1State of Bitcoin and Blockchain 2016
State of Bitcoin and Blockchain 2016
28th January 2016

About CoinDesk
• World leader in digital currency news, prices and information
• The Bitcoin Price Index serves as an industry reference point
• Offices in New York, Boston and London
• Consensus 2016 conference will be held on 2–4 May in New York in
collaboration with Digital Currency Group and Coin Center
2State of Bitcoin and Blockchain 2016

State of Bitcoin and Blockchain Credits
Creator and producer: Dr. Garrick Hileman
London School of Economics and
University of Cambridge
Statistical assistance: Danqing Ying
London School of Economics
3State of Bitcoin and Blockchain 2016
@GarrickHileman @DanqingYing

Contents
1. 2015 Year in Review
2. Q4 2015 State of Bitcoin
a. Price and Trading
b. Media and Sentiment
c. Investment and M&A
d. Use Cases and Commerce
e. Technology
f. Regulation and Macro
3. Q4 2015 State of Blockchain
a. Overview
b. Private (Permissioned) Blockchains
c. Public (Permissionless) Blockchains
4. 2016 Thought Leader Survey &
Forecasts
4State of Bitcoin and Blockchain 2016

5State of Bitcoin and Blockchain 2016
1. 2015 Year in Review

2015 Industry Summary
6State of Bitcoin and Blockchain 2016
“All about Blockchain”; major financial
services firms invest and explore
distributed ledger tech; bitcoin
companies pivot
VC investment slowed, growth rate
dipped to 3% in Q4; too early to say
whether this is industry specific or part
of overall downturn in all VC funding
Regulatory tempo slows in 2015; NY
BitLicense finalised as some
companies apply, others abandon NY
market; Circle granted first license
Issues like block size and
concentration of mining pools draw
heated debate among bitcoin
community on scalability and security
Payment processor and wallet
sectors stagnate with little new VC
investment; most consumers still lack
compelling reason to use bitcoin
Bitcoin price up 35% in 2015; China
dominates bitcoin trading and
mining, while Chinese financial
instability drives bitcoin price gains

$150
$200
$250
$300
$350
$400
$450
$500
1-Jan 1-Feb 1-Mar 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec
2015 Price Chart and Key Bitcoin & Blockchain Events
29th May
Silk Road operator
Ross Ulbricht
sentenced to life in
prison
Source: CoinDesk Bitcoin Price Index, daily data collected at 00:00 UTC
New York
releases final
BitLicense
5th
January
Bitstamp
claims it lost
$5m in hot
wallet hack
15th April
MIT Media Lab
launched Digital
Currency Initiative
3rd June
11th May
Nasdaq becomes first
major Wall St firm to
publicly announce trial of
bitcoin network
20th January
BBVA, USAA join
Coinbase's $75m
Series B
10th March
Bitcoin startup 21
announces $116m
all-star VC backing
11th March
Former JP Morgan
exec Blythe Masters
joins blockchain startup
State of Bitcoin and Blockchain 2016 7
15th August
Bitcoin 'fork'
proposed in
controversial bid to
resolve scalability
question
9th September
Visa, Capital One back
blockchain startup Chain
in $30m round
17th
December
R3’s distributed
ledger initiative
grows to 42
members
16th
November
Amazon starts
shipping 21
bitcoin
computers
23rd June
Bitcoin network
survives surprise
stress test
5th November
Final US government
auction of over 44,000
Silk Road bitcoins

Key Bitcoin And Blockchain Adoption Metrics:
Price Up 82%, Trading Volume Increased 424%
8State of Bitcoin and Blockchain 2016
Quarterly Total or
End-of-Quarter (EoQ) Year Ago
Q4 2015 Q3 2015 Q4/Q3Δ Q3/Q2Δ Q4 2014 Δ
Commerce
Wallets (EoQ) 12,768,681 11,051,719 16% 18% 7,396,772 2x
Transaction Volume (BTC) 384,835,478 350,286,741 10% 7% 291,817,718 1x
Merchants’ annual revenue ($bn) (EoQ) $197 $190 4% 0% $180 1x
ATMs (EoQ) 536 475 13% 12% 342 2x
Price
Price (EoQ) $430.05 $236.25 82% -10% $319.7 1x
Exchange trading volume (BTC) 150,025,305 28,615,261 424% 17% 40,041,026 4x
Bitcoin market capitalization ($bn) (EoQ) $6.5 $3.5 86% -8% $4.4 1x
Industry
All-time VC investment ($m) (EoQ) $949 $923 3% 10% $459 2x
Number of VC-backed startups (EoQ) 127 120 6% 6% 90 1x
Media
Mainstream media mentions 521 411 27% 11% 508 1x
Blockchain
Number of blockchain companies (EoQ) 54 42 29% 40% 14 4x
Technology
Network hashrate (billion/second) (EoQ) 743,604,444 457,184,328 63% 30% 313,142,289 2x

