STATE OF BLOCKCHAIN Q3 2017 Q3 2017 State of Blockchain: Table of Contents
1. EXECUTIVE 4. INVESTMENT SUMMARY 5. GOVERNMENT & 2. PUBLIC REGULATION BLOCKCHAINS 6. SENTIMENT SURVEY A. Bitcoin 7. COINDESK B. Ethereum A. Research 3. ENTERPRISE Framework BLOCKCHAINS
State of Blockchain – Q3 2017 | 2 1 EXECUTIVE SUMMARY
State of Blockchain – Q3 2017 | 3 Q3 2017 Overall Summary
Market grows despite regulatory challenges: ICOs and VC hit new highs: - Multiple executive regulators announced aggressive - ICOs raise $1.24bn, led by Filecoin, Tezos. Coinbase action, markets boom to all-time high above $170bn. raises $100mn: puts valuation at $1.6bn, becoming the industry’s first unicorn.
Bitcoin tested by soft and hard fork: Token diversity sparks growth of buy side: - Often debated soft fork resulted in segregated witness, - Cryptocurrencies see development of buy side, and opened Bitcoin to cryptographic innovations; hard fork sophisticated analysis for valuations. Major law firms resulted in big block Bitcoin Cash. develop blockchain specialties.
Sentiment survey: Key metrics up across public blockchains: - Hedge against monetary policy was BTC’s best quality; - Hash rate, >1MB Bitcoin blocks; ethereum hit a record 83% checked prices everyday (50%) or compulsively, for blockchain transactions. every hour (33%).
Data Source: CoinDesk State of Blockchain – Q3 2017 | 4 Q3 2017 Trends: Public Blockchains
- Bitcoin tested by regulators, forks, breaks all time high of $5000.
- Bitcoin begins to reassert market dominance over ETH, XRP.
- Global trading volumes accelerate and grow in diversity in terms of geography, exchanges, and currency pairs. - Major digital assets BTC, ETH, XRP, DASH, and XMR rally ~3000%, almost 5% daily return. - Transactions on major blockchains increased, except for Bitcoin. Ethereum sets transaction record for any blockchain. - Industry terms like Bitcoin, Cryptocurrency and Blockchain hit all-time high in Google search frequencies.
Data Sources: CoinDesk, Image Notes: Expanded upon in Section 2: Public Blockchains State of Blockchain – Q3 2017 | 5 Q3 2017 Trends: Enterprise Blockchains
- 10 law firms that include Cooley, Debevoise & Plimpton, Hogan Lovells, Jones Day, Perkins Coie, Morrison Foerster join Enterprise Ethereum Alliance.
- R3 launches Corda v1.0, works trade finance applications.
- A group of telecom companies that includes Sprint and SoftBank launch Carrier Blockchain Study Group.
- Microsoft and Hyperledger each work on interoperability between enterprise chains.
Data Sources: CoinDesk, Image Notes: Expanded upon in Section 3: Enterprise Blockchains State of Blockchain – Q3 2017 | 6 Q3 2017 Trends: Investment
- YTD returns for digital reached 690%, with increased diversification of assets and investors.
- Q3 sent ICO total funding ($2.38bn) above total VC funding for blockchain investment ($1.95bn).
- Token diversification led to sophisticated buy side, 100+ crypto hedge funds launch and pioneer valuations.
Data Sources: CoinDesk, Image Notes: Expanded upon in Section 4: Investment State of Blockchain – Q3 2017 | 7 Q3 2017 Trends: Regulation & Government
- Chinese crackdown on ICOs and cryptocurrency exchanges, all exchanges cease operations on final day of Q3.
- SEC published ICO guidance, demonstrates new depth of expertise.
- CFTC granted LedgerX registration as a derivative clearing organization and a swap execution facility.
- Virtual Currency Tax Act tabled in the House, would see an exception to gains tax for small transactions.
Data Source: CoinDesk Notes: Expanded upon in Section 5: Regulation & Government State of Blockchain – Q3 2017 | 8 2 PUBLIC BLOCKCHAINS
State of Blockchain – Q3 2017 | 9 Q3 2017 Public Blockchain Summary
Aggregate market cap breaks $100bn: Bitcoin dominance returns to 50% range: - Public blockchain assets rallied 4x, - Bitcoin reasserted market dominance it over $75bn in value within the quarter. ceded in Q1 and Q2 (trend continued into Q4).
Trading volume grows and distributes: Some major assets grew ~30x YTD: - Exchange trading volumes increased worldwide, now - ETH, XRP, and DASH are all up approximately 3,000% more distributed than ever.
Sector sees all-time high interest: Transactions hit new highs: - Google searches for blockchain terms (except - Transactions on major blockchains increased, except for ethereum) see new highs. Bitcoin; ethereum broke records.
Data Source: CoinDesk State of Blockchain – Q3 2017 | 10 Digital Assets Outperformed Traditional Assets Nearly 7X Return YTD
2017 YTD Returns 800%
690.8% 700%
600%
500%
400% 332.2% 300%
200%
100% 20.8% 4.0% 10.1% 13.1% 0% Global Real Estate Gold U.S. Equities Global Equities Bitcoin All Digital Assets
Data Source: Yahoo! Finance, Coincap, Coin.dance Notes: Daily data, RWO, GLD, SPY, CWI, & BTC prices, all cryptocurrency market cap, data through 9/30/2017 State of Blockchain – Q3 2017 | 11 Five Cryptocurrencies Returned At Least 500% in Q3
Top Performing Cryptocurrencies of Q3 3000% 2666%
2500%
2000%
1500% 1334%
1000% 856% 771% 590% 500%
0% AdEx Rise Triggers NoLimitCoin Pura
Data Source: Coinmarketcap Notes: Limited to cryptocurrencies with >$20 MM market cap, launched by 7/1/2017; based on 7/1/2017 USD open compared to 9/30/2017 USD close State of Blockchain – Q3 2017 | 12 Total Cryptocurrency Market Cap Increased Over 50% Reached All-Time High Above $170bn in Q3
Total Cryptocurrency Market Cap For some context, the market cap of: Western Union ≈ $9 billion $180bn Sep. 30: $160bn $146.0bn Ether ≈ $30 billion $140bn Jul. 1: Bitcoin ≈ $70 billion $120bn $93.3bn All Cryptocurrencies ≈ $150 billion $100bn Visa ≈ $240 billion $80bn Gold ≈ $8 trillion Aggregate Aggregate Marketbillions) ($,Cap $60bn
$40bn 56.5%
$20bn
- $52.7bn Jul-1 Jul-8 Jul-15 Jul-22 Jul-29 Aug-5 Aug-12 Aug-19 Aug-26 Sep-2 Sep-9 Sep- Sep- Sep- 16 23 30
2017
Data Source: Coin.dance State of Blockchain – Q3 2017 | 13 Bitcoin Regained Share Approached 50% of Total Cryptocurrency Market Cap in Q3
Percentage of Total Cryptocurrency Market Cap 100% Bitcoin: 48.65% Ethereum: 19.41% 90% Bitcoin Cash: 4.94% Litecoin: 1.98% 80% Ripple: 5.16% Dash: 1.69% NEM: 1.44% 70% Monero: 0.98% IOTA: 1.18% NEO: 1.11% 60% Others: 13.45%
50%
40%
30%
20%
10%
0% Jan ’17 Feb ’17 Mar ’17 Apr ’17 May ‘17 Jun ’17 Jul ‘17 Aug ‘17 Sep ’17
Data Source: Coinmarketcap State of Blockchain – Q3 2017 | 14 Major Asset Prices Rallied ~3000% Year to Date Exceeded 5% Average Daily Volatility
2017 Price Movement Cumulative Return (%) BTC ETH XRP DASH XMR 7000% Average Daily Price Movement Asset Symbol Q1 2017 Q2 2017 Q3 2017 YTD 2017 6000% Bitcoin BTC 2.6% 3.1% 3.9% 3.2% Ethereum ETH 4.7% 5.5% 5.0% 5.1% 5000% Ripple XRP 2.9% 11.3% 4.9% 6.4% Dash DASH 6.0% 5.2% 5.3% 5.5% Monero XMR 4000% 4.7% 5.2% 6.0% 5.3%
