Ross Ulbricht
sentenced to life in
prison
11th May
5th November
Nasdaq becomes first

major Wall St firm to
publicly announce trial of
bitcoin network
Final US government
auction of over 44,000
Silk Road bitcoins
3rd June
$250
$150
1-Jan
15th August
Bitcoin 'fork'
proposed in
controversial bid to
resolve scalability
question
New York
releases final
BitLicense
$200
R3s distributed
ledger initiative
grows to 42
members
16th
November
Amazon starts
shipping 21
bitcoin
computers
20th January
15th April
23rd June
9th September
BBVA, USAA join

Coinbase's $75m
Series B
MIT Media Lab

launched Digital
Currency Initiative
Bitcoin network
survives surprise
stress test
Visa, Capital One back

blockchain startup Chain
in $30m round
1-Feb
1-Mar
1-Apr
1-May
1-Jun
1-Jul
1-Aug
1-Sep
1-Oct
1-Nov
1-Dec
Source: CoinDesk Bitcoin Price Index, daily data collected at 00:00 UTC
Key Bitcoin And Blockchain Adoption Metrics: Price

Up 82%, Trading Volume Increased 424%
Quarterly Total or
End-of-Quarter (EoQ)
Q4 2015
Q3 2015
Commerce
Wallets (EoQ)
12,768,681
Transaction Volume (BTC)
384,835,478
Merchants annual revenue ($bn) (EoQ)
$197
ATMs (EoQ)
536
Price
Price (EoQ)
$430.05
Exchange trading volume (BTC)
150,025,305
Bitcoin market capitalization ($bn)
(EoQ)
$6.5
Industry
All-time VC investment ($m) (EoQ)
$949
Number of VC-backed startups (EoQ)
127
Media
Mainstream media mentions
521
Blockchain
Number of blockchain companies (EoQ)
54
Technology
Network hashrate (billion/second) (EoQ) 743,604,444
Q4/Q3 Q3/Q2
Year Ago
Q4 2014
11,051,719
350,286,741
$190
475
16%
10%
4%
13%
18%
7,396,772 2x
7% 291,817,718 1x
0%
$180 1x
12%
342 2x
$236.25
28,615,261
82%
424%
-10%
17%
$319.7 1x
40,041,026 4x
$3.5
86%
-8%
$4.4 1x
$923
120
3%
6%
10%
6%
$459 2x
90 1x
411
27%
11%
508 1x
42
29%
40%
14 4x
457,184,328
63%
30% 313,142,289 2x
8
2015 Bitcoin and Blockchain Metric Highlights
Up 2X
New wallets and ATMs both doubled from end of 2014

Network hashrate doubled from end of 2014
Total VC investment doubled from end of 2014
Up 4X
Exchange trading volume in Q4 2015 is four times greater

than Q4 2014
Number of large firms interested in blockchain technology is
four times greater than end of 2014
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-backed startups and VC
investment unadjusted for closed companies: Melotic, Buttercoin, BitInstant, and TradeHill.
Biggest VC Deals in 2015
$116m*
$75m
$50m
(Series A) March 2015
(Series C) January 2015
(Series C) April 2015
Investors: Andreessen
Horowitz, Data Collective,
Khosla Ventures, RRE
Ventures and Yuan Capital
Investors: New York Stock

Exchange, USAA, BBVA,
Andreessen Horowitz
Investors: Goldman Sachs,

IDG Capital Partners, Breyer
Capital
*Note: Exact timing of when 21 Inc raised $116m has not been revealed and its likely that much of the funding was raised in 2014.
Source: CoinDesk
10
Annual VC Investment in 2015 Increased 36% Over VC

Investment in 2014
$362m $490m
VC investment in 2014
VC investment in 2015*
*Note: Exact timing of when 21 Inc raised $116m has not been revealed and its likely that much of the funding was raised in 2014.
Data sources: CoinDesk, CrunchBase
11
While 2015 VC Investment Was Greater Than 2014,

the Growth Rate Slowed in 2015
Millions
$600
300%
280%
$490
$500
$400
250%
200%
$362
$300
150%
$200
100%
$100
50%
36%
$0
0%
2014
2015
Total VC Investment ($M)
Annual Percentage Growth
12
By Comparison, Annual Internet VC Investment

Increased to 155% in 1996, Slowed to 41% in 1997
Billions
Annual Internet VC Investment

$10
308%
$9
$9.08
350%
300%
$8
250%
$7
$6
200%
155%
$5
$4.39
150%
$4
107%
$3
$2
$1
100%
71%
$0.17
$0.45
41%
$0.63
$1.08
50%
0%
$0
1995
1996
1997
Annual Investment ($b)
1998
1999
Annual percentage increase
2000
Data source: PricewaterhouseCoopers
13
Growth Rate of Quarterly Bitcoin and Blockchain VC

Investment Slowing, But
Quarterly Percentage Growth in All-Time VC Investment
80%
70%
68%
60%
54%
50%
50%
41%
40%
29%
30%
22%
20%
10%
10%
3%
0%
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Some of the
slowdown in
growth rate
could be
explained by
the law of large
numbers for
business,
where
achieving the
same % growth
rate on a larger
base can
steadily
become more
difficult
Q4 2015
14
Bitcoin/Blockchain Industry Not Alone; Overall VC

Funding Environment Softened in 2015
US Venture Capital Investment ($bn)
Total VC investment across all tech sectors decreased 9% from $31.1bn

in 2014 to $28.2bn 2015; number of deals decreased 13% from 2014
Data source: Bloomberg
15
Blockchain Startups Still Lag Behind Bitcoin Startups

in VC Investment
100%
Distribution of Investment Among Bitcoin, Blockchain and

Hybrid Companies
98%
80%
64%
60%
40%
53%
53%
47%
47%
36%
20%
2%
0%
Q1 2015
Q2 2015
Percentage of Bitcoin Company Investment
Q3 2015
Q4 2015
Percentage of Blockchain and Hybrid Company Investment
Data source: CoinDesk
16
Bitcoin Deadpool Grows to 26 Startups; Besides Funding,

Security Also Commonly Cited Cause of Death
30
25
20
Agora
15
Bit121
10
0
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
17
Notable 2015 Bitcoin Announcements by

Major Financial Firms
Visa Europe is working to leverage bitcoin

blockchain for remittance services
MasterCard and American Express invested in

Digital Currency Group (DCG) and Abra,
respectively
PayPal adds Xapo CEO to Board of Directors
Source: CoinDesk
18
Notable 2015 Blockchain Announcements by Major