2015 Bitcoin and Blockchain Metric Highlights
9State of Bitcoin and Blockchain 2016
Data sources and notes: CoinDesk, Blockchain, BitcoinPulse, Github, Coin ATM Radar. Figures are cumulative from start of records, except transaction
volume, exchange trading volume and media mentions which are figures for the quarter ending that month. Number of VC-backed startups and VC
investment unadjusted for closed companies: Melotic, Buttercoin, BitInstant, and TradeHill.
• New wallets and ATMs both doubled from end of 2014
• Network hashrate doubled from end of 2014
• Total VC investment doubled from end of 2014
• Exchange trading volume in Q4 2015 is four times greater
than Q4 2014
• Number of large firms interested in blockchain technology is
four times greater than end of 2014
Up 2X
Up 4X

Biggest VC Deals in 2015
10State of Bitcoin and Blockchain 2016
$75m $50m
(Series C) April 2015(Series C) January 2015
*Note: Exact timing of when 21 Inc raised $116m has not been revealed and it’s likely that much of the funding was raised in 2014.
Source: CoinDesk
Investors: New York Stock
Exchange, USAA, BBVA,
Andreessen Horowitz
Investors: Goldman Sachs,
IDG Capital Partners, Breyer
Capital
$116m*
(Series A) March 2015
Investors: Andreessen Horowitz,
Data Collective, Khosla
Ventures, RRE Ventures and
Yuan Capital

Annual VC Investment in 2015 Increased 36% Over VC
Investment in 2014
$362m $490m
VC investment in 2014 VC investment in 2015*
Data sources: CoinDesk, CrunchBase
State of Bitcoin and Blockchain 2016 11
*Note: Exact timing of when 21 Inc raised $116m has not been revealed and it’s likely that much of the funding was raised in 2014.

While 2015 VC Investment Was Greater Than 2014,
the Growth Rate Slowed in 2015
State of Bitcoin and Blockchain 2016 12
Millions
Data sources: CoinDesk, CrunchBase
$362
$490
280%
36%
0%
50%
100%
150%
200%
250%
300%
$0
$100
$200
$300
$400
$500
$600
2014 2015
Total VC Investment ($M) Annual Percentage Growth

By Comparison, Annual Internet VC Investment
Increased to 155% in 1996, Slowed to 41% in 1997
13State of Bitcoin and Blockchain 2016
Data source: PricewaterhouseCoopers
Annual Internet VC Investment
Billions
$0.17
$0.45 $0.63
$1.08
$4.39
$9.08
155%
41%
71%
308%
107%
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
1995 1996 1997 1998 1999 2000
0%
50%
100%
150%
200%
250%
300%
350%
Annual Investment ($b) Annual percentage increase

68%
54%
29%
41%
50%
22%
10%
3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
Quarterly Percentage Growth in All-Time VC Investment
Growth Rate of Quarterly Bitcoin and Blockchain VC
Investment Slowing, But…
14State of Bitcoin and Blockchain 2016
Data sources: CoinDesk, CrunchBase
• Some of the
slowdown in
growth rate
could be
explained by
the ‘law of
large numbers’
for business,
where
achieving the
same % growth
rate on a larger
base can
steadily
become more
difficult

…Bitcoin/Blockchain Industry Not Alone; Overall VC
Funding Environment Softened in 2015
15State of Bitcoin and Blockchain 2016
Data source: Bloomberg
US Venture Capital Investment ($bn)
• Total VC investment across all tech sectors decreased 9% from $31.1bn
in 2014 to $28.2bn 2015; number of deals decreased 13% from 2014

Blockchain Startups Still Lag Behind Bitcoin Startups
in VC Investment
16State of Bitcoin and Blockchain 2016
Data source: CoinDesk
Distribution of Investment Among Bitcoin, Blockchain and
Hybrid Companies
64%
53% 53%
98%
36%
47% 47%
2%
0%
20%
40%
60%
80%
100%
Q1 2015 Q2 2015 Q3 2015 Q4 2015
Percentage of Bitcoin Company Investment Percentage of Blockchain and Hybrid Company Investment

17State of Bitcoin and Blockchain 2016
Bitcoin ‘Deadpool’ Grows to 26 Startups; Besides Funding,
‘Security’ Also Commonly Cited Cause of Death
0
5
10
15
20
25
30
Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
Bit121
Agora
Data sources: CoinDesk, CrunchBase

Notable 2015 Bitcoin Announcements by
Major Financial Firms
18State of Bitcoin and Blockchain 2016
Source: CoinDesk
• Visa Europe is working to leverage bitcoin
blockchain for remittance services
• MasterCard and American Express invested in
Digital Currency Group (DCG) and Abra,
respectively
• PayPal adds Xapo CEO to Board of Directors

