State of Blockchain Q3 2016
Total Page:16
File Type:pdf, Size:1020Kb
STATE OF BLOCKCHAIN Q3 2016 State of Blockchain Q3 2016 | 1 CoinDesk – Leader in Blockchain News • Headquarters in Times Square, New York, 15 FTEs. • News: 20 million readers have visited CoinDesk since 2013. • Data: Bitcoin Price Index serves as an industry reference point. • Events: 2,000+ have attended our Consensus summits. • Research: 750k views of our reports, subscriptions available in 2017. State of Blockchain Q3 2016 | 2 About the “State of Blockchain” For three years, CoinDesk has benchmarked the “State of Blockchain” in our quarterly industry reports. We cover: • Technical trends within the top open-source developer communities and major product updates from the top funded startups. • Digital currency markets and exchange data, consumer utilization rates, public sentiment and network performance metrics. • Enterprise adoption rates and new proofs-of-concept. • Venture capital and corporate investment trends. • Public policy updates from around the globe. State of Blockchain Q3 2016 | 3 Report Overview 1. RESEARCH FRAMEWORK 2. EXECUTIVE SUMMARY 3. PUBLIC BLOCKCHAINS A. Bitcoin B. Ethereum • Ethereum Sentiment Study 4. ENTERPRISE BLOCKCHAINS • Solutions Providers 5. INVESTMENT 6. REGULATION & GOVERNMENT State of Blockchain Q3 2016 | 4 1 RESEARCH FRAMEWORK State of Blockchain Q3 2016 | 5 Defining The Blockchain Technology Market A public blockchain is a dis- An enterprise blockchain Many companies tributed ledger which uses a is a distributed ledger that employ hybrid native digital currency that: provides: models where they: • Acts as a unit of account for • Solutions to clients who wish • Build on public transactions on that ledger. to use shared cryptograph- blockchain infra- ic databases managed by structure. • Uses a predictably scarce trusted intermediaries. token that incentivizes ear- • Provide technology ly adopters, developers and • Since consensus is achieved for permissioned transaction processors (min- via trusted intermediaries, networks. ers) to use, support and verify digital currencies are unnec- that ledger without the need essary. for a trusted intermediary. State of Blockchain Q3 2016 | 6 The Internet-Intranet Comparison We believe both public and enterprise blockchains have useful applications, much like the Internet and corporate intranets. PUBLIC BLOCKCHAINS ENTERPRISE BLOCKCHAINS public (inter-) private (intra-) The Internet Intranets & IT Graphic Source: Coinbase State of Blockchain Q3 2016 | 7 ‘Public’ (Open) vs ‘Enterprise’ (Permissioned) Blockchains: Generalized Features Comparison PUBLIC ENTERPRISE ACCESS Open read/write Permissioned read and/or write SPEED Slower Faster SECURITY Open computer network Approved participants IDENTITY Anonymous / Pseudonymous Known identities ASSET Native assets Any asset Note: Some features can vary from platform to platform. Data Source: Chain, Chris Skinner’s blog State of Blockchain Q3 2016 | 8 Startup Categories: Infrastructure Layer When producing market maps and tracking investment trends, we look for business shifts between these models: PUBLIC ENTERPRISE HYBRID Data Source: Coindesk State of Blockchain Q3 2016 | 9 Startup Categories: Application Layer Most applications are built on public blockchains (bitcoin, ethereum dominate), but enterprise apps are coming. BITCOIN ETHEREUM ENTERPRISE Uses the bitcoin blockchain Uses the ethereum IBM launches internal to facilitate cross-border blockchain to fight “shadowchain” to stream- SMB commerce. product counterfeiting. line dispute resolution. ????? Uses the bitcoin Uses the ethereum block- Many enterprise projects blockchain for chain to fight fraud in the remain in early prototype data verification. diamond industry. or incubation stages. Data Source: Coindesk State of Blockchain Q3 2016 | 10 Spotlight Study: Ethereum Sentiment Since our last report, interest and de- velopment of ethereum has exploded… but not without controversy. • We are now dedicating a section of our Our goals: SOB coverage to ethereum and its market, blockchain and community metrics. • Determine if market events • We conducted a “spotlight study” survey caused direct change in sentiment with 240+ startup execs and enterprise or use of ethereum’s technology. blockchain leads to assess the impact of • Identify effects of ethereum’s chal- the DAO hack and subsequent hard fork lenges on the extended block- on ethereum sentiment. chain marketplace. Data Source: CoinDesk Ethereum Survey State of Blockchain Q3 2016 | 11 2 EXECUTIVE SUMMARY State of Blockchain Q3 2016 | 12 Q3 2016 Summary Investment on the decline: Blockchain consortiums thrive: VC investment reaches $114m for Q3, but R3 hits 70 members, Hyperledger adds over total down 18% year over year. 50 new members. Digital currencies