Financial Firms
Nasdaq debuted its blockchain-based private

markets product, Nasdaq Linq
CME and London Stock Exchange form
blockchain settlement group
Australian Securities Exchange selects Digital
Asset to develop distributed ledger solutions
Source: CoinDesk
19
Notable Regulatory Developments in 2015

UK Treasury: AML rules for
wallets and prudential
regulations for exchanges
European Court of Justice
(ECJ): Bitcoin sales are not
subject to VAT
itBit Trust Company is chartered
under New York Banking Law by
the New York State Department
of Financial Services (NYDFS)
New York: The NY BitLicense
became effective in August
Bank Secrecy Act (BSA)

audits: FinCEN is serious
about anti-money laundering
enforcement
Commodity Futures Trade
Commission (CFTC):
Bitcoins are commodities
Hong Kong: No need for
bitcoin regulation
New Jersey: Digital Currency
Jobs Creation Act introduced
Securities and Exchange

Commission (SEC): Some
mining contracts are securities
Source: CoinDesk
20
Scaling Bitcoin Debate Draws Causalities on Both

Sides, Stress Tests Hamper Network
Three significant stress tests (or spam attacks) took place in the 2nd half of 2015
June
July
October
Conducted by Conducted by Stress test

CoinWallet.eu
an unknown
rumoured to
party
be carried out
Spent 20 BTC
by a hired
(around
Largest bitcoin
Russian
$5,000) on
transaction of
named Alister
transactions
all time was
Maclin
totaling about
created to
200MB in data
clean up the
mess
Number of reachable nodes declined following the October stress test
The bitcoin network stress tests orchestrated by CoinWallet may have breached UK
technology law
Sources: MotherBoard, CoinDesk
21
Unknown Pools Dropped Significantly from 11% to 1%,

Mining Pools Become More Concentrated
2015
2014
BW.COM
6%
Unknown
11%
AntPool
2%
KnCMiner
3%
Slush
4%
BTCC Pool
11%
Discus Fish
31%
Slush
6%
KnCMiner
5%
21 Inc.
2%
BitFury
14%
Unknown with
1AcAj9p Address
4%
Polmine
4%
Unknown with
1BX5YoL Address
4%
Eligius
5%
GHash.IO
22%
F2Pool
24%
AntPool
25%
BTC Guild
5%
Antpool and F2Pool have grown significantly, from 2% to 50% in 2015; both now
maintain a consistent 25% share of bitcoins hashing power
Note: Labels for mining pools with 1% or less share are removed. Data source: Four-day
average as of 2nd October 2014 and 6th January 2016 on Blockchain
22
2. Q4 2015
State of Bitcoin
23
Q4 2015 Summary
VC investment growth rate dropped
from 11% in Q3 to 3% in Q4; unclear if
this is sector specific or driven by
overall VC environment
Its all about blockchain; 42 major

financial services firms partner with
R3CEV to explore blockchain
applications
Bitcoin price volatility reaches twoyear high amid price rally and high
exchange trading volume; bitcoin
price up 82%
Bitcoin is exempt from VAT by the

European Court of Justice - A big
milestone according to European
exchanges
Developing-world VC investment
stagnates; debate emerges over cost
advantages and overall value
proposition of rebittances
Media attention returns to sector with

interest in blockchain technology,
price rally and new speculation on
Satoshi Nakamotos real identity
24
2.a Price and Trading
25
CoinDesk Bitcoin Price Index

Q4 & 2015 by the Numbers
26
Bitcoin Price Rallied in Q4

10th
$500
November
Bitcoin price drops

13% to below $350
after hitting $450 for
the first time in 2015
$450
5th November
$400
9th December
Supposed Satoshi
Bitcoin price climbs to
Nakamoto 'unmasking' one-year high on record
might be driving bitcoin's volume
price rally
19th
November
$350
5th
December
3rd November
Bitcoin price breaks
$400 amid 12% surge
on China concerns
$300
16th
November
R3s distributed
ledger initiative
grows to 42
bank members
Visa Europe
demos bitcoin
remittance app
Amazon starts
shipping 21
bitcoin computers
$250
$200
17th
December
EU announces
possible crack
down on bitcoin
after Paris attacks
Final US government
auction of over 44,000
Silk Road bitcoins
11th December
1-Oct
8-Oct
15-Oct
22-Oct
29-Oct
5-Nov
12-Nov
19-Nov
26-Nov
3-Dec
10-Dec
17-Dec
24-Dec
31-Dec
27
Bitcoin Rebounded From the Worst Performing

Currency in 2014 (-67%) to Best in 2015 (+35%)
Bitcoin was
also the
worlds top
performing
currency in
2013
Data uses USD as a base currency. Source: the Money Project
28
Bitcoin vs. FinTech: Bitcoins 2015 Appreciation (+35%)

Surpasses Publicly Traded FinTech Stocks (+12%)
Bitcoin Price Index: +35%
150
140
FinTech Portfolio Index: +12%
130
120
110
100
90
80
70
60
50
01-Jan-15
01-Apr-15
01-Jul-15
FinTech Portforlio Index
01-Oct-15
BPI
Notes: BPI is CoinDesks price index. The full list of FinTech portfolio stocks can be found at Bank Innovation. The FinTech stock index is an
unweighted index. Both CoinDesk BPI and FinTech portfolio index are normalised to 100 on 1st January 2015.
Data sources: BPI, OTCMarkets, eoddata
29
Main Drivers Behind the Price Rally

Positive media coverage and US
Marshalls auction
European Court of Justice exempted

bitcoin from VAT across EU
Bobby Lee, CEO of BTCC, noted that bitcoins price was

trading up to 10% higher in the Chinese market
As China's government steps up capital controls to limit one
widely used avoidance path, its citizens appear to be shifting
resources to the next best option, cryptocurrencies.
- Robert Viglione, PHD, Darla Moore School of Business
Sources: Viglione (2015), CoinDesk, itBit
30
Some Measures Show a Decrease in Bitcoin Volatility
Volatility has been on

the decline since
bitcoins inception. In
2015, bitcoin volatility
fell by 21%. More
specifically, BTC/USD
exchange volatility
(trailing 30-day
average) fell from
3.98% to 3.15% this
year.
Source: Coinbase blog, 31st Dec 2015
31
While Other Measures Show Q4 Bitcoin Volatility is at

a Two-Year High
Date
Quarterly Price High
Quarterly Price Low
Peak-to-Trough
Percentage
Q1 2014
$951.39 (6th January)
$458.50 (31st March)
52%
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
$237.4 (2nd October)
$465.5 (15th December)
96%
Source: CoinDesk
32
High Volatility = More Trading:

Q4 Bitcoin Trading Volumes Hit One-Year High
90
40
80
35
70
30
60
25
50
20
40
15
30
10
20
10
Monthly bitcoin trading volume (USD)
Monthly bitcoin trading volume (BTC)
Data sources: CoinDesk, Bitcoinity