Notable 2015 Blockchain Announcements by Major
Financial Firms
19State of Bitcoin and Blockchain 2016
Source: CoinDesk
• Nasdaq debuted its blockchain-based private
markets product, Nasdaq Linq
• CME and London Stock Exchange form
blockchain settlement group
• Australian Securities Exchange selects Digital
Asset to develop distributed ledger solutions

Notable Regulatory Developments in 2015
20State of Bitcoin and Blockchain 2016
New Jersey: Digital Currency
Jobs Creation Act introduced
Hong Kong: No need for
bitcoin regulation
UK Treasury: AML rules for
wallets and prudential
regulations for exchanges
European Court of Justice
(ECJ): Bitcoin sales are not
subject to VAT
itBit Trust Company is chartered
under New York Banking Law by
the New York State Department
of Financial Services (NYDFS)
New York: The NY BitLicense
became effective in August
Securities and Exchange
Commission (SEC): Some
mining contracts are securities
Bank Secrecy Act (BSA)
audits: FinCEN is serious
about anti-money laundering
enforcement
Commodity Futures Trade
Commission (CFTC):
Bitcoins are commodities
Source: CoinDesk

Scaling Bitcoin Debate Draws Causalities on Both
Sides, “Stress Tests” Hamper Network
21State of Bitcoin and Blockchain 2016
Sources: MotherBoard, CoinDesk
• Number of reachable nodes declined following the October stress test
• The bitcoin network stress tests orchestrated by CoinWallet may have breached UK
technology law
June
• Conducted by
CoinWallet.eu
• Spent 20 BTC
(around
$5,000) on
transactions
totaling about
200MB in data
July
• Conducted by
an unknown
party
• Largest bitcoin
transaction of
all time was
created to
“clean up the
mess”
October
• Stress test
rumoured to
be carried out
by a hired
Russian
named “Alister
Maclin”
Three significant stress tests (or spam attacks) took place in the 2nd half of 2015

AntPool
25%
F2Pool
24%
BitFury
14%
BTCC Pool
11%
BW.COM
6%
Slush
6%
KnCMiner
5%
21 Inc.
2%
Unknown Pools Dropped Significantly from 11% to 1%,
Mining Pools Become More Concentrated
22State of Bitcoin and Blockchain 2016
Note: Labels for mining pools with 1% or less share are removed. Data source: Four-day
average as of 2nd October 2014 and 6th January 2016 on Blockchain
Discus Fish
31%
GHash.IO
22%
BTC
Guild
5%
Eligius
5%
Unknown with
1BX5YoL Address
4%
Polmine
4%
Unknown with
1AcAj9p Address
4%
Slush
4%
KnCMiner
3%
AntPool
2%
Unknown
11%
2014 2015
• Antpool and F2Pool have grown significantly, from 2% to 50% in 2015; both now
maintain a consistent 25% share of bitcoin’s hashing power

23State of Bitcoin and Blockchain 2016
2. Q4 2015
State of Bitcoin

Q4 2015 Summary
24State of Bitcoin and Blockchain 2016
Bitcoin is exempt from VAT by the
European Court of Justice - ‘A big
milestone’ according to European
exchanges
VC investment growth rate dropped
from 11% in Q3 to 3% in Q4; unclear if
this is sector specific or driven by
overall VC environment
“It’s all about blockchain”; 42 major
financial services firms partner with
R3CEV to explore blockchain
applications
Media attention returns to sector with
interest in blockchain technology,
price rally and new speculation on
Satoshi Nakamoto’s real identity
Developing-world VC investment
stagnates; debate emerges over cost
advantages and overall value
proposition of ‘rebittances’
Bitcoin price volatility reaches two-
year high amid price rally and high
exchange trading volume; bitcoin
price up 82%

25State of Bitcoin and Blockchain 2016
2.a Price and Trading

CoinDesk Bitcoin Price Index –
Q4 & 2015 by the Numbers
26State of Bitcoin and Blockchain 2016
Source: CoinDesk Bitcoin Price Index, daily data collected at 00:00 UTC

$200
$250
$300
$350
$400
$450
$500
1-Oct 8-Oct 15-Oct 22-Oct 29-Oct 5-Nov 12-Nov 19-Nov 26-Nov 3-Dec 10-Dec 17-Dec 24-Dec 31-Dec
Bitcoin Price Rallied in Q4
19th
November
EU announces
possible “crack
down” on bitcoin
after Paris attacks
Source: CoinDesk Bitcoin Price Index, daily data collected at 00:00 UTC
Visa Europe
demos bitcoin
remittance app
5th November
Final US government
auction of over 44,000
Silk Road bitcoins
5th
December
16th
November
Amazon starts
shipping 21
bitcoin computers
11th December
Bitcoin price climbs to
one-year high on record
volume
9th December
Supposed Satoshi
Nakamoto 'unmasking'
might be driving bitcoin's
price rally
State of Bitcoin and Blockchain 2016 27
10th November
Bitcoin price drops
13% to below $350
after hitting $450 for
the first time in 2015
3rd November
Bitcoin price breaks
$400 amid 12% surge
on China concerns
17th
December
R3’s distributed
ledger initiative
grows to 42
bank members