show stability: Public blockchain startups adapt: Bitcoin and ether volatility decline; Exchanges and miners shift to ‘multi-block- ethereum hits at all-time lows. chain’ model. Bitcoin remains media darling: Central banks are moving: Mainstream media attention remains focused Across the globe, central banks are attempt- on bitcoin, but blockchain is catching up. ing to get up to speed on blockchain tech. State of Blockchain Q3 2016 | 13 Trends: Public Blockchains • As a percentage of total public blockchain market cap, bitcoin’s share continues to decline amid competition. • After 1,000% gains, ether’s price was tested by technical issues, competing project (ethereum classic). • Top four public blockchains (bitcoin, ether, ripple, litecoin) begin to show price stability. • ICOs see investor interest, $198m invested year to date; vast majority dedicated to failed DAO project. • China’s exchanges drive exchange volume with 95% of bitcoin market share, but lag with ether volumes (~0.1%). Data Source: CoinDesk Ethereum Survey State of Blockchain Q3 2016 | 14 Bitcoin Infrastructure Landscape Global bitcoin infrastruc- Wallets* Exchanges ture has been built. Application layer emerging (cross-border dominates). Security & Support Universals* Mining Payment Consumer Processing* Onramps* Data Source: CoinDesk Sectors marked with the (*) symbol are included in our definition of ‘Universal’. State of Blockchain Q3 2016 | 15 Ethereum Infrastructure Landscape Early ethereum infrastruc- Wallets* Exchanges ture emerging. Crowd-funded “dapps” more common than ven- ture-funded platforms. Security & Support Universals* Mining Decentralized Consumer Apps* Onramps* Data Source: CoinDesk; Sectors marked with the (*) symbol are included in our definition of ‘Universal’. State of Blockchain Q3 2016 | 16 Public Blockchains Display Notable Overlap in Exchange and Mining Sectors Most ethereum exchanges also support bitcoin trading. The ‘Top 10’ exchanges by Q3 volume all support bitcoin. Some miners are devoting Exchange computing power to both networks. 30% of ethereum Mining hashing power provided by Consumer bitcoin miners. Onramps Few consumer onramps are available to consumers. Coin- base remains one of few dig- ital currency brokerages to offer ether. Data Source: CoinDesk State of Blockchain Q3 2016 | 17 Ethereum Sentiment Spotlight Study: Findings 63% 48% 37% 33% Reported no change Responded the Thought ethereum Opposed the ethere- in their use of hack did not neg- has better govern- um hard fork (23% ethereum due to the atively impact their ance than bitcoin weren’t sure if it was hack or hard fork. sentiment towards (while 34% feel both the correct decision). ethereum; those communities face whose sentiment governance chal- was negatively lenges). impacted were al- ready unlikely to use ethereum. Data Source: CoinDesk’s 240+ person executive survey; full results start on slide 56 State of Blockchain Q3 2016 | 18 Trends: Enterprise Blockchains • Hyperledger experiences 35% QoQ member growth, reaches 81 partner organizations as Fabric begins to see use in prototypes and proofs-of-concept. • R3 maintains steady membership growth now reaching over 70 international partners, continues proofs-of-concept on Cor- da blockchain while expanding partnership with Microsoft. • DAH’s smart contract modeling language, R3’s Corda, Chain begin to open-source previously proprietary code. • Major banks and stock exchanges continue blockchain proofs-of-concept. State of Blockchain Q3 2016 | 19 Trends: VC Investment Ticks Up in Q3, But Still Far Below Q1 Pace 180m 12m 160m 10m ) 160m m m) 140m 120m 8m 100m 114m 6m 80m 101m 60m 4m Investment 40m AVERAGE DEAL SIZE ($ AVERAGE TOTAL INVESTMENT ($ INVESTMENT TOTAL 2m 20m 26m Average 0m 0m Deal Size Q4 2015 Q1 2016 Q2 2016 Q3 2016 QoQ Growth: +515% -37% +13% • No clear trends emerging – hybrid, public and enterprise blockchain startups see inconsistent investment; overall investment up slightly sequentially, but down YoY. • VC interest in ethereum has yet to translate into investment dollars. • Ripple sees quarter’s largest investment ($55m Series B ~ 50% of total funding). Data Source: CoinDesk State of Blockchain Q3 2016 | 20 Trends: Regulation • US: Federal Reserve continues to investigate blockchain regulation as US regulators seek guidance, Florida con- sidering bitcoin regulation. • Europe: EU parliament actively exploring digital currency regulation, Russia’s ‘bitcoin ban’ bill withdrawn as author- ities consider dropping penalty for use. • Asia: Central banks for Japan, India and Philippines be- gin to explore blockchain. • Middle East: No regulatory action, but Dubai continues to emerge as hotbed for industry with local consortium, the Global Blockchain Council (GBC). State of Blockchain Q3 2016 | 21 3 PUBLIC BLOCKCHAINS State of