Note: Bitcoinity has removed Mt Gox data, so trading volume chart may look different from those in previous State of Bitcoin reports.
33
USD Billion
BTC Million
Monthly Bitcoin Trading Volume
Trading Volume in Bitcoin Investment Trust (GBTC) is

Positively Correlated (0.53) With Exchange Trading
Weekly Indexed Bitcoin and GBTC Trading Volume
1200
1000
800
600
400
200
0
04/05/15
04/06/15
04/07/15
04/08/15
BTC Volume
04/09/15
04/10/15
04/11/15
04/12/15
GBTC Volume
Data sources: OTCMarket, Bitcoinity
34
Percentage of Bitcoin Owned by the Top 500 Richest

Addresses Decreases From 33% to 30%
Percent of Bitcoins Owned
Percent of Bitcoins Owned by Richest Addresses Over Time
Note: Block 335,000 is the block roughly one year ago and Block 390,000 is around the current block
Data Source: Bitcoin Rich List
35
Total Number of Altcoins Decreased by 3% in Q4;

Altcoin Market Cap Share Decreased to 6%
800
25%
23%
700
693
648
590
600
15%
400
347
9%
216
200
100
20%
594
483
500
300
675
9%
9%
7%
8%
10%
9%
7%
6%
5%
64
0%
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Total Number of Altcoins
Jun-15
Sep-15
Dec-15
Altcoin Market Cap Share (%)
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.
Data source: CoinMarketCap
36
Top Altcoins Prove Consistency, but

Q4
Rank
Market Cap
Q3
Rank
$6,757,260,784
Same
Name
Bitcoin
Ripple
$203,373,383
Same
Litecoin
$154,072,197
Same
Ethereum
$72,555,828
Same
Dash
$20,865,697
+1
Dogecoin
$14,462,829
+2
Peercoin
$9,946,601
+3
Stellar
$8,321,801
+1
MaidSafeCoin
$6,946,499
+2
10
Bitshare
$6,632,485
-5
Dropped from
Top 10
BanxShares
Q4
Rank
Q3
Rank
588
Data source: CoinMarketCap data as at end of quarter (7th January 2016 and 1st October 2015, respectively)
37
There Are Now Over 400 Dead Altcoins

2chcoin
66coin
8coin
99cents
Acros
AeroCoin
Aircoin
Alcohoin
Alicoin
Aliencoin
AllAgesCoin
Allahcoin
AlphaCoin
AlphaOmegaCoin
Altrocoin
AmericanCoin
AmeriCoin
AminaCoin
AmKoin
Apecoin
AphroditeCoin
Appcoin
AppleByte
Arkhash
Armoredcoin
AstroCoin
AustraliaCoin
Babycoin
BaconBitsCoin
Badcoin
Basecoin
BatCoin
BeaoCoin
Beatlecoin
BeeCoin
BeerCoin
BeliCoin
Bells
BestCoin
Billaume
Binarycoin
Birdcoin
Bitcoin2
Bitcoin2.0
Bitcoin3.0
BiteCoin
Bitinium
Bitland
Bitleu
Bitpeso
Bitpug
Bitraam
Blazecoin
BlobbyCoin
Bluechip
Bones
BonusCoins
Boomcoin
Boringcoin
Bosscoin
Bountycoin
Boxxycoin
Boycoin
Brokebackmountaincoin
BTCTalkCoin
Bumbacoin
Burbucoin
ButterflyCoin
Californiacoin
Cancercurecoin
Capitalcoin
CataloniaCoin
Catedoge
Championcoin
Charitycoin
Chichicoin
Chicoin
Chococoin
ChoomCoin
ChuckCoin
Citizencoin
ClockCoin
Clockwisecoin
CloudCoin
Cnote
Cococoin
Coffeecoin
Coiledcoin
Coin
Coin2.0
Coincoin
CoinyeCoin
ColbertCoin
CollegeCoin
Cometcoin
Compasscoin
Cooperationcoin
CopperBars
CopyCoin
Note: An altcoin is counted as dead when it does not have any reported market cap.
Sources: bitcointalk, CoinMarketCap
38
2.b Media and

Sentiment
39
Q4 Positive News
Bitcoin price rockets to one-year
high on record volumes
Visa Europe demos

remittance app built using
bitcoin blockchain
Amazon starts shipping 21 Bitcoin
Computers
Source: CoinDesk
40
Q4 Negative News
Increasing number of bitcoin companies

enter dead pool
VC investment growth rate dropped from

11% in Q3 to 3% in Q4; companies
focused on wallets and payment
processors report no new funding
Digital currency exchange Cryptsy has

suspended withdrawals and faces problems
with allegations of fraud and
mismanagement
SEC charged GAW Miners, ZenMiner and

CEO Josh Garza with the fraudulent sale of
unlicensed securities and the operation of a
Ponzi scheme
Source: CoinDesk
41
Q4 Most-Viewed CoinDesk Articles: 60% Are PriceRelated

CoinDesks Top 10 Most Viewed Stories in Q4
Rank
Title
Date
Bitcoin's Price Rise Explained by Industry Insiders
31st October
Poll: What Will Bitcoin's Price Be at the End of 2015?
2nd November
US Government to Sell Over 44,000 Bitcoins Today
5th November
Vote for 2015's Most Influential People in Bitcoin and Blockchain
24th November
Bitcoin Price Rockets to One-Year High on Record Volumes
11th December
Satoshi Nakamoto Unmasking Might Be Driving Bitcoin's Price Rally
9th December
Bitcoin Price Breaks $400 Amid 12% Surge
3rd November
Jamie Dimon: Bitcoin Will Not Survive
5th November
Ben Bernanke: Bitcoin Has Serious Problems'
19th November
10
Bitcoin Price Drops 13% to Fall Below $350
10th November
Source: CoinDesk top 10 Q3 stories based on pageviews
42
Mainstream Media Coverage of Bitcoin on Chinas Sina

Increased 42% QoQ, Largely Flat in Western Media
News Published Mentioning Bitcoin
46
FT
77
76
76
NYT
87
81
WSJ
202
Sina
287
0
50
100
150
Q3 2015
200
250
300
350
Q4 2015
Note: Numbers of stories obtained by searching bitcoin on respective publishers websites

Sources: Financial Times, New York Times, Wall Street Journal and Sina
43
China Bitcoin Exchange Market Share Almost 90%;