Bitcoin Rebounded From the Worst Performing
Currency in 2014 (-67%) to Best in 2015 (+35%)
Data uses USD as a base currency. Source: the Money Project
State of Bitcoin and Blockchain 2016 28
• Bitcoin was
also the
world’s top
performing
currency in
2013

Bitcoin vs. FinTech: Bitcoin’s 2015 Appreciation (+35%)
Surpasses Publicly Traded FinTech Stocks (+12%)
29State of Bitcoin and Blockchain 2016
Notes: BPI is CoinDesk’s price index. The full list of FinTech portfolio stocks can be found at Bank Innovation. The FinTech stock index is an
unweighted index. Both CoinDesk BPI and FinTech portfolio index are normalised to 100 on 1st January 2015.
Data sources: BPI, OTCMarkets, eoddata
50
60
70
80
90
100
110
120
130
140
150
1-Jan-15 1-Apr-15 1-Jul-15 1-Oct-15
FinTech Portforlio Index BPI
FinTech Portfolio Index: +12%
Bitcoin Price Index: +35%

• Bobby Lee, CEO of BTCC, noted that bitcoin’s price was
trading up to 10% higher in the Chinese market
• “As China's government steps up capital controls to limit one
widely used avoidance path, its citizens appear to be shifting
resources to the next best option, cryptocurrencies.”
- Robert Viglione, PHD, Darla Moore School of Business
Main Drivers Behind the Price Rally
Sources: Viglione (2015), CoinDesk, itBit
State of Bitcoin and Blockchain 2016 30
• Positive media coverage and US
Marshalls auction
• European Court of Justice exempted
bitcoin from VAT across EU

Some Measures Show a Decrease in Bitcoin Volatility…
31State of Bitcoin and Blockchain 2016
Source: Coinbase blog, 31st Dec 2015
“Volatility has been on
the decline since
bitcoin’s inception. In
2015, bitcoin volatility
fell by 21%. More
specifically, BTC/USD
exchange volatility
(trailing 30-day
average) fell from
3.98% to 3.15% this
year.”

…While Other Measures Show Q4 Bitcoin Volatility is at
a Two-Year High
32State of Bitcoin and Blockchain 2016
Source: CoinDesk
Date Quarterly Price High Quarterly Price Low
Peak-to-Trough
Percentage Δ
Q1 2014 $951.39 (6th January) $458.50 (31st March) 52%
Q2 2014 $665.73 (3rd June) $360.84 (10th April) 84%
Q3 2014 $647.34 (2nd July) $374.73 (29th September) 42%
Q4 2014 $427.24 (12th November) $309.87 (30th December) 27%
Q1 2015 $314.59 (2nd January) $177.28 (14th January) 44%
Q2 2015 $262.48 (30th June) $218.27 (14th April) 20%
Q3 2015 $309.98 (12th July) $209.13 (24th August) 33%
Q4 2015 $237.4 (2nd October) $465.5 (15th December) 96%

High Volatility = More Trading:
Q4 Bitcoin Trading Volumes Hit One-Year High
33State of Bitcoin and Blockchain 2016
Data sources: CoinDesk, Bitcoinity
Note: Bitcoinity has removed Mt Gox data, so trading volume chart may look different from those in previous State of Bitcoin reports.
Monthly Bitcoin Trading Volume
0
5
10
15
20
25
30
35
40
0
10
20
30
40
50
60
70
80
90
USDBillion
BTCMillion
Monthly bitcoin trading volume (USD) Monthly bitcoin trading volume (BTC)

Trading Volume in Bitcoin Investment Trust (GBTC) is
Positively Correlated (0.53) With Exchange Trading
34State of Bitcoin and Blockchain 2016
Data sources: OTCMarket, Bitcoinity
Weekly Indexed Bitcoin and GBTC Trading Volume
0
200
400
600
800
1000
1200
5/4/15 6/4/15 7/4/15 8/4/15 9/4/15 10/4/15 11/4/15 12/4/15
BTC Volume GBTC Volume

Percentage of Bitcoin Owned by the Top 500 Richest
Addresses Decreases From 33% to 30%
35State of Bitcoin and Blockchain 2016
Note: Block 335,000 is the block roughly one year ago and Block 390,000 is around the current block
Data Source: Bitcoin Rich List
Percent of Bitcoins Owned by Richest Addresses Over Time
PercentofBitcoinsOwned

