Economic Trends and Potential Business Opportunities

Paolo Tasca

UCL Centre for Technologies

Blockchain: the Next Financial Revolution ? :: Zurich

Paolo Tasca BlockchainJune Workshop 16, 2016 :: Zurich June 16, 2016 1 / 40 1 Why Blockchain Technologies are important ?

2 China is the most active country in the world

3 startups raised almost USD 1 billion during the last three years

4 Mining Industry is an Oligopoly

5 The Evolution of the Bitcoin Economy

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 2 / 40 https://ecurex.com/2015report

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 3 / 40 Why Blockchain Technologies are important ?

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 4 / 40 Why Blockchain Technologies are important ?

“It is a shared, trusted public/private ledger that everybody can inspect, but which non single user control.”

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 5 / 40 well everything”

Goldman Sachs (December 2015) Basically... “What Internet did for information (Internet of Media and Information Exchange) Blockchain is doing for money (Internet of Value Exchange)”

Why Blockchain Technologies are important ?

“While the Bitcoin hype cycle has gone quiet, Silicon Valley and Wall Street are betting that the underlying technology behind it, the Blockchain, can change...

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 6 / 40 Basically... “What Internet did for information (Internet of Media and Information Exchange) Blockchain is doing for money (Internet of Value Exchange)”

Why Blockchain Technologies are important ?

“While the Bitcoin hype cycle has gone quiet, Silicon Valley and Wall Street are betting that the underlying technology behind it, the Blockchain, can change... well everything”

Goldman Sachs (December 2015)

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 6 / 40 well everything”

Why Blockchain Technologies are important ?

“While the Bitcoin hype cycle has gone quiet, Silicon Valley and Wall Street are betting that the underlying technology behind it, the Blockchain, can change...

Goldman Sachs (December 2015) Basically... “What Internet did for information (Internet of Media and Information Exchange) Blockchain is doing for money (Internet of Value Exchange)”

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 6 / 40 The UCL CBT will Forge Cross-Sectoral Alliances with a Worldwide Network of Industry Partners

Why Blockchain Technologies are important ?

FINANCIAL INTERNET CONSUMER INSURANCE ENERGY INDUSTRY SERVICES of THING ELECTRONICS

MEDIA LOGISTICS and AUTOMATION and COMMUNICATIONS INDUSTRIAL HEALTHCARE TRANSPORTATION ROBOTICS ENTERTAINEM.

BANKING

Figure: Sectors that will be affected by the blockchain technology

January 2016, UCL CBT (Confidential) :: 9

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 7 / 40 WhyExamples Blockchain of Blockchain Technologies Business are important Applications ?

Governance and Clearing and settlement monitoring Distributed and, or Post-trading payments Brokerage activities decentralised immutable Rating, grading and and transactions data storage voting systems.

Traceability of products, Rewarding and incentive Refereeing, arbitration Securitization and re- components and spare mechanisms and notarization insurance activities parts

Digitalization of real Blockchain IDs Tamper–proof assets such as stocks, for access in apps and decentralization of Smart contracts for IoT bonds, land titles, and websites, and digitally controlling and auditing applications frequent flyer miles sign documents activities

Shared private blockchain Correspond banking, Trust & custody for efficient automatic Decentralized AI for trade finance, remittance Funds holding, and asset invoice reconciliation and medical application and payments management tracing

Figure: Examples of Blockchain Business Applications

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 8 / 40 Why Blockchain Technologies are important ? It is a valid substitute to centralised ledgers in all these cases: intermediation; clearing and settlement; post-trade activities of middle-back offices (i.e., messaging, matching, netting, allocations, payments and reconciliations); record system (e.g., guns, precious metals, arts); rating or voting system; databases; distributed storage, authentication, anonymisation of private information; rewarding and punishing-incentive schemes; transaction traceability schemes; refereeing, arbitration; notarization (e.g., vehicles registrations).