3000%
2000% Cumulative Return (%, since January since (%, Return Cumulative 2017) 1,
1000%
0% January February March April May June July August September 2017 Data Source: Coincap Notes: Average day over day price movement (absolute value) State of Blockchain – Q3 2017 | 15 Transactions on Major Blockchains Increased, Except for Bitcoin
Daily Cryptocurrency Transactions BTC ETH BCH LTC DASH XMR ETC ZEC 700,000 Average Daily Cryptocurrency Transactions 600,000 Quarter BTC ETH BCH LTC DASH XMR ETC ZEC Total Q1 '16 201,633 20,242 4,453 1,582 580 20,242 248,733 Q2 '16 220,659 40,895 5,519 1,184 434 40,895 309,586 500,000 Q3 '16 218,831 45,109 3,432 1,549 1,038 21,324 291,283 Q4 '16 260,987 42,908 3,455 1,238 1,600 14,658 3,186 328,032 Q1 '17 286,052 58,291 3,345 3,118 2,720 19,890 2,561 375,975 400,000 Q2 '17 290,845 154,176 11,707 4,893 2,796 27,524 4,033 495,974 Q3 '17 242,180 315,631 12,391 21,808 5,910 3,835 34,614 5,399 641,768
300,000 Average Daily Transactions (#) Average Transactions Daily
200,000
100,000
0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 '09 '09 '09 '09 '10 '10 '10 '10 '11 '11 '11 '11 '12 '12 '12 '12 '13 '13 '13 '13 '14 '14 '14 '14 '15 '15 '15 '15 '16 '16 '16 '16 '17 '17 '17
Data Source: Bitinfocharts State of Blockchain – Q3 2017 | 16 Average Transaction Fees Rose for All Major Cryptocurrencies BTC Fees Above $3
Cryptocurrency Transaction Fees BTC ETH BCH LTC DASH XMR ETC ZEC $3.50 Average Cryptocurrency Transaction Fees $3.00 Quarter BTC ETH BCH LTC DASH XMR ETC ZEC Q1 '16 $0.08 $0.01 $0.05 $0.04 $0.07 Q2 '16 $0.13 $0.01 $0.02 $0.08 $0.11 $2.50 Q3 '16 $0.18 $0.01 $0.02 $0.09 $0.33 $0.00 Q4 '16 $0.24 $0.01 $0.02 $0.13 $0.13 $0.00 $0.00 Q1 '17 $0.62 $0.01 $0.03 $0.12 $0.38 $0.00 $0.00 $2.00 Q2 '17 $2.40 $0.22 $0.11 $0.10 $1.09 $0.01 $0.00 Q3 '17 $3.20 $0.33 $0.17 $0.15 $0.16 $1.84 $0.01 $0.00
$1.50 Average Transaction Fees ($) Fees Average Transaction $1.00
$0.50
$0.00 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17
Data Source: Bitinfocharts State of Blockchain – Q3 2017 | 17 Bitcoin Cash Forked Off of Bitcoin on August 1st Bitcoin Cash Difficulty Adjustment Led to Hash Power > Bitcoin for One Day
Bitcoin Cash Price Bitcoin and Bitcoin Cash Network Security USD BTC BCH BTC $800 0.5 12m 10m 0.4 $600 8m 0.3 $400 6m 0.2
4m
Hash Rate Rate Hash(TH/s) BCH Price Price BTC in BCH BCH Price Price USD in BCH $200 0.1 2m
$0 0 -
While the BCH Hash Rate started off near BTC, it generally fell below in subsequent weeks
Data Sources: Bitinfocharts, Blockchain State of Blockchain – Q3 2017 | 18 Many Blockchain Terms Hit an All-Time Google Search High Ethereum Searches Fell from a Peak in Q2 2017
Global Google Search Trends Bitcoin Ethereum Blockchain Cryptocurrency
100%
90%
80%
70%
60%
50%
40%
30%
20% Traffic (%)to Period in Maximum Relative 10%
0% Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17
Data Source: Google Trends State of Blockchain – Q3 2017 | 19 2A BITCOIN
State of Blockchain – Q3 2017 | 20 Q3 2017 Bitcoin Summary
Bitcoin breaks $5,000: Transaction fee surge slowed: - Most variation in history, second straight largest - Average transaction fees rose 33% after nearly tripling quarterly $ variation. in Q2.
Important soft and hard forks occur: Global trading volume continues growth: - Segregated witness adopted after a soft fork, Bitcoin - JPY, USD dominate, KRW jumps. Cash created after a hard fork.
First > 1MB blocks mined: Hash rate up 50% to new all time high: - At block 48197, BitFury mined first ever >1MB block. - Network security grows, but hash rate slipped one day from competition.
Data Source: CoinDesk State of Blockchain – Q3 2017 | 21 Bitcoin Ended Volatile Quarter Up 69% Set a New All-Time High Above $80bn
Bitcoin Bitcoin Historical Market Cap Q3 2017 Market Cap Sep. 30: $90bn $90bn $80bn $69.8bn $80bn $70bn $60bn $70bn $50bn $60bn $40bn $50bn $30bn $40bn $20bn $30bn 69% $10bn $20bn Jul. 1: - $10bn - $41.2bn $28.6bn
Jul Aug Sep
4/1/17 1/1/14 4/1/14 7/1/14 1/1/15 4/1/15 7/1/15 1/1/16 4/1/16 7/1/16 1/1/17 7/1/17
7/1/13 2017
10/1/13 10/1/14 10/1/15 10/1/16
Data Source: Coincap State of Blockchain – Q3 2017 | 22 Bitcoin: Key Market Events
Sept. 7: Equifax Data Breach Sept. 12: made public. Any JP Morgan trader caught trading BTC risks job loss for $5,000 being stupid.
Aug. 1 Jul. 20: Bitcoin Cash fork Miners vote 97% on BIP 91, takes place. $4,000 stage is set to activate segregated witness. Aug. 23: Sept. 29: First blocks > 1mb BTCC, world’s $3,000 mined after SegWit oldest exchange, adoption. stopped trades after 2305 days. $2,000 Sept. 14: Chinese exchanges announce shutdowns after regulators signal a total reset for Bitcoin $1,000 Jul. 16: in the country . Debate around impending Bitcoin Jul. 26: Cash fork, initiates transactions to It’s not custody private keys and hold both real!!!!! $- chains. Jul Aug Sep 2017
Data Sources: CoinDesk, bitcoin price page State of Blockchain – Q3 2017 | 23 Global Trading Volumes Began to Rebound Other Markets Grew Despite People’s Bank of China Actions
Global Daily Bitcoin Exchange Trading Volume USD JPY CNY EUR KRW PLN HKD
$12bn
$10bn
$8bn
$6bn
$4bn Aggregate Trading Volume ($,billions) Volume Aggregate Trading
$2bn
- January April July October January April July 2016 2017
Data Source: Cryptocompare State of Blockchain – Q3 2017 | 24 Bitcoin Behaves as ‘Crisis Currency’ in Venezuela and Zimbabwe Exchange Rates at Premium as Demand Surges
Data Source: Coindesk, The Street, The Atlantic State of Blockchain – Q3 2017 | 27 Global Trading Volume Dominated by USD and JPY
Global Daily Bitcoin Exchange Trading Volume Global Daily Bitcoin Exchange Trading Volume USD JPY CNY EUR KRW PLN HKD USD JPY CNY EUR KRW PLN HKD 100% 100% KRW 80% 80% CNY 60% CNY 60% JPY 40% 40% JPY
20% USD 20%
% of Aggregate Volume Aggregate of % Trading % of Aggregate Volume Aggregate of % Trading 0% 0% USD February March April May June July August September 2017
Data Source: Cryptocompare State of Blockchain – Q3 2017 | 26 Exchange Trading Volume Increased Bitfinex, With Margin Trading, is the Largest USD Exchange
Global Daily Bitcoin Exchange Trading Volume Bittrex Top BTC <> USD 8.12% USD JPY CNY EUR KRW PLN HKD Exchanges in Q3: $5.0bn Gemini 12.97% - Bitfinex $4.0bn Bitfinex - Bitstamp 44.92% - Coinbase $3.0bn - Gemini $2.0bn Coinbase - Bittrex 16.81% $1.0bn Q2 2017: Bitfinex: 28.81% Aggregate Trading Volume ($,billions) Volume Aggregate Trading - Coinbase: 22.05% Bitstamp Poloniex: 19.48% 2017 17.18% Bitstamp: 17.89%
Data Source: Cryptocompare State of Blockchain – Q3 2017 | 27 Bitcoin Price Varied From $2,000 to $5,000 Second Straight Largest Quarterly $ Variation