Total Number of Altcoins Decreased by 3% in Q4;
Altcoin Market Cap Share Decreased to 6%
36State of Bitcoin and Blockchain 2016
Data source: CoinMarketCap
Note: Altcoin market cap share is calculated by dividing the sum of all non-bitcoin cryptocurrency market caps by the combined market caps of all cryptocurrencies (including
bitcoin). For example, a market cap share of 7% for altcoins indicates that bitcoin by itself represents 93% of the market cap of all cryptocurrencies combined.
64
216
347
483
590 594
648
693
675
9%
23%
7% 8%
9%
7%
9% 9%
6%
0%
5%
10%
15%
20%
25%
0
100
200
300
400
500
600
700
800
Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Total Number of Altcoins Altcoin Market Cap Share (%)

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

…There Are Now Over 400 ‘Dead’ Altcoins
Note: An altcoin is counted as dead when it does not have any reported market cap.
Sources: bitcointalk, CoinMarketCap
State of Bitcoin and Blockchain 2016 38
2chcoin AphroditeCoin Binarycoin Bountycoin Citizencoin
66coin Appcoin Birdcoin Boxxycoin ClockCoin
8coin AppleByte Bitcoin2 Boycoin Clockwisecoin
99cents Arkhash Bitcoin2.0 Brokebackmountaincoin CloudCoin
Acros Armoredcoin Bitcoin3.0 BTCTalkCoin Cnote
AeroCoin AstroCoin BiteCoin Bumbacoin Cococoin
Aircoin AustraliaCoin Bitinium Burbucoin Coffeecoin
Alcohoin Babycoin Bitland ButterflyCoin Coiledcoin
Alicoin BaconBitsCoin Bitleu Californiacoin Coin
Aliencoin Badcoin Bitpeso Cancercurecoin Coin2.0
AllAgesCoin Basecoin Bitpug Capitalcoin Coincoin
Allahcoin BatCoin Bitraam CataloniaCoin CoinyeCoin
AlphaCoin BeaoCoin Blazecoin Catedoge ColbertCoin
AlphaOmegaCoin Beatlecoin BlobbyCoin Championcoin CollegeCoin
Altrocoin BeeCoin Bluechip Charitycoin Cometcoin
AmericanCoin BeerCoin Bones Chichicoin Compasscoin
AmeriCoin BeliCoin BonusCoins Chicoin Cooperationcoin
AminaCoin Bells Boomcoin Chococoin CopperBars
AmKoin BestCoin Boringcoin ChoomCoin CopyCoin
Apecoin Billaume Bosscoin ChuckCoin …

39State of Bitcoin and Blockchain 2016
2.b Media and
Sentiment

Q4 Positive News
40State of Bitcoin and Blockchain 2016
Amazon starts shipping 21 Bitcoin
Computers
Source: CoinDesk
Bitcoin price rockets to one-year
high on record volumes
Visa Europe demos
remittance app built using
bitcoin blockchain

Q4 Negative News
41State of Bitcoin and Blockchain 2016
Source: CoinDesk
Increasing number of bitcoin companies
enter dead pool
SEC charged GAW Miners, ZenMiner and
CEO Josh Garza with the fraudulent sale of
unlicensed securities and the operation of a
Ponzi scheme
Digital currency exchange Cryptsy has
suspended withdrawals and faces problems
with allegations of fraud and
mismanagement
VC investment growth rate dropped from
11% in Q3 to 3% in Q4; companies
focused on wallets and payment
processors report no new funding

Q4 Most-Viewed CoinDesk Articles: 60% Are Price-
Related
42State of Bitcoin and Blockchain 2016
Source: CoinDesk top 10 Q3 stories based on pageviews
CoinDesk’s Top 10 Most Viewed Stories in Q4
Rank Title Date
1 Bitcoin's Price Rise Explained by Industry Insiders 31st October
2 Poll: What Will Bitcoin's Price Be at the End of 2015? 2nd November
3 US Government to Sell Over 44,000 Bitcoins Today 5th November
4 Vote for 2015's Most Influential People in Bitcoin and Blockchain 24th November
5 Bitcoin Price Rockets to One-Year High on Record Volumes 11th December
6 Satoshi Nakamoto ‘Unmasking’ Might Be Driving Bitcoin's Price Rally 9th December
7 Bitcoin Price Breaks $400 Amid 12% Surge 3rd November
8 Jamie Dimon: Bitcoin Will Not Survive 5th November
9 Ben Bernanke: Bitcoin Has ‘Serious Problems' 19th November
10 Bitcoin Price Drops 13% to Fall Below $350 10th November