CNY/BTC Captures 95% of Total Volume
Currency Share by Exchange Volume (BTC)
lakebtc,
Exchange Market Share
2.10%
bitstamp,
1.63%
bitfinex,
2.45%
USD, 3.91%
others, 3.13%
btcchina,
4.10%
huobi,
42.85%
CNY, 95.05%
okcoin,
41.21%
Note: Labels for currencies and exchanges with less than 1% market share are omitted. Data source: Bitcoinity
44
Google Searches: Gemini Bitcoin and mmm Bitcoin (Notorious Ponzi

Scheme) Have Been Rising Fast in Past Three Months
Related Searches: Top
Related Searches: Rising
Q4 2015
2015
Source: Google Trends search bitcoin
45
Bitcoin Academic Research Increased by 8% in 2015,

Economics Discipline Leads with 25% of Publications
Number of New Bitcoin Academic
Research Publications Each Year
Discipline Distribution of Publications

Sociology
8%
Politics
1%
300
248
Law
15%
267
250
Economics
25%
200
Environment
1%
150
Cryptography
and Security
17%
Finance
10%
Computer
Science &
Engineering
23%
100
50
Accounting
0%
71
1
2008
2009
2010
2011
23
0
2012
2013
2014
2015
Note: Run rate calculated for 2015 total research. Sources: Brett Scott , Peer-to-Peer Review: The State of Academic Bitcoin Research 2014, JSTOR,
Science Direct, Ingenta, Microsoft academic search, SpringerLink, SSRN, Taylor and Francis, Wiley, ArXiv, Oxford Journals , deepdyve, researchgate,
seekdl, dblp, Cryptology ePrint Archive, Freesearch and Cambridge Journals.
46
2.c Investment and

M&A
47
Biggest VC Deals in Q4
$5m
$13m
(Series A) November 2015
(Series B) October 2015
Source: CoinDesk
48
VC Deal Sizes Continue Declining
Millions
Largest Quarterly VC Deals

$80
$75*
$70
$60
$50
$50
$40
$31
$30
$30
$30
$25
$20
$20
$20
$13
$10
$0
2013 Q4
2014 Q1
2014 Q2
2014 Q3
2014 Q4
2015 Q1
2015 Q2
2015 Q3
2015 Q4
*Note: 21 Inc. is excluded because the precise timing of when it raised the $116m, which occurred in various
individual stages, has not been revealed.
Source: CoinDesk
49
No New Countries Added a VC-backed Bitcoin Startup

in Q4 Keeping Total at 23 Countries
Argentina
Australia
Barbados
Canada
China
India
Israel
Japan
Kenya
Philippines
Singapore
South Korea
Sweden
Luxembourg
Switzerland
Denmark
Mexico
United Kingdom
France
The
Netherlands
United States
Germany
Panama
Sources: CoinDesk, CrunchBase
50
Both Total VC Investment and Average VC Deal Size

Dropped QoQ
$250
$12
$228
$200
$10
$150
$10
$10
$8
$145
$133
$6
$6
$100
$74
$85
$4
$4
$3
$3
$50
$26
$0
$2
$0
Q3 2014
Q4 2014
Q1 2015
Quarterly Total VC Investment ($m)
Q2 2015
Q3 2015
Q4 2015
Quarterly Average VC Investment Deal Size ($m)
51
Millions
Millions
Quarterly VC Investment ($m)
Bitcoin VC Investment Now Falling Behind EarlyStage Internet Investment

Millions
Bitcoin vs Early Internet VC Investment ($m)

$700
$639
$600
$490
$500
$400
$362
$300
$250
$200
$100
$0
2014
Bitcoin
1995
Internet
2015
Bitcoin
1996
Internet
Note: Internet figures include only first-sequence venture deals. Year-end projection extrapolated from YTD run rate. All figures unadjusted for inflation,
changes in the cost of launching a startup over last two decades, etc. Further methodology discussion.
Data sources: CoinDesk, PricewaterhouseCoopers
52
Asia Saw Largest Q4 % Increase; New Investment in

Middle East, Latin America and Africa Has Evaporated
$ Invested as of Q4
Africa 0%
Europe
16%
Asia 6%
Middle East
1%
US &
Canada
75%
Latin
America
1%
$ Invested as of Q3
Regions
Q4 ($m) Q3 ($m) Q/Q ($m) Q/Q

Africa 0%
US &
Canada
710.7
694.3
16.5
2.4%
Europe
156.4
155.8
0.57
0.4%
Asia
59.5
50.2
9.3
18.5%
Middle
East
14.0
14.0
0.0
0.0%
Latin
America
7.5
7.5
0.0
0.0%
Africa
1.1
1.1
0.0
0.0%
Total
949.2
922.9
26.3
Europe
17%
Asia 5%
Middle East
2%
US &
Canada
75%
Latin
America
1%
2.9%
No VC investment in Middle East, Latin America and Africa for three

consecutive quarters
US continues to dominate bitcoin VC investment
Note: $ invested represents all-time total bitcoin VC investment at the end of each quarter. Data sources: CoinDesk, CrunchBase
53
US VC Investment is 2.6x the Rest of World Combined
Millions
Total Funding by Country ($m)

$70
$60
$50
$40
$30
$20
$10
$0
Note: US is excluded from above chart. Data sources: CoinDesk, CrunchBase
54
Share of VC Investment in Silicon Valley Remained

Relatively Constant Over Past Quarters
$ Invested
No. of Companies
Location
Rest of
World 47%
Silicon
Valley 53%
Value ($m)
No. of
companies
Silicon Valley
507.8
38
Rest of World
449.5
90
Total
957.3
128
Silicon Valley
30%
Rest of World
70%
Total number of VC-backed bitcoin companies increased steadily over the

past quarters
55
Venture Investment Falls Into

Seven Distinct Bitcoin Industry Sectors
Infrastructure
Wallets
Exchanges
Universal
Payment
Processing
Source: CoinDesk
Financial
Services
Mining
56
Sector Trends: 69% of This Quarters Total Investment Is

Raised by Financial Services Companies
Millions
VC Investment by Ecosystem Category ($m)

$250.0
$200.0
$150.0
$100.0
$50.0
$0.0
Payment
Processor
Exchange
Universal
Q1
Mining
Q2
Q3
Financial
Services
Wallet
Infrastructure
Q4
57
Wallets, Payment Processors Have Raised No New

Investment for Several Quarters
2013 to 2015 VC Investment by Ecosystem Category ($m)
Millions
$350
$300
$250
$200
$150
$100
$50
$0
Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
Payment Processor
Exchange
Universal
Mining
Financial Services
Wallet
Infrastructure
58
Payment Processor and Wallet Investment Nearly