Quarter High Low ∆ ($) ∆ (%) Quarterly Price Range Q3 10 $0.09 $0.05 $0.04 69.9% Q4 10 $0.39 $0.06 $0.33 538.3% ∆ ($) ∆ (%) Q1 11 $1.09 $0.30 $0.80 269.5% Q2 11 $29.60 $0.68 $28.92 4252.9% Q2 ’11: Q3 11 $15.44 $4.77 $10.67 223.7% $3,500 4,253% Q4 ’13: 1000% Q4 11 $5.27 $2.05 $3.22 157.0% 1,049% Q3 ’17: Q1 12 $7.11 $4.22 $2.89 68.5% $3,012 900% Q2 12 $6.69 $4.69 $2.00 42.7% $3,000 Q3 12 $13.50 $6.45 $7.05 109.3% 800% Q4 12 $13.70 $10.17 $3.53 34.7% Q1 ’13: Q1 13 $104.00 $13.28 $90.72 683.1% $2,500 700% Q2 13 $230.00 $68.36 $161.64 236.5% 683% Q3 13 $129.46 $66.34 $63.12 95.1% 600% Q4 13 $1,147.25 $99.81 $1,047.43 1049.4% $2,000 Q1 14 $951.39 $458.50 $492.89 107.5% 500% Q2 14 $665.73 $360.84 $304.89 84.5% Q3 14 $647.34 $374.73 $272.61 72.7% $1,500 Q4 ’13: 400% Q4 14 $427.24 $309.87 $117.37 37.9% $1,047 Q1 15 $314.59 $177.28 $137.31 77.5% $1,000 300% Q2 15 $262.48 $218.27 $44.21 20.3% Q3 15 $309.98 $209.13 $100.85 48.2% 200% Q4 15 $465.50 $237.40 $228.10 96.1% $500 Q1 16 $458.28 $358.77 $99.51 27.7% 100% Q2 16 $768.24 $417.01 $351.23 84.2% Q3 16 $703.69 $552.82 $150.87 27.3% $0 0% Q4 16 $997.69 $609.38 $388.31 63.7% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 17 $1,290.79 $775.98 $514.80 66.3% 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15 16 16 16 16 17 17 17 Q2 17 $3,018.55 $1,089.51 $1,929.03 177.1% Q3 17 $4,950.72 $1,938.94 $3,011.78 155.3%
Data Source: CoinDesk bitcoin price page State of Blockchain – Q3 2017 | 28 Hash Rate and Mining Difficulty Up 50% Hash Rate to Another All-Time High
Bitcoin Network Security Average Hash Rate (TH/s) Average Difficulty 7m 1000bn Average Hash Rate QoQ Average 6m Quarter (TH/s) Growth Difficulty QoQ Growth Q1 2016 1.06m 94% 139.82bn 98% 800bn Q2 2016 1.39m 31% 188.36bn 35% 5m Q3 2016 1.59m 14% 216.75bn 15% Q4 2016 2.03m 28% 273.07bn 26% Q1 2017 3.15m 55% 412.67bn 51% 600bn 4m Q2 2017 4.40m 39% 584.49bn 42% Q3 2017 6.76m 54% 885.87bn 52%
3m Difficulty
400bn Hash Rate Rate Hash(TH/s)
2m 200bn 1m
- - Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Data Source: Blockchain Notes: Daily data. 'TH/s' is the estimated number of tera hashes (trillions of hashes) per second, 'difficulity' is a relative measure of how difficult it is to find a new block, which is adjusted periodically as a function of how much hashing power has been deployed. State of Blockchain – Q3 2017 | 29 The Transaction Fee Surge Slowed Fees Fees Rose 33% After Nearly Tripling in Q2
Bitcoin Transaction Fee Growth Average Daily (Average $ per transaction) Quarter Bitcoin Transaction Fees QoQ Change $3.50 Q3 2013 $0.08 $3.21 Q4 2013 $0.19 125.8% $3.00 Q1 2014 $0.15 -19.6% Q2 2014 $0.10 -35.3% $2.50 Q3 2014 $0.09 -4.9% Q4 2014 $0.06 -40.8% $2.00 Q1 2015 $0.04 -32.8% Q2 2015 $0.04 2.9% $1.50 Q3 2015 $0.06 42.8% Q4 2015 $0.06 12.4% $1.00 Q1 2016 $0.08 36.4% Q2 2016 $0.13 51.9% Q3 2016 $0.18 36.5% $0.50 Q4 2016 $0.24 37.9% Q1 2017 $0.62 156.4% $0.00 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q2 2017 $2.41 288.5% 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 Q3 2017 $3.21 32.9%
Data Source: Blockchain State of Blockchain – Q3 2017 | 30 Transactions Transaction Volumes Fell By 17%
Bitcoin Transactions Average Daily Quarter Bitcoin Transactions QoQ Change 300,000 Q3 2013 49,042 Q4 2013 60,280 22.9% 242,334 Q1 2014 63,991 6.2% 250,000 Q2 2014 62,639 -2.1% Q3 2014 67,260 7.4% 200,000 Q4 2014 82,724 23.0% Q1 2015 95,344 15.3% 150,000 Q2 2015 108,910 14.2% Q3 2015 130,834 20.1%
Average Average per # day 100,000 Q4 2015 164,488 25.7% Q1 2016 201,595 22.6%
50,000 Q2 2016 221,018 9.6% Q3 2016 219,624 -0.6% Q4 2016 261,710 19.2% - Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 2017 287,098 9.7% 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 Q2 2017 291,091 1.4% Q3 2017 242,334 -16.7%
Data Source: Blockchain State of Blockchain – Q3 2017 | 31 Average Block Size Also Fell by 9% to 0.88 MB Blocks as Transactions Decreased
Bitcoin Block Size Average Daily Bitcoin 1.00 Quarter Block Sizes (MB) QoQ Change Q3 2013 0.12 0.88 0.90 Q4 2013 0.16 32.9% 0.80 Q1 2014 0.21 25.3% Q2 2014 0.22 7.8% 0.70 Q3 2014 0.25 12.5% 0.60 Q4 2014 0.33 31.6% Q1 2015 0.38 14.4% 0.50 Average Average Block(MB) Size Q2 2015 0.42 11.5%
0.40 Q3 2015 0.54 28.4% Q4 2015 0.58 7.7% 0.30 Q1 2016 0.71 21.6% Q2 2016 0.78 10.8% 0.20 Q3 2016 0.78 -0.9% 0.10 Q4 2016 0.86 10.6% Q1 2017 0.93 7.8% 0.00 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q2 2017 0.97 4.6% 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 Q3 2017 0.88 -8.7%
Data Source: Blockchain State of Blockchain – Q3 2017 | 32 SegWit Activated on August 23 Blocks BitFury Processed the First BTC Block Over 1MB
Data Source: Segwit.party, Bitcoin.com State of Blockchain – Q3 2017 | 33 2B ETHEREUM
State of Blockchain – Q3 2017 | 34 Q3 2017 Ethereum Summary
New trade pairs emerge Network Hash Rate continues rise: - The South Korean Won passed the USD - Hash rate tripled for second consecutive as ether’s top trade pair. Quarter.
Innovations on test net: Transactions per day passes bitcoin: - Ethereum Byzantium testnet launches to prepare - Ethereum transaction volumes skyrocket, sets all for Metropolis hard fork, verifies zk-snark proof time record for any blockchain ever, signals scaling milestone
Value rise slows after record breaking Q2: Several security issues lead to lost ETH: - Ethereum’s USD exchange value grew 5.4% in Q3 - Partity wallet breach and ICO hack highlight while trade volume fell. losses.
Data Source: CoinDesk State of Blockchain – Q3 2017 | 35 Ethereum Increased 5% Over Q3 Reached All-Time High of $36.5bn in Market Cap
Ether Ethereum Historical Market Cap Q3 2017 Market Cap $40bn $40bn Jun. 30: $35bn $35bn Jul. 1: $27.7bn $30bn $30bn $26.3bn $25bn $25bn $20bn $20bn $15bn $15bn 5.4% $10bn $10bn $5bn $5bn - $1.4bn - Jul Aug Sep Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 2017
Data Source: Coincap State of Blockchain – Q3 2017 | 36 Ethereum: Key Market Events
Sept. 4: $450 Aug. 17: 7 Chinese regulators take Software wallet startup regulatory action against Sept. 19: Blockchain adds ETH wallet ICOs. Ethereum testnet, $400 Jul. 25: option. Byzantium, launches to SEC issues ICO prepare for Metropolis hard guidance. fork. $350 Jul. 18: EEA announces new members, becomes largest open source $300 enterprise blockchain initiative.
$250
Aug. 15: Sept. 19: $200 ETH transactions Sept. 5: Ethereum testnet Aug. 8: break 24hr record Ethereum Russia signs verifies first zk-snark Overstock begins to Jul. 19: for any blockchain agreement with Russian state- proof. $150 Partity wallet breach leads to accept ETH payments ever, marks scaling owned bank VEB. theft of ~150,000 ETH after ShapeShift milestone. $100 (~$31mn). intigration.