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 9 / 40 China is the most active country in the world

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 10 / 40 China is the most active country in the world At the end of 2014, Chinese mining pools cover 50% of the total market share Mining Market Share among Countries (by number of blocks) 2000 Unknown USA Global 1500 Europe China

1000

500 2016 Blocks in Each Difficulty Level 0 01/13 05/13 09/13 12/13 04/14 08/14 12/14

Figure: Top mining activity per country. Mining pools are classified per country of operation. Many mining pools operate in different countries (e.g, BTC Guild and BitMinter run their mining operation in both USA and Europe), so they are classified as “Global”. Period: from January 2013 to February 2015. Data source: Blocktrail, Bitcoin Wiki (comparison of mining pools). Internal calculation. Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 11 / 40 China is the most active country in the world Since 2014, the traded CNY/BTC volume in is about 3 times larger than the USD/BTC volume, with peaks at BTC 4 million per week

Weekly BTC/USD Exchange Volume Weekly BTC/CNY Exchange Volume 4 2 6 15 Billion USD Billion CNY Trend Trend Million BTC Million BTC 3 1.5 4 10

2 1

2 5 1 0.5

0 0 07/11 01/12 07/12 01/1307/13 01/14 07/14 01/15 07/11 01/12 07/12 01/1307/13 01/14 07/14 01/15

Figure: Weekly exchange volume of in the main trading platforms (Anxbtc, Bitcoin24, btc-e, Bitcoincentral, Bitcoinde, bitfinex, bitmarket, , britcoin, btc china, campbx, coinfloor, hitbtc, , , lakebtc, MtGox, okcoin, rmbtb, tradehill) from July 2011 to January 2015. Data source: Bitcoinity. Internal calculation. Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 12 / 40 China is the most active country in the world

Volume in BTC Year BTC/USD BTC/EUR BTC/GBP BTC/CNY Mean 2012 404833 (91.09%) 23320 (5.25%) 11794 (2.65%) 4506 (1.01%) (weekly) 2013 650294 (65.91%) 63608 (6.45%) 13225 (1.34%) 259549 (26.31%) 2014 343025 (22.33%) 23059 (1.50%) 7131 (0.46%) 1163197 (75.71%) St. Deviation 2012 205498 11401 5230 3796 (weekly) 2013 460848 54599 8474 438822 2014 205045 12179 3952 960218 Volume in USD Year BTC/USD BTC/EUR BTC/GBP BTC/CNY Mean 2012 3147387 (89.83%) 220411 (6.29%) 95505 (2.73%) 40219 (1.15%) (weekly) 2013 173744312 (52.09%) 13308177 (3.99%) 2537553 (0.76%) 143965181 (43.16%) 2014 171547907 (22.33%) 11750245 (1.64%) 3554263 (0.50%) 530584398 (73.96%) St. Deviation 2012 1682033 163329 54862 35771 (weekly) 2013 322865053 22231294 3792220 332101759 2014 113491426 7633762 2119485 335344667

Table: Annual mean and volatility of the Bitcoin market volume exchanged in major trading platforms and expressed in BTC and USD. Platforms: Anxbtc, Bitcoin24, btc-e, Bitcoincentral, Bitcoinde, bitfinex, bitmarket, bitstamp, britcoin, btc china, campbx, coinfloor, hitbtc, huobi, kraken, lakebtc, MtGox, okcoin, rmbtb, tradehill.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 13 / 40 China is the most active country in the world: China has the largest number of active Bitcoin clients

4 Bitcoin client downloads 4 Bitcoin client downloads x 10 x 10 2.5 12 Australia Australia Canada Canada 10 2 Denmark Denmark Germany Germany Italy 8 Italy 1.5 Romania Romania Russia Russia 6 Spain Spain 1 United Kingdom United Kingdom United States 4 United States China 0.5 2

0 0 09/2010 09/2011 09/2012 09/2013 09/2014 09/2010 09/2011 09/2012 09/2013 09/2014

Figure: Bitcoin client downloads per country normalised by the complementary number of users that have direct access to the Internet. Data source: ITU (International Telecommunication Union) and Sourceforge. Internal calculation.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 14 / 40 Bitcoin startups raised almost USD 1 billion

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 15 / 40 Bitcoin startups raised almost USD 1 billion Bitcoin startups raised almost USD 1 billion in three years with an annual investment growth rate of about 150%.