Flat Over Last Four Quarters
$ Invested as of Q4
Wallet
10%
Payment
Processor
8%
Infrastructure
10%
Exchange
11%
Universal
34%
Mining
13%
Financial
Services
14%
$ Invested as of Q3
Sector
Q4
($m)
Q3
($m)
Q/Q
($m)
Q/Q
Payment
Processor
78.9
77.6
1.4
2%
Infrastructure
94.8
94.4
0.4
0%
Exchange
Financial
Services
Mining
Universal
Wallet
Total
105.7
105.7
0%
133.6
115.4
18.1
16%
120.8
321.7
93.8
949.2
119.3
316.7
93.8
922.9
1.4
5.0
0
26.3
1%
2%
0%
3%
Payment
Processor
Wallet 10%
8%
Infrastructure
10%
Exchange
12%
Universal
35%
Financial
Services
12%
Mining 13%
Financial Services received highest growth in VC investment at 16%

Five new VC-backed financial services startups added this quarter
Note: $ invested represents all-time total bitcoin VC investment at the end of each respective quarter.
59
Q4 2015 Investment Rounds

Close Date
Company
Size ($m)
Round
Dec-2015
Streami
2.00
Seed
Dec-2015
BTCS
1.45
N/A
Cavalry Fund I LP
Virginia
Dec-2015
Purse.io
1.00
Seed
Digital Currency Group
San Francisco
Nov-2015
Bitwage
0.76
Seed
Orange Telecom, Draper Associates,

San Francisco
Cloud Money Ventures, Saeed Amidi
Nov-2015
Align
Commerce
First
Kleiner Perkins Caufield & Byers,

Digital Currency Group, FS Venture
Capital, Pantera Capital
12.50
Select Investors
Headquartered
Shinhan Bank, Shinhan Data Systems,

South Korea
ICB, Bluepoint Partners
San Francisco
Source: CoinDesk
60
Q4 2015 Investment Rounds (cont.)
Size
($m)
Round
Select Investors
Headquartered
0.35
Seed
Adam Draper, Tim Draper, Boost Bitcoin Fund
San Francisco
Oct-2015 ScoreChain
0.57
Seed
Undisclosed
Luxembourg
Oct-2015
Orb
2.30
Seed
Adways Inc, Ceres, Monex Ventures, SBI

Investment
Tokyo
Oct-2015
Coinplug
5.00
Second
KB Investment, SBI Investment, Atinum

Investment Co. Ltd.
Seoul
Close Date Company
Nov-2015
Zapchain
Source: CoinDesk
61
2.d Use Cases and

Commerce
62
While Average Daily Bitcoin Transactions

Increased 81% in 2015
Thousand
Number of Transactions Per Day

300
2014 daily average: 69,200

250
2015 daily average: 125,100

200
150
100
50
Total no. of daily transactions
No. of daily transactions excluding popular addresses
Note: 100 most popular addresses. Source: Blockchain
63
Once Long-chains* Are Removed, Growth Since 2014

Has Been Only 50% Per Year
*Long-chain transactions comprised of spam, wallet shuffling, coin mixing, mining payouts, faucets, etc.
Sources: Coinbase, A Proxy for Users, Neighbourhood Pool Watch
64
Coinbase Off-chain* Transaction Volume Is Roughly

Same Across All of 2015
*An off-chain transaction is one on an internal database rather than movement of value on the blockchain.
Sources: A Proxy for Users, Coinbase
65
16 Million Bitcoin Wallets Forecasted by 2016 (+25%

YoY), YE 2015 Forecast Exceeded by 0.8m
18,000,000
R = 0.98642
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
Total bitcoin wallets
Forecasted bitcoin wallets
Data sources and notes: total wallets based on data from Blockchain, MultiBit, Coinbase, Andreas Schildbach (Android bitcoin wallet developer).
Historical Coinbase data provided by BitcoinPulse. 2015 Q2 MultiBit figures note made available, held constant as end of March 2015 onwards.
66
Blockchains New Wallet Growth Rate Has

Climbed Last Two Quarters
Number of New Wallets Added Each Quarter
120%
1,066,962
1,200,000
114%
100%
1,000,000
800,000
80%
706,209
600,000
514,583
481,258
50%
400,000
480,715
451,294
454,435
60%
488,303
40%
343,121
35%
200,000 118,286
24%
27%
20%
17%
15%
Mar-15
Jun-15
19%
24% 20%
0%
0
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Quarterly Increase in Wallets
Dec-14
Sep-15
Dec-15
Quarterly Percentage Growth
Data source: Blockchain
67
Zero Q4 Growth Reported in New Bitcoin-Accepting

Merchants by Coinbase or BitPay
14,000
12,000
12,000
10,360
10,000
8,000
6,000
6,000
6,000
6,000
4,000
2,000
0
0
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Note: Data reflects number of new merchants, as self-reported by BitPay and Coinbase. The startups either
declined to provide data to the report or reported no change. Sources: Coinbase, BitPay
68
150k Merchants Accepting Bitcoin Forecasted by 2016

(+42% YoY), YE 2015 Forecast Fell Short by 34k
160,000
R = 0.97093
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Total merchants accepting bitcoin
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Forecasted total merchants
Data sources and notes: Total current merchants based on data from Coinbase and BitPay. Historical Coinbase data provided by
BitcoinPulse. Daily merchant increase is calculated using linear interpolation.
69
International Coinbase Users Grew from 44% to 51% of

Total User Base in 2015
The majority of Coinbase users now reside outside the US
Countries like Brazil, the Philippines and Indonesia saw big growth
Source: Coinbase
70
New Bitcoin ATM Deployments Growth Rate at 13%;

One ATM Producer Ends Bitcoin Business
Increase in ATMs in Each Quarter
120
112
104
100
79
80
62
60
52
43
40
48
32
20
0
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Robocoin announced a shutdown of its bitcoin business and a move towards

traditional payments. Robocoin ATMs represents 4% of total bitcoin ATMs
Data source: CoinATMRadar, CoinDesk
71
2.e Technology
72
In Response to Bitcoins Q4 Price Spike, Network

Difficulty Growth Rate Increased 67% QoQ
Ten Billion
Hashrate
Quarterly Increase in Bitcoin Mining Difficulty

45
80%
67%
39.8
40
35
70%
60%
30
50%
25
40%
20
30%
15
20%
17%
5
20%
15%
10
6.0
6.1
Q4 2014
Q1 2015
0
Quarterly Increase in Mining Difficulty
6%
9.9
10%
2.7
Q2 2015
0%
Q3 2015
Q4 2015
Percentage Increase in Mining Difficulty
Notes: Difficulty represents the number of necessary hash calculations to mine a new block.
73
Bitcoin Payment Software Developer Ecosystem Grew