Jul. 17: $50 CoinDash ICO hacked, ~45,000 ETH (~$7mn) sent to wrong address. $- Jul Aug Sep
Data Sources: CoinDesk, CoinDesk ether price page State of Blockchain – Q3 2017 | 37 Ether Exchange Trading Volume Fell In Recent Months
Global Daily Ether Exchange Trading Volume Average Daily Ether Exchange Trading Volume $1000m $2.5b $900m $800m $2.0b $700m $634m $600m $1.5b millions) ($, Volume $500m
$1.0b $400m
$300m Average Average Daily $.5b $200m Total Daily Trading Volume ($, billions) ($, Volume Trading Daily Total $100m - -
Data Sources: Cryptocompare, CoinDesk ether price page Notes: $ value at the time across all listed currencies and exchanges State of Blockchain – Q3 2017 | 38 Ether Exchange Trading $ Volume Fell to Earlier Levels After Surpassing Bitcoin
Trading Volume Dominance 100%
90%
80%
70%
60%
50%
40%
30%
Relative Share of Total Trading Volume Trading Share Total of Relative 20%
10%
0% January February March April May June July August September 2017
Data Source: Coincap State of Blockchain – Q3 2017 | 39 ETH Most Heavily Traded with KRW BTC Lost Market Share to USD and KRW
Global Daily Ether Exchange Trading Volume Q3 2017 Ether Exchange Trading Volume Share of Volume Across Currencies KRW USD BTC CNY EUR USDT JPY KRW USD BTC CNY EUR USDT JPY 100% 90% BTC 80% BTC 19.6% EUR 70% CNY 4.8% 60% 9.6% 50% USD USD USDT 40% 28.9% 30% 0.1% 20% % of Aggregate Volume Aggregate of % Trading KRW JPY 10% KRW 0.1% 0% 36.9% July August September 2017 Q1 2017: Q2 2017: BTC: 58.5% BTC: 38.8% USD: 25.5% USD: 25.1% KRW: 5.5% KRW: 24.0%
Data Source: Cryptocompare State of Blockchain – Q3 2017 | 40 Poloniex Led Volume in BTC Markets Bitfinex Displaced Coinbase with USD
Ether Exchange Trading Volume (BTC) Ether Exchange Trading Volume (USD) Share of Total Volume Across Exchanges Share of Total Volume Across Exchanges
Poloniex Bittrex Bitfinex Binance Yobit Bitfinex Coinbase Gemini Kraken Poloniex 100% 100%
80% 80%
60% 60%
40% 40%
20% 20% Bitfinex ShareTotalofVolume(%) ShareTotalofVolume(%) Poloniex 0% 0% July August September 2017 July August September 2017
Ether Exchange Trading Volume (BTC) Ether Exchange Trading Volume (USD) Poloniex Share of Total Across Exchanges 10.56% Share of Total Across Exchanges Bitfinex Binance 5.09% Kraken Bittrex 16.01% 12.62% 18.22% Bitfinex Yobit 30.93% 7.65%
Poloniex Gemini Coinbase 53.03% 17.94% 27.95%
Data Source: Cryptocompare State of Blockchain – Q3 2017 | 41 ETH Transaction Numbers Doubled Transactions Surpassed BTC in Quarterly Average
Ethereum Transaction Growth Ethereum Transaction Growth (Average # per day) (Average # per day) 350,000 315,634 600,000 300,000 500,000 250,000 400,000 200,000 300,000 150,000 200,000 100,000 100,000 50,000 0 - Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Q3 2015Q4 2015Q1 2016Q2 2016Q3 2016Q4 2016Q1 2017Q2 2017Q3 2017
Q3 2017: BTC: 242,334
Data Source: Etherscan State of Blockchain – Q3 2017 | 42 Transaction Fees Continued to Increase Fees Rose from 9₵ in Q2 to 16₵ in Q3 2017
Ethereum Transaction Fee Growth Ethereum Transaction Fee Growth (Average $ per transaction) (Average $ per transaction) $0.18 $0.50 $0.16 $0.16 $0.45 $0.14 $0.40 $0.35 $0.12 $0.30 $0.10 $0.25 $0.08 $0.20 $0.06 $0.15 $0.04 $0.10 $0.02 $0.05 $- $- Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17
Upward demand on price as well as ICO demand caused a few spikes in transaction fees
Data Sources: Etherscan, CoinDesk ether price State of Blockchain – Q3 2017 | 43 Hash Rate Securing the Network Nearly Hash Rate Tripled for Second Consecutive Quarter
Hash Rate Growth (Average GH/s per day)
90,000 83,186 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Hashing power on the ethereum network grew 273% from Q2 to Q3 2017 Data Source: Etherscan Notes: 'GH/s' is the estimated number of gigahashes (billions of hashes) per second State of Blockchain – Q3 2017 | 44 Block Size Increased to New All-Time Highs Blocks As Transactions Increased
Ethereum Block Size Growth (Average bytes per block)
25,000
20,000
15,000
10,000
5,000
0 7/30/15 10/30/15 1/30/16 4/30/16 7/31/16 10/31/16 1/31/17 4/30/17 7/31/17
Data Source: Etherscan State of Blockchain – Q3 2017 | 45 Over 8 Million Ethereum Blockchain Addresses Addresses, Doubled Quarter-Over-Quarter
Total Distinct Ethereum Addresses 9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0 7/30/15 10/30/15 1/30/16 4/30/16 7/31/16 10/31/16 1/31/17 4/30/17 7/31/17
Data Source: Etherscan Notes: Distinct addresses do not directly correlate to unique users, individuals frequently control the private keys to multiple addresses and exchanges frequently control the private keys to addresses that store multiple users’ funds State of Blockchain – Q3 2017 | 46 3 ENTERPRISE BLOCKCHAINS
State of Blockchain – Q3 2017 | 47 Q3 2017 Enterprise Blockchain Summary
Enterprise Ethereum Alliance grows: Cellular providers move into industry: - Enterprise Ethereum Alliance adds members, - Major cellular providers launch study group, look into payments organizational structure, makes big legal push, systems, account recharges across carriers, and authentication becomes largest open-source blockchain solutions. consortium.
R3’s projects take shape: Interoperability between enterprise chains: - R3 adds members, launches Corda version 1.0. - Microsoft makes enterprise blockchain interoperability play with Projects include cross border payments, ID Coco, Hyperledger launches Quilt. management, FX management, bills of lading, and trade finance tools. Hyperledger - Hyperledger adds high profile members, including Baidu, Cisco, and Oracle; launched education efforts with free online course via edX.
Data Source: CoinDesk State of Blockchain – Q3 2017 | 48 Permissioned Blockchains: Enterprise Ethereum Alliance Update
Membership New Organizational Structures Legal Push
Now 200+ members, recent additions Quorum Working Group 10 law firms and four legal institutions include: join Legal Industry Working group, including: Indian State of Andhra Pradesh Communications Protocol Working Group
Integration and Tools Working Group
Standards Working Group
Marketing and Communications Committee
Data Sources: Enterprise Ethereum Alliance, CoinDesk State of Blockchain – Q3 2017 | 49 Permissioned Blockchains: Hyperledger Update
Membership Education Projects
Now 100+ members, recent additions • Hyperledger launched a free online • Fabric, originally donated by IBM, include: course via edX was released as a 1.0. It is the first • Blockchain for Business: An production ready solution for Introduction to Hyperledger building apps • Option to add a verified certificate • Quilt was launched, a Java for $99 implementation of the Interledger protocol, for making transactions across ledgers. It established a global namespace for accounts, and a protocol for synchronized atomic swaps between different systems • Sawtooth Ethereum “Seth” revealed: a proof of concept for smart contracts on Hyperledger Sawtooth, originally donated by Intel
Data Sources: Hyperledger, CoinDesk State of Blockchain – Q3 2017 | 50 Permissioned Blockchains: R3 Update
Membership Corda v1.0 Projects
Now 100+ members, recent additions • Corda v1.0 released • Cross-border payments platform include: • Corda is a platform for smart built on Corda with 22 member contracts focused on privacy and banks in North America, Europe, security and Asia • Codebase developed with 50 • HP Enterprise leveraging Corda financial services and tech firms and HPE’s NonStop for payments • Open source release of platform and identity management occurred in 2016 infrastructure First Middle Eastern Bank to join • BBVA piloting foreign exchange matching • Mizuho and Bolero leveraging Corda for electronic bill of lading • Commerzbank, KfW Banking, and MEAG replicated security sale • 11 banks developed a trade finance application Chilean Banking Regulator
Data Sources: R3, CoinDesk State of Blockchain – Q3 2017 | 51 Major Cellular Carriers Around the World Launch Study Group, CBSG
Members Projects
• The Carrier Blockchain Study Group (CBSG) officially unveiled during the Mobile World Congress Americas on September 12. • Already tested mobile payment systems, prepaid phones recharge across different carriers • Study group will look at applications for connected computing, personal authentication, and debt resolution.
Data Sources: IBM, CoinDesk State of Blockchain – Q3 2017 | 52 Coco, Blockchain Interoperability Play
Projects Interoperability
• Microsoft revealed a framework designed to make it easier to build enterprise networks using any distributed ledger. • The Coco platform aims to speed up transactions speeds simplify governance decisions • It will work with popular open-source blockchains and distributed ledgers, including ethereum, R3, Corda, Hyperledger Sawtooth, and JP Morgan’s Quorum • Aims for compatibility with Intel’s SGX chip, other hardware that protect private cryptographic keys.
Data Sources: IBM, CoinDesk State of Blockchain – Q3 2017 | 53 Permissioned Blockchains: IBM Update
Accelerator Partnership Education Projects
• The IBM Academic Initiative • ZF Friedrichshafen and UBS on provides open resources to over mobile payments system: Car 1,000 universities worldwide eWallet • Recently added blockchain • PSA International working on a resources to the initiative, blockchain trial for supply chain • HyperFab is a new growth lab for including access to the IBM document flow enterprise blockchain focused on Blockchain Platform, six months of • Food safety consortium based on Hyperledger Fabric, originally access to IBM Cloud, and use of initial Walmart pilot now includes donated by IBM the IBM Blockchain cloud sandbox Dole, Unilever, Kroger, Nestle, and • In partnership with IBM, the • In addition, there are resources others accelerator will foster innovation and guides for educators startups in the enterprise space • IBM will provide training and support to participants • HyperFab is also associated with Boldstart Ventures
Data Sources: IBM, CoinDesk State of Blockchain – Q3 2017 | 54 4 INVESTMENT
State of Blockchain – Q3 2017 | 55 Q3 2017 Investment Summary
Token sales raise 8X over VC: Token diversification sparks sophisticated buy side: - Total raised by ICOs hits $1.2bn in Q3, pass all time - More than 100 crypto hedge funds launch. cumulative VC raised in blockchain.