Mainstream Media Coverage of Bitcoin on China’s Sina
Increased 42% QoQ, Largely Flat in Western Media
43State of Bitcoin and Blockchain 2016
News Published Mentioning Bitcoin
Note: Numbers of stories obtained by searching ‘bitcoin’ on respective publishers’ websites
Sources: Financial Times, New York Times, Wall Street Journal and Sina
287
81
76
77
202
87
76
46
0 50 100 150 200 250 300 350
Sina
WSJ
NYT
FT
Q3 2015 Q4 2015

China Bitcoin Exchange Market Share Almost 90%;
CNY/BTC Captures 95% of Total Volume
44State of Bitcoin and Blockchain 2016
Note: Labels for currencies and exchanges with less than 1% market share are omitted. Data source: Bitcoinity
huobi,
42.85%
okcoin,
41.21%
btcchina,
4.10%
others, 3.13%
bitfinex,
2.45% lakebtc,
2.10%
bitstamp,
1.63%
Exchange Market Share
CNY, 95.05%
USD, 3.91%
Currency Share by Exchange Volume (BTC)

Google Searches: ‘Gemini Bitcoin’ and ‘mmm Bitcoin’ (Notorious Ponzi
Scheme) Have Been Rising Fast in Past Three Months
45State of Bitcoin and Blockchain 2016
Q4 2015
Related Searches: Top Related Searches: Rising
2015
Source: Google Trends search bitcoin

Bitcoin Academic Research Increased by 8% in 2015,
Economics Discipline Leads with 25% of Publications
Note: Run rate calculated for 2015 total research. Sources: Brett Scott , Peer-to-Peer Review: The State of Academic Bitcoin Research 2014, JSTOR,
Science Direct, Ingenta, Microsoft academic search, SpringerLink, SSRN, Taylor and Francis, Wiley, ArXiv, Oxford Journals , deepdyve, researchgate,
seekdl, dblp, Cryptology ePrint Archive, Freesearch and Cambridge Journals.
Number of New Bitcoin Academic
Research Publications Each Year
Discipline Distribution of Publications
State of Bitcoin and Blockchain 2016 46
1 0 1 8
23
71
248
267
0
50
100
150
200
250
300
2008 2009 2010 2011 2012 2013 2014 2015
Economics
25%
Finance
10%
Accounting
0%
Computer
Science &
Engineering
23%
Cryptography
and Security
17%
Environment
1%
Law
15%
Politics
1%
Sociology
8%

47State of Bitcoin and Blockchain 2016
2.c Investment and
M&A

Biggest VC Deals in Q4
48State of Bitcoin and Blockchain 2016
Source: CoinDesk
$13m $5m
(Series B) October 2015(Series A) November 2015

$25
$20
$30
$20
$31
$75
$50
$30
$13
$0
$10
$20
$30
$40
$50
$60
$70
$80
2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4
VC Deal Sizes Continue Declining
*Note: 21 Inc. is excluded because the precise timing of when it raised the $116m, which occurred in various
individual stages, has not been revealed.
Source: CoinDesk
Millions
*
State of Bitcoin and Blockchain 2016 49
Largest Quarterly VC Deals

No New Countries Added a VC-backed Bitcoin Startup
in Q4 Keeping Total at 23 Countries
Sources: CoinDesk, CrunchBase
Switzerland
Sweden
Philippines
South Korea
Kenya
Singapore
Panama
Japan
Canada
The
Netherlands
India
Barbados
Mexico
France
Australia
Luxembourg
United States
Israel
Denmark
Argentina
Germany
United Kingdom
China
State of Bitcoin and Blockchain 2016 50

Both Total VC Investment and Average VC Deal Size
Dropped QoQ
Data sources: CoinDesk, CrunchBase
Millions
Millions
State of Bitcoin and Blockchain 2016 51
$74
$133
$228
$145
$85
$26
$3
$4
$10 $10
$6
$3
$0
$2
$4
$6
$8
$10
$12
$0
$50
$100
$150
$200
$250
Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
Quarterly VC Investment ($m)
Quarterly Total VC Investment ($m) Quarterly Average VC Investment Deal Size ($m)

Bitcoin VC Investment Now Falling Behind Early-
Stage Internet Investment
52State of Bitcoin and Blockchain 2016
Note: Internet figures include only first-sequence venture deals. Year-end projection extrapolated from YTD run rate. All figures unadjusted for inflation,
changes in the cost of launching a startup over last two decades, etc. Further methodology discussion.
Data sources: CoinDesk, PricewaterhouseCoopers
Bitcoin vs Early Internet VC Investment ($m)
Millions
2014
Bitcoin
2015
Bitcoin
1995
Internet
1996
Internet
$362
$490
$250
$639
$0
$100
$200
$300
$400
$500
$600
$700