40% in 2015
Number of GitHub repositories that mention payment methods
Source: GitHub
74
While Battle Continues Over the First Major 'PostSatoshi' Protocol Decision
FAST
DECENTRALISED
SECURE
Scalability is a trade-off
between decentralisation
and low fees
UNLIMITED
CHEAP
Source: Medium
75
A New Solution Proposed at Scaling Bitcoin

Conference Has Support of Bitcoin Core
Pieter Wuille
Core Dev and
Tech Engineer, Blockstream
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
Sources: CoinDesk, Pieter Wuille (2015) Segregated witness and deploying it for Bitcoin Presentation
76
Number of Bitcoin Nodes Decreased,

Down 6% from 6,030 at End of Q3
Data source: Bitnodes
77
2.f Regulation and

Macro
78
Bank of England Examines Macroeconomic

Consequences of New Central Bank Digital Currency
Bank of England researchers explore the
macroeconomic consequences of central
banks themselves issuing digital currency
in sizeable amounts, in direct competition
with privately-issued bank deposits.
Preliminary findings:
A sizeable increase in the steadystate level of GDP.
Michael Kumhof
John Barrdear
Stabilise the business cycle by

granting policymakers an additional
policy instrument that controls either
the price or the quantity of
government-provided liquidity.
Source: Kumhof and Barrdear (2016)
79
Difficulties Reported by Cryptocurreny Startups in

Gaining Approvals From Swiss Authorities
While Switzerland is advertising itself as a haven for cryptocurrency firms, a
number of companies are reporting problems with getting approval from the Swiss
financial market authority, as well as with getting banking accounts
Opportunities are opening up in London, Luxembourg, and other friendlier
jurisdictions
80
Bitcoin is Exempt from European VAT, A Big

Milestone According to Exchanges
A big milestone for
bitcoin in general.
Nikolaus Kangas,
Founder of
LocalBitcoins
Reduction of risks and

uncertainties surrounding
the adoption of an
innovation.
Pierre Noizat, Co-founder
of Paymium
Absolutely reasonable
and quite expected.
Victoria Polyakova,
Chief Legal Officer of
CEX.io
The European Court of

Justice decided to
exempt bitcoin
transactions from Value
Added Tax (VAT). In so
doing, the
court effectively
recognized bitcoin as a
legitimate means of
payment in Europe,
putting it in the same
group as other
currencies for tax
purposes.
An impetus for the

development of crypto
payments in the EU.
Filip Godecki, COO of
Bitcurex
Brings additional
clarity and legal
certainty.
Nejc Kodric, CEO of
Bitstamp
Regulation is proving to be
more efficient than the
technology to organise the
rights and the correct
functioning of the market.
Alberto Gomez Toribio, CEO
of Coinffeine
Source: CoinDesk
81
Select Country Regulatory Updates
Japan
Poland
Polands Ministry of Finance:

Regulating bitcoin should form "part of
initiatives at the EU level, due to the
trans-border character of
cryptocurrency transactions"
Japans Financial Services Agency:

Financial regulators moving closer to
creating a system for registering and
overseeing domestic digital currency
exchanges
Source: CoinDesk
82
Viewpoint: Why China Should Consider Promoting

Bitcoin As a New Reserve Asset
The emergence of a new reserve
asset could weaken US dollar/USs
grip on global monetary system
Central banks are openly weighing
pros/cons of acquiring bitcoin
In an effort to boost Chinas global
economic standing, for years the
PBOC has acquired gold
However, Chinas gold holdings still
trail the US, Germany, IMF, etc
Gold is expensive (global market cap
~$7tn) compared to bitcoin ($6 bn)
With over half of all bitcoin mining
inside The Great Firewall of China,
China can exert influence over bitcoin
Sources: CoinDesk, World Gold Council
83
3. Q4 2015
State of Blockchain
84
3.a Overview
85
Distributed Ledger Technology (DLT) 101:

Blockchain Tech vs The Bitcoin Blockchain
Blockchain technology
The Bitcoin Blockchain
private (intra-)
public (inter-)
Intranets & IT
The Internet
Source looks incorrect?

Source: Coinbase
86
Startups Pivoting from Bitcoin (Currency) Focus to

Blockchain (Non-currency) and Hybrid Business Models
Bitcoin
Blockchain
Hybrid
87
Blockchain vs Bitcoin: Blockchain and Hybrid (Currency

+ Non-Currency) Startups Raised 35% of All VC Funds
Total VC Raised ($m)
Hybrid
14%
No. of Companies
Blockchain
20%
Hybrid
1%
Blockchain
20%
Bitcoin
66%
Bitcoin
79%
Note: Three new deals in January (including the $50m raised by Digital Asset Holdings) are included
in these two charts. Data sources: CoinDesk, CrunchBase
88
Q4 2015 Blockchain Investment Rounds
Close Date Company
Oct-2015
Factom
Size
($m)
Round
Select Investors
Headquartered
0.40
Seed
Kuala Innovations
Texas
Source: CoinDesk
89
Consolidation of Blockchain Companies Slows From

Three Q3 Acquisitions to One in Q4
Q4 Merger & Acquisitions
Acquiree
Acquirer
Oct 2015
Source: CoinDesk
90
Google Search of Blockchain Shows An Increasing

Trend Over the Past One Year, Up 272%
100
Source: Google Trend search for blockchain from January 2015 to December 2015
91
Google Searches Show Blockchain Joins the Top

Bitcoin-Related Searches
Related Searches: Top
Related Searches: Rising
Q4 2015
Past 12
Months
Source: Google Trends search for blockchain
92
Criticism of Blockchain Hype Raised

Nasdaq's Linq
blockchain can
replace Microsoft
Excel as a way to
keep corporate cap
tables. But why
would you want it
to?
Uses
approximately the
same amount of
electricity as could
power an average
American
household for a day
per transaction
Matt Levine
Bloomberg View columnist
Private blockchain is
not ultimately wildly
conceptually different.
It's just some brokers
getting together and
agreeing on who owns
what and who sold
what to whom.
Tony Arcieri
Platform security specialist at Square
Certificate
Transparency is
more efficient in
solving the
decentralized audit
log problem.
Sources: Motherboard, Bloomberg, Tony Arcieris blog
93
Regulators Show Interest in Using Blockchain to

Monitor Systemic Risk
While I am not advocating for the adoption or
effectiveness of blockchain technology, it appears to
offer potential
One can imagine a world in which securities lending,
repo, and margin financing are all traceable through
blockchain's transparent and open approach to
tracking transactions
Kara Stein
Commissioner of the
US Securities and
Exchange Commission
This could revolutionize regulators approach to

monitoring systemic risk in these areas, including
the oversight of collateral reuse, to name just one
potential use
Sources: Pantera BitFlash, Bloomberg
94
Bonds Are Ideal For Smart Contracts
UBS announced smart bonds

platform built on Ethereum
Bonds are well suited for smart
contracts fungible, relatively
simple to code regularly
scheduled principal/interest
payments
Can also be fully collateralized
on the blockchain if the bond
issuer fails
Source: International Business Times
95
Smart Contracts May Have a Negative Impact on