ICO deals break records: ICOs emerge as killer app: - Led by Filecoin ($262mn) and Tezos ($232mn). - Celebrity endorsements push crypto into mainstream, blockbuster boxing hype.
Two important VC deals : Regulation enters: - Coinbase raised $100mn, becomes first industry - SEC releases ICO guidance, charges several for fraud, unicorn. Miner Bitmain raises $50mn. China bans ICOs.
Data Source: CoinDesk State of Blockchain – Q3 2017 | 56 Blockchain ICOs Cumulatively Surpassed $2bn
Data Sources: CoinDesk ICO Tracker Notes: Deals under $100,000 excluded, $ amount at time raised State of Blockchain – Q3 2017 | 57 ICO Funding Raised $1.2bn in Q3 ICOs Exceeded VC by Over 10x
Q3 2017 Blockchain Funding Cumulative ICO Cumulative VC $1400m ICO VC $1200m $1,246m $156m
$1000m Top ICO Deals: Top VC Deals: $800m Filecoin - $262m Coinbase - $100m Tezos - $232m Bitmain - $50m TenX - $83.1m Conjoule - $4.5m $600m ICO MobileGo - $53.1m Bitcoin.com.au - $0.8m
$400m Cumulative Quarterly Cumulative millions) ($, Funding
$200m Q1 Q2 VC - ICO VC ICO VC July August September 2017 $36m $107m $797m $235m
Data Sources: CoinDesk venture capital database, CoinDesk ICO Tracker Notes: Deals under $100,000 excluded, $ amount at time raised, including only fundraisers ending in 'Q3 2017’ (7/1/17 – 9/30/17) State of Blockchain – Q3 2017 | 58 Two Blockchain ICOs Above $200m in Q3 Dwarfs VC Investments in Blockchain
Q3 2017 ICOs Q3 2017 VC Q3 2017 ICOs Date Project ICO Round ($mn) Date Project ICO Round ($mn) VC Date Project VC Round ($mn) ICO 7/1/17 EncryptoTel $4.52 8/24/17 Opus $1.38 7/10/17 Conjoule $4.50 7/3/17 Rialto.AI $10.00 8/24/17 Paquarium $0.62 7/11/17 Provenance $0.80 7/4/17 OpenANX $18.76 8/27/17 Corion $1.88 7/4/17 Rialto $10.00 9/03/17 Bitmain $50,00 8/27/17 DimCoin $4.70 7/4/17 Starta $5.00 8/30/17 XPlay $10.91 8/10/17 Coinbase $100.00 7/4/17 CrypViser $3.93 8/31/17 FinShi Capital $9.64 Total $156 7/5/17 Polybius $31.65 8/31/17 Moeda $0.58 7/5/17 Santiment $12.09 8/31/17 ATB Coin $17.60 7/6/17 OnPlace $0.92 9/5/17 Viberate $10.71 7/9/17 LeviarCoin $0.77 9/6/17 Revain $0.70 7/12/17 Nimiq $14.53 9/6/17 Substratum $12.21 7/12/17 ATBcoin $10.84 9/6/17 WorldWide Anonymous Messaging $0.17 7/13/17 Fuck $0.30 9/6/17 COSS $2.36 7/13/17 Tezos $232.00 9/6/17 Indorse $7.98 7/13/17 InsureX $17.27 9/7/17 Hubii $6.68 7/14/17 Orocrypt $0.14 9/10/17 Prospector $0.60 7/15/17 PressOne $82.00 9/10/17 Rivetz $13.63 7/15/17 SONM $42.00 9/10/17 OneGram $1.51 7/16/17 Mothership $4.69 9/10/17 Filecoin $262.00 7/16/17 Bitquence $1.23 9/10/17 fujinto $2.01 7/17/17 Pillar $18.53 9/10/17 Alpen Coin $2.43 7/17/17 CoinDash $0.00 9/11/17 Ahoolee $0.14 7/17/17 Sumerchain $0.00 9/11/17 StuffGoGo $0.24 7/20/17 Gilgam $0.22 9/12/17 Aventus $17.31 7/20/17 Gilgam.es $0.21 9/12/17 Enigma Catalyst $45.00 7/21/17 SkinCoin $3.32 9/14/17 Social(SCL) $5.22 7/23/17 Eros $4.86 9/14/17 BitDice $8.72 7/26/17 GeoFounders $0.23 9/15/17 ATB Coin $16.55 7/26/17 Primalbase $6.82 9/15/17 Smart Investment Fund Token $1.75 7/26/17 Dent $4.10 9/15/17 Trackr $0.29 7/28/17 Blocktix $6.89 9/15/17 Propy $12.52 7/28/17 RootProject $3.50 9/15/17 FaceCoin $0.84 7/28/17 TrueFlip $4.04 9/15/17 ICObox $12.05 7/31/17 FundYourselfNow $0.74 9/16/17 KyberNetwork $53.01 7/31/17 11.97 $18.68 9/16/17 KICKICO $17.12 8/1/17 district0x Network $13.19 9/17/17 Intelligent Trading Tech $3.12 8/1/17 SunContract $2.41 9/18/17 SilentNotary $0.12 8/4/17 MonsterByte $0.97 9/20/17 Hackspace Capital $4.80 8/4/17 CoinDash $0.14 9/20/17 Impak Finance $1.05 8/7/17 Blocktix $6.98 9/20/17 DetectorToken $0.29 8/10/17 Tierion $25.04 9/22/17 Modum.io $13.50 8/17/17 Agrello $26.14 9/27/17 Solomon Exchange $0.16 8/21/17 DMarket $11.97 9/28/17 Internxt $0.16 Data Sources: CoinDesk venture capital database, CoinDesk ICO Tracker … … … Total $1,246 Notes: Deals under $100,000 excluded, $ amount at time raised, including only fundraisers ending in 'Q3 2017’ (7/1/17 – 9/30/17) State of Blockchain – Q3 2017 | 59 The Two Largest ICOs Ever Launched in Q3 2017
Bancor
Filecoin The DAO Tezos
Data Source: CoinDesk ICO Tracker Notes: Deals under $100,000 excluded, $ amount at time raised State of Blockchain – Q3 2017 | 60 August Saw a Dip in ICO Launches in Terms of Quantity and Amount Raised
Data Sources: CoinDesk venture capital database, CoinDesk ICO Tracker Notes: Deals under $100,000 excluded, $ amount at time raised, including only fundraisers ending in 'Q3 2017’ (4/1/17 – 6/30/17) State of Blockchain – Q3 2017 | 61 Q3 2017 Sent ICO Total Funding Above Total Venture Capital Blockchain Investment
All-Time Blockchain Funding Cumulative VC Cumulative ICO $2.5bn ICO VC $2.38bn $1.95bn $2.0bn
Top ICO Deals: Top VC Deals: $1.5bn Filecoin - $262m 21 - $116m* Tezos - $232m R3 - $107m Bancor - $153m Coinbase - $100m The DAO - $152m Digital Asset - $60m $1.0bn VC
$.5bn ICO
- Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Data Sources: CoinDesk venture capital database, CoinDesk ICO Tracker Notes: Deals under $100,000 excluded, $ amount at time raised *Amount contested and frequently reported between $75m - $116m State of Blockchain – Q3 2017 | 62 Celebrity Endorsements Were Prevalent on Twitter and Instagram
Data Sources: Instagram, Twitter
State of Blockchain – Q3 2017 | 63 Rise of a Sophisticated Buy Side Crypto Hedge Funds Boom, ~100 New Firms Launch in 2017
Cryptocurrency Funds
124 $2.3bn 100% *from CoinDesk sentiment survey 10 0.1 0.1 90% Which will have a greater effect on the quality of 11 0.1 0.1 tokens or ICO projects, a sophisticated buy-side of 80% 4 13 professional crypto-hedge-funds, or the regulatory 70% Index 0.7 approach? Token Basket 60% 40 Fund of Funds 50% AI / Quant A regulatory approach will be more 43.2% 40% Trading important Liquid Venture 30% 1.1 20% 46 A market approach with a sophisticated 56.8% 10% buy-side will be more important
0% Number Estimated AUM ($bn) 0% 10% 20% 30% 40% 50% 60% Data sources: CoinDesk, Autonomous NEXT
State of Blockchain – Q3 2017 | 64 Rise of Specialized Legal Services
Law Firms Actions in Cryptocurrency Lawyers include an author of the SAFT Project whitepaper, and a co-founder of the Bitcoin Foundation. Cooley is a member of the Enterprise Ethereum Alliance Working Group.
Recent briefs on the SEC blockchain report and DAO decision. Released A Securities Law Framework for Blockchain Tokens with Coinbase. Member of the Enterprise Ethereum Alliance Working Group.
Host a Digital Currency & Blockchain Perspectives blog. Represented Coinbase in IRS case. Advised ICOs, venture funds, exchanges, and bitcoin ATM companies.
Represented LedgerX in CFTC registration as a derivatives clearing organization. Written periodic advisory statements on blockchain regulation including the NYDFS BitLicense.
Assisted a variety of protocols and Dapps: Ethereum, Tezos, Golem, Lisk, Wings, etc.