Relative Share of Dollars Raised

Bitcoin Photo Sharing Physical Storage Space Travel Transportation Hospitality Lending Food & Beverages Health Insurance Travel Human Resources Crowdfunding Banking Drones Classifieds 0 1% 2% 3% 4% 5% 6% 7%

Figure: Relative Capital investment into different startup businesses during the period mid-2012 till mid-2015. Data source: Mattermark. Internal calculation.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 16 / 40 Bitcoin startups raised almost USD 1 billion Bitcoin startups raised almost USD 1 billion in three years with an annual investment growth rate of about 150%.

Growth Rate of Startup Investment

Bitcoin Photo Sharing Physical Storage Space Travel Transportation Hospitality Lending Food & Beverages Health Insurance Travel Human Resources Crowdfunding Banking Drones Classifieds 0 20% 40% 60% 80% 100% 120% 140% 160%

Figure: Relative Capital investment into different startup businesses during the period mid-2012 till mid-2015. Data source: Mattermark. Internal calculation.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 17 / 40 Bitcoin startups raised almost USD 1 billion

Funding Scale (2012−2015) 1 10 >10 million 1~10 million 0.8 0.5~1 million 8 0.1~0.5 million <0.1 million 0.6 6

0.4 4

0.2 2 % of Deals with Different Funding Scale 0 0 Average Funding Amount (million USD)

2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1

Figure: Bar chart: Percentage of deals in different funding scales, from Q1/2012 to Q1/2015. Line chart: Average funding amount per deal in each quarter. Data source: Bitangel, Cbinsight, Coinfilter, Coindesk, Crunchbase. Internal calculation.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 18 / 40 Bitcoin startups raised almost USD 1 billion

Capital Market Payment and Financial Blockchain Mining Miscellaneous Remittance Services Application Industry Exchange Payment Accounting Smart Contracts Mining Solutions Bitcoin Faucet Derivatives Remittance Security Blockchain API Mining Pool Tipping Commodity Wallet ATM Messaging Institutional Trading Market and Crowdfunding and Data Analysis Crypto Equity

Table: Classification of business categories in the Bitcoin industry.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 19 / 40 Bitcoin startups raised almost USD 1 billion Mining and Capital Market industries drove the funding race Mining and Payment & Remittance drove the funding race per nr deals

Number of Deals Quarterly Funding Amount for Bitcoin Startups 35 250 Payment & Remittances Payment & Remittances 30 Mining Industry Mining Industry Capital Market 200 Capital Market Blockchain Application Blockchain Application 25 Financial Service Financial Service Miscellaneous Miscellaneous 20 150

15 100 (million USD) 10 50 5

0 0

2012 2012Q1 Q22012 2013Q3 Q42013 Q12013 Q22013 2013Q3 Q42014 Q12014 Q22014 Q32014 Q42015 Q1 2012 Q12012 Q22012 Q32012 Q42013 Q12013 Q22013 Q32013 Q42014 Q12014 Q22014 Q32014 Q42015 Q1

Figure: Left: Quarterly number of deals for startups in different Bitcoin industries. Right: Quarterly funding amount for startups in different Bitcoin industries. Data source: Bitangel, Cbinsight, Coinfilter, Coindesk, Crunchbase. Internal calculation.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 20 / 40 Bitcoin startups raised almost USD 1 billion Payment & Remittance and Mining are capital intensive industries and dominate the top rounds of funding per size (i.e., individual deals with size larger than USD 10 million)