Asia Saw Largest Q4 % Increase; New Investment in
Middle East, Latin America and Africa Has Evaporated
53State of Bitcoin and Blockchain 2016
$ Invested as of Q3
• No VC investment in Middle East, Latin America and Africa for three
consecutive quarters
• US continues to dominate bitcoin VC investment
Note: $ invested represents all-time total bitcoin VC investment at the end of each quarter. Data sources: CoinDesk, CrunchBase
$ Invested as of Q4
Regions Q4 ($m) Q3 ($m) Q/Q Δ ($m) Q/Q Δ
US &
Canada
710.7 694.3 16.5 2.4%
Europe 156.4 155.8 0.57 0.4%
Asia 59.5 50.2 9.3 18.5%
Middle
East
14.0 14.0 0.0 0.0%
Latin
America
7.5 7.5 0.0 0.0%
Africa 1.1 1.1 0.0 0.0%
Total 949.2 922.9 26.3 2.9%
Europe
17%
Africa 0%
Asia 5%
Middle East
2%
Latin
America
1%
US &
Canada
75%
Europe
16%
Africa 0%
Asia 6%
Middle East
1%
Latin
America
1%
US &
Canada
75%

US VC Investment is 2.6x the Rest of World Combined
54State of Bitcoin and Blockchain 2016
Millions
Note: US is excluded from above chart. Data sources: CoinDesk, CrunchBase
$0
$10
$20
$30
$40
$50
$60
$70
Total Funding by Country ($m)

Share of VC Investment in Silicon Valley Remained
Relatively Constant Over Past Quarters
55State of Bitcoin and Blockchain 2016
• Total number of VC-backed bitcoin companies increased steadily over the
past quarters
$ Invested No. of Companies
Data sources: CoinDesk, CrunchBase
Location Value ($m)
No. of
companies
Silicon Valley 507.8 38
Rest of World 449.5 90
Total 957.3 128
Silicon Valley
30%
Rest of World
70%
Silicon
Valley 53%
Rest of
World 47%

Venture Investment Falls Into
Seven Distinct Bitcoin Industry Sectors
56State of Bitcoin and Blockchain 2016
Payment
Processing
Wallets
Mining
Financial
Services
Exchanges
Infrastructure
Universal
Source: CoinDesk

Sector Trends: 69% of This Quarter’s Total Investment Is
Raised by Financial Services Companies
57State of Bitcoin and Blockchain 2016
VC Investment by Ecosystem Category ($m)
Data sources: CoinDesk, CrunchBase
Millions
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
Payment
Processor
Exchange Universal Mining Financial
Services
Wallet Infrastructure
Q1 Q2 Q3 Q4

Wallets, Payment Processors Have Raised No New
Investment for Several Quarters
58State of Bitcoin and Blockchain 2016
2013 to 2015 VC Investment by Ecosystem Category ($m)
Data source: CoinDesk
Millions
$0
$50
$100
$150
$200
$250
$300
$350
Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
Payment Processor Exchange Universal Mining Financial Services Wallet Infrastructure

Payment Processor and Wallet Investment Nearly
Flat Over Last Four Quarters
59State of Bitcoin and Blockchain 2016
• Financial Services received highest growth in VC investment at 16%
• Five new VC-backed financial services startups added this quarter
$ Invested as of Q3$ Invested as of Q4
Note: $ invested represents all-time total bitcoin VC investment at the end of each respective quarter.
Data sources: CoinDesk, CrunchBase
Payment
Processor
8%
Infrastructure
10%
Exchange
12%
Financial
Services
12%
Mining 13%
Universal
35%
Wallet 10%Sector
Q4 Q3 Q/Q Δ
($m)
Q/Q Δ
($m) ($m)
Payment
Processor
78.9 77.6 1.4 2%
Infrastructure 94.8 94.4 0.4 0%
Exchange 105.7 105.7 0 0%
Financial
Services
133.6 115.4 18.1 16%
Mining 120.8 119.3 1.4 1%
Universal 321.7 316.7 5.0 2%
Wallet 93.8 93.8 0 0%
Total 949.2 922.9 26.3 3%
Payment
Processor
8%
Infrastructure
10%
Exchange
11%
Financial
Services
14%
Mining 13%
Universal
34%
Wallet
10%

Q4 2015 Investment Rounds
60State of Bitcoin and Blockchain 2016
Source: CoinDesk
Close Date Company Size ($m) Round Select Investors Headquartered
Dec-2015 Streami 2.00 Seed
Shinhan Bank, Shinhan Data Systems,
ICB, Bluepoint Partners
South Korea
Dec-2015 BTCS 1.45 N/A Cavalry Fund I LP Virginia
Dec-2015 Purse.io 1.00 Seed Digital Currency Group San Francisco
Nov-2015 Bitwage 0.76 Seed
Orange Telecom, Draper Associates,
Cloud Money Ventures, Saeed Amidi
San Francisco
Nov-2015
Align
Commerce
12.50 First
Kleiner Perkins Caufield & Byers,
Digital Currency Group, FS Venture
Capital, Pantera Capital
San Francisco