Assisted Civic on their ICO. Practice includes a Blockchain Technology & Digital Currency industry group. Member of the Enterprise Ethereum Alliance Working Group.
Data sources: CoinDesk, Firm Websites
State of Blockchain – Q3 2017 | 65 5 GOVERNMENT & REGULATION
State of Blockchain – Q3 2017 | 66 Q3 2017 Government & Regulation Summary
Chinese crackdown on ICOs and cryptocurrency CFTC granted LedgerX registration as a derivative exchanges: clearing organization and a swap execution facility: - After Q1 PBOC currency control measures, Q3 saw a ban on ICOs - Important steps for maturity of asset class. and trades stopped on all exchanges.
SEC published significant ICO guidance, Virtual Currency Tax Act Tabled in the House: demonstrates new depth of expertise: - Law would see an exception to gains tax for small - Other jurisdictions applied similar tests as in guidance. transactions.
Data Source: CoinDesk State of Blockchain – Q3 2017 | 67 Americas: Important moves by SEC, CFTC Charges Filed in Two Cases With Major Implications
Jul. 6 – CFTC issued order of registration to LedgerX as a Swap Execution Facility (SEF).
Jul. 24 – CFTC, by unanimous vote of the Commission, granted LedgerX registration as a Derivatives Clearing Organization (DCO). Jul. 25 – SEC released ICO guidance, demonstrated new subject matter expertise, underlined importance of Howey Test, exempt market status. Other important notes: no action taken against DAO founders. Sept. 6 – Quebec’s Autorite des Marche Financieres (AMF) admitted ICO for Impak Coin to regulatory sandbox. Sept. 7 – Cryptocurrency Tax Fairness Act tabled in Congress, would see an exception to gains tax for small transactions. Sept. 21 – CFTC filed charges against several defendants alleging a Bitcoin ponzi scheme (though not involving a derivative contract). Sept. 29 – SEC filed fraud charges against 2 ICOs; REcoin and DRC World
Data Sources: CoinDesk, Image State of Blockchain – Q3 2017 | 68 Europe: Studies, Consultations, Signals Suggest Open Environment
Jul. 12 – After consultation with Switzerland’s top regulator, the Financial Market Supervisory Authority (FINMA), the private bank Falcon began to offer clients services for bitcoin.
Jul. 5 – UK cybercrime watchdog suggested recent surveillance law, the Investigatory Powers Act, which gave sweeping privacy invasion powers, could pave the way for cryptocurrency adoption.
Aug. 22 – Managers of the Estonian government’s popular e-residency announced they were considering launching an ICO for Estcoins, which would be managed by the Republic of Estonia.
Sept. 22 – Germany’s central bank, the Deutsche Bundesbank, published research paper that stated their experts saw “little prospect of DLT being put to widespread use in the field of individual and retail payments.” Sept. 29 – Switzerland’s top financial markets regulator FINMA announced it is investigating a number practices on an undisclosed number of ICOs.
Data Sources: CoinDesk, Image State of Blockchain – Q3 2017 | 69 Asia: Bans, Shutdowns Mark Most Aggressive Executive Action Against Bitcoin
Aug. 1 – Monetary Authority of Singapore (MAS) underlined similar logic to SEC, will regulate ICOs that are securities.
Sept. 4 – People’s Bank of China (PBOC) banned ICOs, declared them illegal and disruptive to financial stability.
Sept. 15 – People’s Bank of China ordered shutdown of all cryptocurrency exchanges operating in the country.
Sept. 29 – Korea’s Financial Services Commission (FSC) banned domestic ICOs, declared violators will be dealt with in a Virtual Currency Detention Center.
Sept. 29 – Japan’s Financial Services Agency (FSA) issued licenses to 11 cryptocurrency exchanges after best practices guidance released in March.
Data Sources: CoinDesk, Image State of Blockchain – Q3 2017 | 70 Middle East and Australia: AML and ICO Warnings
Aug. 17 – Australian Minister of Justice introduced bill that would put cryptocurrency exchanges on Digital Currency Exchange Register, make them follow current national anti-money laundering law that forces KYC reports on any international transaction >1$. (The USA enforced a KYC law for transactions above $10,000).
Sept. 13 – The Dubai Financial Services Authority (DFSA) issued warning on ICOs – should be considered high risk.
Q4 Preview: Oct. 20 – The Islamic Development Bank (IDB) of Saudi Arabia announced plans to create Halal transaction authorization blockchain, partner with startups Ateon and SettleMint.
Data Sources: CoinDesk, Image State of Blockchain – Q3 2017 | 71 6 Blockchain Sentiment Survey
SPOTLIGHT STUDY
State of Blockchain – Q3 2017 | 72 Q3 2017 Blockchain Sentiment Survey: Demographics – ~400 Respondents
17% Executives, 13% Investors, 12% Developers 48% U.S. & Canada 12% Full-Time Blockchain, 25% Part-Time 32% Europe
8% work at Blockchain Technology Companies, 8% Asia 5% at Investment Services 3% Central & South America 16% Accredited, 84% Unaccredited investors 3% Africa 93% bought cryptocurrency in 2017, 81% in Q3, 67% in Q2, 47% in Q1 Male Female Median respondent owned 4 unique digital assets, mean 5.8, 93% 7% top 10% over 12
23% own $10k - $50k worth of cryptocurrency, 18% own $1k - $5k, 14% own $0 - $1k
83% check prices at least daily, 50% every day, 33% every hour, < 18 18 – 25 26 – 35 36 – 45 46 - 55 56 – 65 66+ 12% a couple times a week 0% 13% 32% 29% 15% 9% 2%
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 73 Q3 2017 Blockchain Sentiment Survey: Key Takeaways
feel positive about the current state of kept Bitcoin Cash after the fork, 29% bitcoin, up 30% from last quarter 87% 33% exchanged for BTC
believe cryptocurrencies not in a bubble, most positive aspect of bitcoin was most common single response (23%) hedging against central bank policy, was they were slightly in a bubble 3.2 highest weighted score 50%
followed the scaling debates with 43% checked prices everyday (50%) or aware of proposals and positions, and 83% compulsively, every hour (33%) 72% 29% having a personal position.
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 74 Most Respondents Own Bitcoin and Ether
Do you own bitcoin? Do you own ether? I have never I have never owned bitcoin owned ether 6.9% 16.2%
No, I used to but I sold all of it No, I used to but I 9.2% sold all of it 13.1%
Yes Yes 70.6% 83.9%
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 75 84% of Respondents Increased Their Variety of Cryptocurrency Holdings 78% of Respondents Owned a Cryptocurrency Other than Ether or Bitcoin
Do you hold more types of cryptocurrencies in Do you own any other cryptocurrency? 2017 than you did in previous years? Yes
No 77.9% 16.2% I have never owned a cryptocurrency besides bitcoin and ether No, I used to but I sold all of it 11.1% Yes I have never owned any 83.9% 6.9% cryptocurrency
4.1%
Top 5 other currencies: Litecoin, Ripple, Monero, NEO, OmiseGO
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 76 92% of Respondents Purchased Cryptocurrency in 2017 83% Checked Prices At Least Daily
Did you buy or sell any cryptocurrency in 2017? Approximately how frequently do you check cryptocurrency prices? 90% 60% 81.0% 80% 50.0% 50% 70% 66.7% 40% 60% 33.3% 47.2% 50% 30% 40% 20% 30% 11.5% 20% 10% 3.1% 2.1% 10% 7.7% 0% 0% Every day Every hour -- I'm A couple times a A couple times a Hardly ever Yes, in Q3 2017 Yes, in Q2 2017 Yes, in Q1 2017 No compulsive week month
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 77 Knowledge of Major Public Blockchains and Assets Grew Knowledge of Enterprise Projects Relatively Unchanged
How much do you know about the following? Almost nothing A bit A lot 100% 12.2% 8.5% 20.1% 80% 48.3% 34.3% 67.4% 47.9% 60% 51.7%
40%
48.0% 57.2% 20% 39.9% 31.7% 28.3%
0% 0.8% 3.7% Bitcoin Ethereum Enterprise Ethereum Alliance Ripple Hyperledger
Q2 “A lot” 54.2% 43.9% 13.1% 21.7% 7.3%
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 78 Approximately Half Believed Cryptocurrencies Are Not in a Bubble Most Common Response Was ‘Slight Yes’