Number of Deals in Each Funding Scale (2012−2015) 80 Miscellaneous Blockchain Application 60 Mining Industry Financial Service Capital Market 40 Payment & Remittances

Number of Deals 20

0

<0.1 million >10 million 0.5−1 million 1−10 million 0.1−0.5 million Figure: Number of deals in each funding scale (Q1/2012 to Q1/2015). Deals in each funding scale are further divided into business categories. Data source: Bitangel, Cbinsight, Coinfilter, Coindesk, Crunchbase. Internal calculation.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 21 / 40 Bitcoin startups raised almost USD 1 billion covers 1/3 of the capital raised by the whole P&R industry 21 Inc covers 1/2 of the capital raised by the Mining industry

Capital Market Payment & Remittances Capital Market Payment & Remittances Bitstamp 8% Coinbase 18%Bitstamp 8% 3% Coinbase 18% OKCoin 3% 4% Xapo OKCoin 4% Xapo 33% Huobi 4% 33% 33% BitPay 33% Huobi 4% BitPay BTCJam BTCJam Blockchain Blockchain 8% 10% Payward10% Payward 8% Bitnet TechnologiesBitnet Technologies Mirror Circle Intenet Financial Mirror Circle Intenet Financial BitGold BitGold BitGo 8% 8% BitGo BTC China BTC China BitReserve BitReserve 9% 9% 3% 3% Korbit Korbit 9% 12% Ripple12% Labs Ripple Labs 9% 4% 4% 7% Others7% Others 10% 10% Others Others 5% 5% 5% 6% 5% 6%

Mining Industry Blockchain ApplicationBlockchain Application 3% Mining Industry 2% 4% 3% 21 Inc 4% 2% Blockstream 5% 4% 21 Inc 5% 4% Blockstream 5% BitFury 5% Chain BitFury 6% Chain KnCMiner 6% PeerNova 14% KnCMiner 36% PeerNova 14% Spondoolies−Tech Gem36% CoinSeed Spondoolies−Tech BlockCypher Gem Others CoinSeed Colu BlockCypher 55% Others Others Colu 55% 23% 23% Others 19% 19% 23% 23% Figure: Funding distribution among startups within main categories (Q1/2012 – Q1/2015). Data source:Paolo Bitangel, Tasca Cbinsight, Coinfilter,Blockchain Coindesk, Workshop :: ZurichCrunchbase. Internal calculation.June 16, 2016 22 / 40 Bitcoin startups raised almost USD 1 billion Mining Industry and Blockchain Application are the two industries with the largest average amount of funding raised per individual deal

Funding Scale of Different Category (2012−2015) 80 >10 million 1~10 million 60 0.5~1 million 0.1~0.5 million <0.1 million 40

Number of Deals 20

0

Fin. Service Mining Ind. Miscellaneous Paym, & Remit. Capital Market Blockchain App. Figure: Total investment deals in different category, divided by funding scales, from Q1/2012 to Q1/2015. Data source: Bitangel, Cbinsight, Coinfilter, Coindesk, Crunchbase. Internal calculation.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 23 / 40 Mining Industry is an Oligopoly

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 24 / 40 Mining Industry is an Oligopoly The cumulative market share of the largest 10 pools relative to the total market hover in the 70%-80% range

Ditrib. of Mining Pools per Nr. of Blocks Mined Market Share of Top 5/10 Mining Pools

20 100% 2013 Top 10 Top 5 2014 90% 15 80%

10 70%

5 60%

50% 0

~500 40% ~2500 ~4500 ~6500 ~8500 01/13 07/13 01/14 07/14 01/15 ~10500~12500~14500~16500 Figure: Left: Distribution of mining pools per number of blocks. Right: Market share of top 5 and 10 mining pools. Data source: Blocktrail. Internal calculation.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 25 / 40 Mining Industry is an Oligopoly Ghash.IO hashing power was close to “51% attack” for several times.