Insurance Industry Profits
There were 558,000 passengers who did
not files insurance claims for delayed or
cancelled flights in and out of the UK in a
12-month period
A smart flight cancellation insurance
contract - policy conditions held on a
blockchain
A delayed flight is a matter of fact and
public record
If event occurs, a smart contract is
triggered and payout is automatic
Source: BankInnovation
96
3.b Private Blockchains
97
Q4 Blockchain Top News
R3s distributed ledger initiative

grows to 42 bank members
Nasdaq formally debuts its

blockchain product, Nasdaq Linq
Source: CoinDesk
98
R3 CEVs Consortium: 42 Banks with Combined

$600bn+ Market Cap; 60% Are Global SIFIs
Source: CoinDesk
99
Critical Mass: R3s Wall St Founders Have the

Formula For Attracting Top Blockchain Talent
David Rutter
CEO
Jesse Edwards
Co-founder
Richard Brown
CTO
Todd McDonald
Co-founder
Mike Hearn
Chief Platform Officer
Sources: R3 CEV, Diginomics 2016 Bitcoin Investors Report
100
Not Everyone is Thrilled About R3 and Megabank

Blockchain Initiatives
The problem is not the regulators. I think the regulators
want this to happen. They dont want to be under the
thumb of Wall Street. They understand Wall Street has
monopolistic power.
Whats happening is Wall Street is trying to slow us
down while they come up with their own version, and
thats, I think, R3. Thats a consortium thats really going
to be there so Wall Street comes up with their own
version, and then theyre going to outlaw [the
competition].
Patrick Bryne
CEO of Overstock
Sources: Diginomics 2016 Bitcoin Investors Report , 2016 Bitcoin Investor's Report
101
Wall St Mainly Interested in Private or Permissioned

Blockchains
Many permissioned blockchain applications can be layered on top of permissionless
blockchains (eg Ethereum, Bitcoin) using existing technology
For example, colored coins, which aim to ease the transfer of assets on
blockchains, could make public ledgers useful for financial institutions
Sources: CoinDesk,
BitFury Group in collaboration with Jeff Garzik (2015) Public versus Private Blockchains Part 2: Permissionless Blockchains White Paper
102
Blockchain Companies and Financial Institutions Apply

for Cryptocurrency Patents
Real-time conversion system

Cryptocurrency transaction payment system
Cryptocurrency suspicious user alert system
"Cryptographic Currency For Securities Settlement" that allows

peer-to-peer participants to exchange cryptographic tokens
representing securities with instant settlement
Mining circuitry which described herein may be used for any digital
medium of exchange such as digital currencies, rewards or points
Source: CoinDesk
103
Will Other Large Database Companies Remain

Conspicuously Quiet in 2016 About Blockchain Tech?
2014 Total Revenue
$38.60bn
$29.09bn
$16.13bn
$10.64bn
$2.73bn
$0.30bn
Only two large database

firms have made
significant blockchain
tech announcements:
IBM and Microsoft
In Nov 2015 Microsoft
announced Blockchain
as a Service,
incorporating Ethereum
and bitcoin into Azure
IBM recently announced
support for the Open
Ledger Project
Sources: ServerWatch, Microsoft
104
3.c Public Blockchains
105
Too Many Blockchains?
Image via Tony Arcieris blog
106
Interledger Could Be Solution to the Too Many

Blockchains Interoperability Dilemma
A protocol for payments across payment systems
Secure transfers between ledgers and allows anyone with accounts
on two ledgers to create a connection between them
No global coordinating system or blockchain required
Rather than trying to create a global ledger that everyone can agree
on, Ripple chief technology officer Stefan Thomas explains, were
trying to tie together all the ledgers that are already out there.
Sources: A Protocol for Interledger Payments, CoinDesk, Wired
107
Viewpoint: To Reap the Main Benefits of Distributed Ledgers,

Banks Must Use Permissionless Blockchains
Banks naturally hate the loss of power; it's

extremely difficult for them to implement seamless
global systems
"So they keep trying to re-inject points of
control, and thus points of vulnerability, into
blockchains, eg through 'permissioning
Nick Szabo
Smart contract and
cryptocurrency pioneer
However, this nullifies the main benefits (of

blockchains), which come from removing points
of vulnerability
Source: International Business Times
108
Can the Linux Model Address Governance Issues

That Have Stalled Blockchain Development?
The Open Ledger
Project is a development
library that will allow
businesses to build
custom distributed ledger
solutions, without having
to rely on open, public
blockchains like bitcoin
and Ethereum
Will use the Linux Foundation approach to provide governance
But how will this approach work without a benevolent dictator to
settle contentious disputes?
Sources: Fortune, Wired, Bloomberg, CoinDesk
109
While Still Two Years Away From Providing a Robust

Platform, Expect to Hear More About Ethereum in 2016
Ethereum
development now
focused on
decentralized apps
Slock.it
General view remains

that if you need to
deploy something on
a blockchain right
now, use bitcoin,
private DLT, etc; if
your time horizon is
two years, consider
Ethereum
Rent, sell or share

anything - without
middlemen
Use cases: washing
machines and bikes
Augur
Vunk
Get precise forecasts

on any topic
Augur enables the
long tail of prediction
markets
Trade your virtual

junk that you
accumulate while
playing video games
Decentralized value
exchange
Sources: Slock.it, Augur, FreeMyVunk, Bank Innovation, Medium, CoinDesk
110
Two Big Challenges for Public Blockchain Tech:

Scalability and Privacy
Scalability
Currently, the network process 3-20 transactions per second
Several orders of magnitude away from mainstream payment systems
such as VISA, which handles around 2,000 transactions per second
Several solutions are available like Segregated Witness
Privacy
Companies or individuals are unwilling to publish all of their information
onto a public database which is accessible by government, competitors
and family members.
Difficult to provide solutions with privacy and full capability of blockchain
Sources: Ethereum, Bitcoin Wiki
111
4. Thought Leader
Survey and 2016
Forecasts
112
Survey Highlights
What were the highlights for bitcoin and blockchain in 2015?
43% mentioned blockchain initiatives by major
established companies like Nasdaq
21% mentioned the CoinDesk Consensus Conference
14% mentioned transaction growth

What was the biggest challenge or setback for bitcoin and
blockchain in 2015?
23% mentioned the block size debate

23% mentioned the slow adoption of bitcoin as an
alternative payment method
Source: Bitcoin and Blockchain Thought Leaders Annual Survey
113
Survey Highlights (cont.)