Do you believe the value of cryptocurrencies, including bitcoin and ether, are in a 'bubble'? 25% 23.0% 22.2%
20% 17.4%
15%
11.0% 11.5% 10.1% 10%
4.8% 5%
0% Extreme yes Moderate yes Slight yes Neutral Slight no Moderate no Extreme no
38.7% yes 49.7% no Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 79 Community Was More Bullish on Bitcoin and Ethereum Prices in Q3
How do you think the price of the following will do in the rest of 2017? Go down a lot Go down a bit Stay about the same Go up a bit Go up a lot
100% 4.7% 14.6% 21.2% 21.0% 33.8% 80% 44.5% 41.5%
40.3% 60% 51.0% 43.2%
40% 43.5% 56.5% 45.7% 33.1% 20% 22.3% 25.4% 9.4% 3.1% 9.0% 5.7% 4.8% 3.4% 4.4% 0% 2.0% 2.3% 3.0% 1.2% 5.6% 2.9%1.2% Bitcoin Ethereum Ripple Litecoin Ethereum Classic All cryptocurrencies
Q2 “Go Up A lot” 28.2% 38.7% 17.8% 28.9% 12.4% 29.9%
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 80 79% Believed the First Digital Asset ETF Will be Live by the End of 2018
When do you think the first digital asset based ETF will be live? 30%
25.3% 25%
20% 17.9% 18.5%
15%
10.1% 10% 7.4% 7.4% 8.0%
5% 2.1% 1.5% 1.8%
0% Q4 ' 17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 2020 or later
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 81 Community Was Most Confident in Decentralized Exchanges
What sector of blockchain applications are you most bullish on? 40%
34.6%
30%
19.9% 20% 19.1%
12.3%
10% 5.9% 4.1% 4.1%
0% Decentralized exchanges Privacy focused Asset management tools Identity Computation Prediction markets Storage transactions
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 82 The Overall Sentiment Towards Bitcoin Was Very Positive in Q3
How do you feel about the current overall state of bitcoin? 45% 39.2% 40% 35.8% 35%
30%
25%
20%
15% 12.3% 10% 5.2% 3.7% 5% 1.8% 2.1% 0% Extremely negative Moderately negative Slightly negative Neutral or ok Slightly positive Moderately positive Extremely positive
Overall state of ethereum response: positive Q2 2017 State of Blockchain response: 76.7% positive 87.2% 8.6% negative 57.3% positive 7.6% negative 26.7% negative
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 83 Most Positive Aspect of Bitcoin Was Hedging Against Central Bank Policy Most Negative Aspect Was ‘Transaction Fees’
How would you rank the following positive aspects of Bitcoin today? 3.5 3.2 3.1 3.0 2.8 2.7 2.6 2.5 2.0 1.5 1.0 0.5 0.0 It's a hedge against central bank It's uncensorable and immutable It's digital gold with counterfeit It's a solution to privacy concerns and It's great for payments and as a medium monetary policy protection identity theft of exchange
Which of the following do you consider to be the most negative aspect of Bitcoin today? 30% 25% 20% 15% 10% 5% 0% Transaction fees Scaling No traction as a consumer tool Complicated to use
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 84 Most Members of the Community Followed the Bitcoin Scaling Debates Most Were Aware of the SegWit Soft Fork and Expect a Segwit2X Hard Fork
Do you follow the Bitcoin scaling debates? 50% 43.2% 40% 30% 22.5% 20% 12.9% 10.9% 6.5% 10% 4.1% 0% Yes, I follow the people and Yes, I follow the debates and am No, other reasons No, scaling debates are too Yes, and I signal for the position I No, Bitcoin scaling is boring entities that have taken positions in favour of a position heated but I follow the technical have taken proposals
Did you notice or hear that blocks larger than >1MB Do you think the proposals for 2X blocks will result in were mined in Q3 2017 as a result of the SegWit soft a contentious hard fork or blockchain split of Bitcoin fork? this year? Uncertain 12.7%
Uncertain No 38.6% Yes 21.7% Yes 51.7% 65.6% No 9.7%
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 85 After the BCH Hard Fork, 33% ‘Hodled Until Now’ 72% Were Unaware of the Lumens Airdrop
If you were a bitcoin (BTC) holder when Bitcoin Cash (BCH) was created, what did you do with your BCH?
40% 32.9% 28.8% 30% 20% 15.4% 12.2% 10% 5.9% 4.8% 0% Hodled until now Exchanged for BTC Exchanged for ETH Exchanged for a Exchanged for fiat Wait, what? combination of coins
If you were a bitcoin holder when Stellar airdropped lumens (XLM) as part of a token generating event (TGE), what did you do with your free tokens? 80% 71.8% 60% 40% 12.0% 20% 7.9% 1.9% 4.8% 1.6% 0% Hodled until now Exchanged for BTC Exchanged for ETH Exchanged for a Exchanged for fiat Wait, what? combination of coins
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 86 The Overall Sentiment Towards Ethereum Improved in Q3 Relative to Q2 Ethereum Sentiment Slightly Lower than Bitcoin
How do you feel about the current overall state of ethereum? 35% 33.2% 30.3% 30%
25%
20% 14.8% 15% 13.1%
10%
3.5% 5% 2.7% 2.4%
0% Extremely negative Moderately negative Slightly negative Neutral or ok Slightly positive Moderately positive Extremely positive
Overall state of bitcoin response: positive Q2 2017 State of Blockchain response: 87.2% positive 76.7% 7.6% negative 64.8% positive 8.6% negative 22.7% negative
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 87 Most Positive Aspect of Ethereum Was the Protocol 81% Don’t Expect Ethereum to Overtake Bitcoin’s Market Cap by 2018
Which of the following do you consider to be the most Do you think ethereum will overtake positive aspect of ethereum today? Bitcoin in terms of market cap in 2017 40% 36.7% 34.5% or 2018? 30% 16.3% 20% 12.6% 10% Yes 0% 18.8% The ethereum protocol The ethereum dapp ICOs The Enterprise Ethereum ecosystem Alliance
Which of the following do you consider to be the most negative aspect of ethereum today? 50% 44.8% 40% 30.5% 30% 18.8% 20% No 10% 5.9% 81.3% 0% Potentially buggy smart ICOs Scaling Transaction fees contracts
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 88 44% Participated in an ICO, Up From 39% in Q2 Nearly Half Who Haven’t Participated Had Tried or Wanted To
Have you ever participated in an ICO?
32.0% Yes 43.8% No, but I have tried or wanted to
No, and I have never tried or wanted to either
24.2% 39.2% had participated in Q2 2017 State of Blockchain
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 89 Long-Term Investment Was the Most Common Reason for ICO Participation Most Who Have Participated Are Still Holding Their ICO Tokens
If you have taken part in an ICO, what was the If you have taken part in an ICO, what have you done primary reason for your participation? with your tokens since? 60% 56.5% 90% 77.9% 80% 50% 70% 40% 60%
30% 26.3% 50% 40% 20% 17.2% 30% 25.6% 19.8% 10% 20% 14.0% 10% 5.8% 0% Investment (long-term Interest (learning more about Speculation (short-term trade) 0% holding) and using the technology and I am still holding Sold them into Sold them into Sold them into Sold them into product) all my ICO tokens bitcoin ether other tokens fiat
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 90 Lack of Technical Knowledge Has Kept Out the Most Respondents
If you have not taken part in an ICO, what has been the primary reason for your lack of participation?
25% 23.0%
20% 17.8% 15.7% 14.7% 14.7% 15% 14.1%
10%
5%
0% Lack of technical knowledge on Lack of information or third party Lack of legal or regulatory Lack of attractive projects Lack of faith in software and Lack of attractive investment how to participate research frameworks or guidance code auditing or potential for structures (but have seen bugs attractive projects)
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 91 ICO Participants Considered Use Case Their Primary Driver of Analysis
How would you rank the importance of the following factors behind a token or ICO project? 6
5.0 5 4.6
3.9 4 3.8 3.3 3.3 3.2 3
2
1
0 Use case Team Technological roadmap Crypto-economic viability Token valuation and White paper quality Social signals (buzz, structure (price, allocation to advisors, partnerships, team, future tokens, lock up, endorsements) etc.)