Distribution of Transaction Fee in Each Diffeculty Level 100% Unknown Others BTCChina Pool 80% P2Pool.org DeepBit Ozcoin CloudHashing 60% KNCMiner Bitfury AntPool EclipseMC 40% ASICMiner BitMinter 50BTC Slush Eligius 20% DiscusFish / F2Pool BTC Guild GHash.IO

01/13 05/13 09/13 12/13 04/14 08/14 12/14

Figure: Top 17 mining pools (out of 40) per relative amount of fees earned. In each difficulty level, transaction fees collected by each mining pool are summed up and compared to the total fees earned and collected by the market. Period: From January 2013 to February 2015. Data source: Blocktrail. Internal calculation.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 26 / 40 The Evolution of the Bitcoin Economy

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 27 / 40 The Evolution of the Bitcoin Economy

Three Marked Regimes Three market regimes have evolved as the Bitcoin economy has grown and matured early prototype stage; growth stage populated in large part with “sin” enterprise (i.e. gambling, black markets) phase marked by a sharp progression away from “sin” and toward legitimate enterprises.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 28 / 40 The Evolution of the Bitcoin Economy

Nakamoto (2008) indirectly recognize the power of the input address method by saying that

”Some linking is still unavoidable with multi-input transactions, which necessarily reveal that their inputs were owned by the same owner. The risk is that if the owner of a key is revealed, linking could reveal other transactions that belonged to the same owner”

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 29 / 40 The Evolution of the Bitcoin Economy There are two general procedures that have been proposed thus far to solve the problem of de-anonymizing Bitcoin addresses: “clustering” and “labeling”

Clustering consists of grouping together in one unique cluster all the addresses that belong to the same entity (i.e. legal or individual person). This approach requires one to apply either the “input address heuristic” and/or the “change address heuristic”. Labeling consists of either: manually tagging Bitcoin addresses to specific entities by directly participating in Bitcoin transactions with those entities; scraping specific web pages in which, for any reason, the identity of Bitcoin addresses holders is public and can be extracted.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 30 / 40 The Evolution of the Bitcoin Economy Input address heuristic If address x and address y are both inputs of a transaction, then we assume address x and y belong to the same economic entity. Furthermore, if both address y and address z belong to another transaction, we would extrapolate that address x, y and z are all belonging to the same economic entity.

Subject to False Negative but not to False Positive !

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 31 / 40 The Evolution of the Bitcoin Economy From 3 of Jan 2009 (Genesis Block) to the 7 of May 2015 (Block 355403), we extract around 75 million valid addresses. Followed method suggested by , we end up with 10 million clusters which have at least 2 addresses. In order to apply our methedologhy on large business groups, we select 2,850 large cluster:a include at least 100 addresses received at least BTC 1,000 totally in the past

aAll the selected clustered generated a total revenue (inflow) over the period 2009–2015 of BTC 69,488,575 equivalent to USD 30 billion.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 32 / 40 The Evolution of the Bitcoin Economy

Figure: Network visualisation of the interactions of the economic entities with each others and with all the remaining clusters. Every red node represents a single economic entity and every grey node represents a counterpart clusters. For visualization purposes, we set a threshold of at least 1,000 BTC being transferred between an economic entity and its counterpart. Therefore, the plot shows only 1,957 economic entities out of 2,850. Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 33 / 40 The Evolution of the Bitcoin Economy Linking sample clusters to real entity We collect tagged addresses from some public website We label cluster with real entity name (known group), if it has at least one tagged address linked to business name.