What do you think is the main driver behind the price
surge in October 2015?
29% mentioned China and Chinese economic
worries
14% mentioned growing demand
Factors like Fed interest rates, increased visibility
were also mentioned
What do you think about the slowdown in bitcoin and

blockchain venture capital investment?
29% mentioned lack of realization of the promises

they made when they got funding initially
21% believed it is cyclical and temporary

114

Which areas do you think blockchain technology will have the greatest impact in?
77%
Finance (e.g.: Transaction settlement)

54%
Identity
38%
Property title
Communication (e.g.: machine to machine)
23%
Decentralised coordination (e.g.: Prediction,

Voting)
23%
Privacy
15%
other
15%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
115
What are your views on industry regulation,

both what's happened and what's to come?
36% expressed negative attitudes

towards current regulations, saying they
are stifling innovation, poorly-crafted
and not friendly
29% expressed positive views,

suggesting they believe the laws increase
transparency and awareness
116
Views on 2015 Events and What Lies Ahead in 2016

(Block size debate) will only be resolved when
participants recognize that this or any subsequent
increases in block size are a continuing transaction fee
subsidy provided by the network and financed ultimately
by the bitcoin investors.
Jon Matonis
Former Executive Director,
Bitcoin Foundation
(Bitcoin and blockchain VC investment) will

reaccelerate once some of the early ventures
become successful.
Gil Luria
Managing Director,
Wedbush Securities
117

In general, regulatory certainty is good, but the industry
must work together to educate regulators so they don't
act out of fear, anxiety or misinformation. I would look for
more regulatory activity in Europe and for more
enforcement activity in the US in 2016.
Jason Weinstein
Partner,
Steptoe & Johnson LLP
The established players are mostly acting out of fear and

still do not trust the technology. Most of the initiatives to
date exhibit an unwillingness to embrace the distributed
ledger technology completely.
David Yermack
Professor of
Finance, New York
University
118
Most of the regulation is not helping consumers and it's

helping the industry even less. Smart regulators will watch
what happens first, figure out if and where regulatory pain
manifests itself and then respond in kind.
Bill Barhydt
CEO & Founder,
Abra
I think services like Purse.io and Fold will drive many

more people to start using bitcoin simply because it is
useful to them. We will also see bitcoin wallets
become even easier for people to use.
Roger Ver
CEO,
Bitcoin.com
119

(Slowdown in VC investment) is a telling sign that
theres not enough real use-cases and business cases
yet. But, at the same time, new sectors are coming
online who see potential in bitcoin and the blockchain all
the time, for example, insurance, fine art, trade finance
and supply chain.
Wong Joon Ian
Tech Correspondent,
Quartz
I am supporting the growth of innovation in using bitcoin

and blockchain, whether by bank or not. I believe the
industry to be growing and that the legacy domains will
need to change to account for the extremely fast-moving
ecosystem.
Scott Robinson
Founder & Director,
Plug and Play FinTech
120
The UK will continue to be a leader in innovation-friendly

policy for digital currency. In 2015, the UK released a
policy that is much more amenable to innovation, and
this will be put into place in 2016.
2016 will likely see more regulatory activity outside of just
the money transmission realm, be it around securities or
futures, or law enforcement efforts.
Elizabeth Stark
Co-founder,
Lightning
We will also see more states in the US cement their

digital currency-specific policy, but they will be competing
to be the anti-New York.
121
2016 Forecasts From Survey Participants

More blockchain hype
Bitcoin community will (at least temporarily)
solve scalability challenges
Private and public blockchains will co-exist

There will be more blockchain proofs-ofconcept and minimal viable product/
experimentation from Fortune 500
Regulators will come to understand (and love)

blockchain technology
Sources: Bank Innovation, CoinDesk, Bitcoin and Blockchain Thought Leaders Annual Survey
122
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 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
123
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.
124

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State of Bitcoin and Blockchain 2016

28th January 2016

State of Bitcoin and Blockchain 2016

State of Bitcoin and Blockchain 2016

State of Bitcoin and Blockchain Credits

Dr. Garrick Hileman

Price and Trading

3. Q4 2015 State of Blockchain

4. 2016 Thought Leader Survey &

1. 2015 Year in Review

State of Bitcoin and Blockchain 2016

2015 Industry Summary

All about Blockchain; major financial

VC investment slowed, growth rate

Bitcoin price up 35% in 2015; China

Payment processor and wallet

Regulatory tempo slows in 2015; NY

Issues like block size and

State of Bitcoin and Blockchain 2016

2015 Price Chart and Key Bitcoin & Blockchain Events

Silk Road operator

Nasdaq becomes first

BBVA, USAA join

MIT Media Lab

Visa, Capital One back

State of Bitcoin and Blockchain 2016

Key Bitcoin And Blockchain Adoption Metrics: Price

2015 Bitcoin and Blockchain Metric Highlights

New wallets and ATMs both doubled from end of 2014

Exchange trading volume in Q4 2015 is four times greater

State of Bitcoin and Blockchain 2016

Biggest VC Deals in 2015

(Series A) March 2015

(Series C) January 2015

(Series C) April 2015

Investors: New York Stock

Investors: Goldman Sachs,

State of Bitcoin and Blockchain 2016

Annual VC Investment in 2015 Increased 36% Over VC

State of Bitcoin and Blockchain 2016

While 2015 VC Investment Was Greater Than 2014,

Total VC Investment ($M)

Annual Percentage Growth

Data sources: CoinDesk, CrunchBase

State of Bitcoin and Blockchain 2016

By Comparison, Annual Internet VC Investment

Annual Internet VC Investment

Data source: PricewaterhouseCoopers

State of Bitcoin and Blockchain 2016

Growth Rate of Quarterly Bitcoin and Blockchain VC

Data sources: CoinDesk, CrunchBase

State of Bitcoin and Blockchain 2016

Bitcoin/Blockchain Industry Not Alone; Overall VC

Total VC investment across all tech sectors decreased 9% from $31.1bn

State of Bitcoin and Blockchain 2016

Blockchain Startups Still Lag Behind Bitcoin Startups

Distribution of Investment Among Bitcoin, Blockchain and

Percentage of Bitcoin Company Investment

Percentage of Blockchain and Hybrid Company Investment

Data source: CoinDesk

State of Bitcoin and Blockchain 2016

Bitcoin Deadpool Grows to 26 Startups; Besides Funding,

State of Bitcoin and Blockchain 2016

Data sources: CoinDesk, CrunchBase