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 92 Respondents Indicated Blockchain Projects Should Structure ICOs With a Cap, Over Several Rounds, and With Other Forms of Fundraising
I believe token issuers should cap ICO I believe token issuers should plan for I believe new blockchain projects rounds, as opposed to raising as much several blockchain token sales should consider mixing traditional money as possible in one round 40% investment funding and ICOs 35.1% 40% 40% 35.0% 35% 36.1% 35% 28.2% 35% 30% 28.4% 30% 27.5% 26.7% 25.0% 30% 25% 25% 25% 20% 20% 20% 18.1% 15% 15% 15% 10.6% 10% 10% 7.2% 10% 6.9% 5.7% 5.2% 4.6% 5% 5% 5% 0% 0% 0% Strongly Somewhat Neither agree Somewhat Strongly Strongly Somewhat Neither agree Somewhat Strongly Strongly Somewhat Neither agree Somewhat Strongly agree agree or disagree disagree disagree agree agree or disagree disagree disagree agree agree or disagree disagree disagree 62.5% agree 53.1% agree 46.4% agree 10.9% disagree 11.8% disagree 17.5% disagree
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey Notes: ‘Cap’ meaningnot raising more than some amount like $10m or 100k ETH in a sale ‘Several token sales’ meaning similar to startups raising traditional funding in rounds like “Seed”, “Series A”, “Series B”, etc. ‘Traditional investment funding’ meaning sources like venture capital firms and accredited angel investors State of Blockchain – Q3 2017 | 93 Most Respondents Believed Issuers Should Convert Some Funds to Fiat, But Primarily Hold Funds in Cryptocurrency
How do you think ICO issuers should hold the funds raised in a token sale? 60% 53.3%
50%
40%
30%
22.0% 20.2% 20%
10% 4.5%
0% Both (more cryptocurrency than fiat) Keep all funds in cryptocurrencies Both (more fiat than cryptocurrency) Convert all raised and liquid tokens into fiat
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 94 Blockchain Media Sites and Study White Papers Were Most Commonly Used to Learn More About Tokens or ICO Projects
What resources do you use to learn more about tokens or ICO projects? 90% 80.9% 80%
70% 66.1%
60% 55.9% 49.9% 50%
40% 31.0% 29.6% 30% 25.2%
20% 14.8%
10%
0% Blockchain media sites Study white papers Twitter Reddit GitHub Slack channels Watch for signals from LinkedIn like CoinDesk professional buy-side of crypto-hedge funds
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 95 Respondents Believed VC Investments Were a Positive Sign for ICOs Celebrity Endorsements Made Respondents Less Enthusiastic
I believe VC or angel investment is a I believe celebrity endorsements are I believe celebrity ICO endorsements are positive social signal and would make signs that cryptocurrencies have a positive social signal and would make me more inclined to participate in an entered the mainstream me more inclined to participate in an ICO ICO 40% 35.6% 40% 34.6% 35% 60% 54.7% 35% 30.3% 30% 24.8% 50% 30% 25% 25% 40% 20.5% 20% 17.1% 20% 14.3% 30% 15% 19.7% 15% 20% 15.2% 8.1% 10% 8.3% 10% 6.6% 7.3% 5% 5% 10% 3.1% 0% 0% 0% Strongly Somewhat Neither agree Somewhat Strongly Strongly Somewhat Neither agree Somewhat Strongly Strongly Somewhat Neither agree Somewhat Strongly agree agree or disagree disagree disagree agree agree or disagree disagree disagree agree agree or disagree disagree disagree 55.0% agree 43.9% agree 10.4% agree 14.7% disagree 31.3% disagree 69.9% disagree
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey
State of Blockchain – Q3 2017 | 96 Respondents Thought Token Diversification Was Positive for the Blockchain Industry, And Considered ERC20 Tokens a ‘Killer App’
Do you think token diversification from Are you aware that most ICOs are With the success of ERC20 tokens, the recent ICO boom is positive or generated as ERC20 tokens on the would you say ethereum has developed negative for the blockchain industry? ethereum blockchain? its first 'killer app'?
16.8%
40.1% 41.1% Positive Yes Yes Negative No No 59.9% 59.0%
83.2%
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey
State of Blockchain – Q3 2017 | 97 Respondents Believed ICO Quality Will Be Helped By Regulation But ICO Quantity Will Be Hurt By Regulation
How do you believe regulation will affect the quality of ICOs? How do you believe regulation will affect the quantity of ICOs?
18.0% 13.7% ICO quality will be helped by 25.9% ICO quantity will be helped by regulation regulation 10.2% ICO quality will be hurt by ICO quantity will be hurt by regulation regulation ICOs cannot practically be ICOs cannot practically be 71.8% regulated regulated 60.4%
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 98 Most Respondents Expected China’s Action Against Cryptocurrencies Would Be Temporary
China took the strongest regulatory tone on cryptocurrencies in Q3. This action will... (click all the apply) 80%
70% 67.1%
60%
50% 47.1%
40% 37.4%
30% 21.4% 20%
10%
0% be temporary. be a gift to other parts of the world as China loses be a test on Chinese regulators themselves: the cause other jurisdictions to follow China's lead. its position. compliance they've signalled will be difficult to achieve.
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 99 Most Respondents Felt Positive About the Overall State of DLT The Largest Group Felt ‘Neutral’ or ‘OK’ About DLT
How do you feel about the current overall state of Distributed Ledger Technology? 35%
30% 28.7%
25% 19.8% 20% 17.5% 15.4% 15%
10% 8.3% 5.3% 5.0% 5%
0% Extremely negative Moderately negative Slightly negative Neutral or ok Slightly positive Moderately positive Extremely positive 52.7% positive Often called ‘DLT’, ‘permissioned’ or 18.6% negative ‘enterprise’ blockchains
Data Source: CoinDesk’s Q3 2017 Blockchain Sentiment Survey State of Blockchain – Q3 2017 | 100 6 COINDESK
State of Blockchain – Q3 2017 | 101 CoinDesk – News, Events, Research and Data for Blockchain Technology
Headquarters: Midtown Manhattan, New York City News: 35 million online readers since 2013 Events: 4,000+ attended our 2017 Consensus, Invest and Construct conferences in New York City and San Francisco Data: Industry reference points including Bitcoin and Ether prices and Venture Capital and ICO databases
Data Source: CoinDesk State of Blockchain – Q3 2017 | 102 About the 'State of Blockchain'
For three years, CoinDesk has analyzed the 'State of Blockchain' in our quarterly industry overview reports We cover: - Technical trends within the top open-source developer communities - Major product updates from well-funded startups - Digital currency market data, utilization rates, public sentiment and network performance metrics - Enterprise adoption rates and new proofs-of-concept - Venture capital, corporate, and public investment trends - Public policy updates from around the globe
Data Source: CoinDesk State of Blockchain – Q3 2017 | 103 About CoinDesk
- Find out more at www.coindesk.com
- Follow us on Twitter: @CoinDesk
- Subscribe to our email newsletters for the latest blockchain news
- If you have data you think should be included in future 'State of Blockchain' reports, email [email protected]
- We also welcome any general feedback you have on the report
Data Source: CoinDesk State of Blockchain – Q3 2017 | 104 CoinDesk Events
- We are the leading events firm in blockchain
- Our annual Construct and Consensus events have attracted thousands of entrepreneurs, investors, executives, regulators, journalists and more to San Francisco and New York City
- Join us in November for the debut of our newest event, Consensus Invest!
Data Source: CoinDesk State of Blockchain – Q3 2017 | 105 6A RESEARCH FRAMEWORK
State of Blockchain – Q3 2017 | 106 Defining The Blockchain Technology Market
A public blockchain is an internet protocol that An enterprise blockchain is a distributed Many companies employ hybrid models where manages the distribution of provably unique ledger that provides: they: data that:
- Acts as a unit of account for transactions - Consensus via trusted intermediaries, - Build on public blockchain infrastructure on that ledger making digital currencies unnecessary - Provide technology for permissioned - Incentivizes early adopters and developers - Solutions to clients who wish to use networks to use, support and verify the ledger cryptographic databases managed and without the need for a trusted intermediary shared by trusted parties
State of Blockchain – Q3 2017 | 107 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
State of Blockchain – Q3 2017 | 108 The State of Blockchain Focuses Primarily on Public Blockchains; Enterprise Data is More Opaque
The majority of development work to date has been done using open-source tools and public blockchains like bitcoin and ethereum
PUBLIC BLOCKCHAINS ENTERPRISE BLOCKCHAINS
public (inter-) private (intra-) The Internet Intranets & IT
State of Blockchain – Q3 2017 | 109 ‘Public’ (Open) vs ‘Enterprise’ (Permissioned) Blockchains: Generalized Features Comparison
PUBLIC ENTERPRISE ACCESS Open read and write Permissioned write and/or read SPEED Slower Faster SECURITY Open network Approved participants IDENTITY Anonymous or pseudonymous Known identities ASSET Native assets Any asset
Data Sources: Chain, Chris Skinner’s blog State of Blockchain – Q3 2017 | 110 Strengths and Weaknesses of Public Blockchains
We believe public blockchains will have the greatest impact on developing economies (reduced need for trust) and the connected device, IoT economy (immutability, auditability)
STRENGTHS WEAKNESSES
Immutable ledger Irreversible transactions Relatively fast settlement time Slow transaction clearing (e.g., 10 minutes or less) (e.g., 3 – 7 transactions / second) Reduced security risks associated with More vulnerable to attacks centralization-trusted third party (e.g., 51%, spam, DDoS) Easy to audit Reduced privacy Reduced need for trust Energy consumption
Data Sources: Ethereum, MultiChain Notes: Ledgers and protocol rules may be changed via forks, although these changes can introduce risks State of Blockchain – Q3 2017 | 111 Blockchain Ecosystem Breakdown
When producing market maps and following investment trends, we look for business shifts between these models:
PUBLIC ENTERPRISE PROTOCOL
COMPANY
APPLICATION
The company layer crosses protocols and is heavily comprised of bitcoin related businesses, while the application layer is dominated by ethereum applications
Notes: Numerous protocols are also maintained by open source communities, non-profits like the Ethereum Foundationand consortiums like R3 and Hyperledger State of Blockchain – Q3 2017 | 112 Blockchain Project Funding Models
Entrepreneurs have begun considering blockchain token sales ('ICOs') as fundraising alternatives to traditional venture capital and angel investment
ICO HYBRID VC PROTOCOL
COMPANY
APPLICATION
ICOs rather than VC has driven the development of most public blockchain applications, as well as numerous protocols and companies, a line which is becoming increasingly blurred
Notes: Numerous protocols are also maintained by companies like the Zerocoin Electric Coin Company, open source communities, non-profits like the Ethereum Foundation and consortiums like Hyperledger State of Blockchain – Q3 2017 | 113 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. Numerous DCG portfolio companies are referenced in this report.
State of Blockchain – Q3 2017 | 114