2850 clusters in all Category # of clusters Exchange 104 Known Group (209 lablled clusters) Miner 18 Online Gambling 45 Black Market 13 Unknown Group (2641 clusters) Others 29 Total 209

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 34 / 40 SatoshiDice

Node Size and color Inflow Volume Huobi BtcDice 87887761 btc AntPoolHashnest BTCGuild 1000 btc BW Eligius BitZino

HaoBTC 333DiceGHash BitZillions CloudHashing Btc0Y Category Crypto-Trade MPEx ChBtc 92BTC Inputs Exchange Korbit Bter KnCMiner PrimeDice CloudBet NitrogenSportsBitcoinVideoCasino BitX BTCChinaPool Just-DiceBTCChina EclipseMC Mineing Pool CryptoStocks Btcst BtcTradeCex McxNOW OKCoinMintPal Vircurex Cryptsy Online Gambling AnxPro BitPay BitVC PolmineBTC-e BitMinter Bittrex Black Market LakeBTC Poloniex BitAces miningMbitcoin BitYes Coinmate HappyCoins BetsOfBitco N36 Bitmit MyBitcoinBitcoinica Mix Bit-xGenesis-Mining Coin DiceBitco TheRockTrading OrderBook MercadoBitcoinBetcoin Others CoinJar Cavirtex Bitcurex SilkRoad5 BitBay XapoFYBSGBetcoin Dagensia Trader Evolution PocketRocketsCasino Paymium PandoraOpenBitcoin-57 Sheep VaultOfSatoshiJustcoin CampBX Gambler BitBargain BTCJam SealsWithClubs Instawallet Black Market User Kraken Bitcoin VirWoX Individual or Unknown Entity Agora

LocalBitcoinsBitcoinFog Bitstamp

SilkRoad

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 35 / 40 Ex MP OG BM Mix 0

Exchange 200

400 Mining Pool

600

Online Gambling 800

1000

1200 Black Market

1400

Mix 1600

1800

0 200 400 600 800 1000 1200 1400 1600 1800 nz = 20537

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 36 / 40 The Evolution of the Bitcoin Economy Relative % of BTC Received → Ex MP OG BM Mix Ex 77.3 3 0.5 20.3 5.1 MP 1.3 82.9 0.1 0.1 0.6 OG 0.4 2.4 95.2 0.8 1.1 BM 2.3 0.9 0.1 32.6 0.9 Mix 18.7 10.8 4.1 46.2 92.2 100 100 100 100 100 Relative % of BTC Sent → Ex MP OG BM Mix 100 Ex 78.4 0 0.6 2.3 18.6 100 MP 27.6 20.3 2.5 0.1 49.5 100 OG 0.3 0 96.5 0.1 3.1 100 BM 24.7 0.1 2 38.9 34.3 100 Mix 5.2 0 1.5 1.4 91.8 100

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 37 / 40 The Evolution of the Bitcoin Economy

6 Bitcoin Income by Category

x 10 3.5 Black Market Online Gambling 3 Mining Pool Exchange 2.5

2

1.5

1

0.5

0 01/09 01/10 01/11 01/12 01/13 01/14 01/15

Figure: Stacked plot of the inflow income for each business category in our sample over the of inflows, monthly from January 2009 through May 2015.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 38 / 40 The Evolution of the Bitcoin Economy

Bitcoin Income Percentage by Category

100% Black Market Online Gambling Mining Pool 80% Exchange

60%

40%

20%

01/09 01/10 01/11 01/12 01/13 01/14 01/15

Figure: Stacked plot of the relative income for each business categories as a percentage of total income inflows, monthly from January 2009 through May 2015. Mining dominates initially, then Sin categories (gambling in blue and black markets in black)rise, but recede over time in favor of exchanges.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 39 / 40 The Evolution of the Bitcoin Economy

Network Centrality(Betweenness) by Category

100% Black Market Online Gambling Mining Pool 80% Exchange

60%

40%

20%

01/12 07/12 01/13 07/13 01/14 07/14 01/15

Figure: Plot of the evolution of the centrality of the business categories in the Bitcoin network, monthly from January 2012 through May 2015.

Paolo Tasca Blockchain Workshop :: Zurich June 16, 2016 40 / 40