Q4 2015 Investment Rounds (cont.)
61State of Bitcoin and Blockchain 2016
Close Date Company
Size
($m)
Round Select Investors Headquartered
Nov-2015 Zapchain 0.35 Seed Adam Draper, Tim Draper, Boost Bitcoin Fund San Francisco
Oct-2015 ScoreChain 0.57 Seed Undisclosed Luxembourg
Oct-2015 Orb 2.30 Seed
Adways Inc, Ceres, Monex Ventures, SBI
Investment
Tokyo
Oct-2015 Coinplug 5.00 Second
KB Investment, SBI Investment, Atinum
Investment Co. Ltd.
Seoul
Source: CoinDesk

62State of Bitcoin and Blockchain 2016
2.d Use Cases and
Commerce

While Average Daily Bitcoin Transactions
Increased 81% in 2015…
63State of Bitcoin and Blockchain 2016
Note: 100 most popular addresses. Source: Blockchain
Number of Transactions Per Day
0
50
100
150
200
250
300
Thousand
Total no. of daily transactions No. of daily transactions excluding popular addresses
2014 daily average: 69,200
2015 daily average: 125,100

…Once Long-chains* Are Removed, Growth Since 2014
Has Been Only 50% Per Year
64State of Bitcoin and Blockchain 2016
*Long-chain transactions comprised of spam, wallet shuffling, coin mixing, mining payouts, faucets, etc.
Sources: Coinbase, A Proxy for Users, Neighbourhood Pool Watch

Coinbase Off-chain* Transaction Volume Is Roughly
Same Across All of 2015
65State of Bitcoin and Blockchain 2016
*An off-chain transaction is one on an internal database rather than movement of value on the blockchain.
Sources: A Proxy for Users, Coinbase

16 Million Bitcoin Wallets Forecasted by 2016 (+25%
YoY), YE 2015 Forecast Exceeded by 0.8m
66State of Bitcoin and Blockchain 2016
Data sources and notes: total wallets based on data from Blockchain, MultiBit, Coinbase, Andreas Schildbach (Android bitcoin wallet developer).
Historical Coinbase data provided by BitcoinPulse. 2015 Q2 MultiBit figures note made available, held constant as end of March 2015 onwards.
Total bitcoin wallets Forecasted bitcoin wallets
R² = 0.9864
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000

Blockchain’s New Wallet Growth Rate Has
Climbed Last Two Quarters
67State of Bitcoin and Blockchain 2016
Data source: Blockchain
118,286
514,583
481,258
343,121
480,715
451,294 454,435
488,303
706,209
1,066,962
35%
114%
50%
24%
27%
20%
17% 15%
19%
24%
0%
20%
40%
60%
80%
100%
120%
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15
Number of New Wallets Added Each Quarter
Quarterly Increase in Wallets Quarterly Percentage Growth

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

150k Merchants Accepting Bitcoin Forecasted by 2016
(+42% YoY), YE 2015 Forecast Fell Short by 34k
69State of Bitcoin and Blockchain 2016
Data sources and notes: Total current merchants based on data from Coinbase and BitPay. Historical Coinbase data provided by
BitcoinPulse. Daily merchant increase is calculated using linear interpolation.
Total merchants accepting bitcoin Forecasted total merchants
R² = 0.9709
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16

International Coinbase Users Grew from 44% to 51% of
Total User Base in 2015
Source: Coinbase
State of Bitcoin and Blockchain 2016 70
• The majority of Coinbase users now reside outside the US
• Countries like Brazil, the Philippines and Indonesia saw big growth

New Bitcoin ATM Deployments Growth Rate at 13%;
One ATM Producer Ends Bitcoin Business
71State of Bitcoin and Blockchain 2016
Data source: CoinATMRadar, CoinDesk
43
79
112
104
32
52
48
62
0
20
40
60
80
100
120
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
Increase in ATMs in Each Quarter
• Robocoin announced a shutdown of its bitcoin business and a move towards
traditional payments. Robocoin ATMs represents 4% of total bitcoin ATMs

72State of Bitcoin and Blockchain 2016
2.e Technology

In Response to Bitcoin’s Q4 Price Spike, Network
Difficulty Growth Rate Increased 67% QoQ
73State of Bitcoin and Blockchain 2016
Notes: Difficulty represents the number of necessary hash calculations to mine a new block.
Data source: CoinDesk
Hashrate
6.0 6.1
2.7
9.9
39.8
17%
15%
6%
20%
67%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
5
10
15
20
25
30
35
40
45
Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
TenBillion
Quarterly Increase in Bitcoin Mining Difficulty
Quarterly Increase in Mining Difficulty Percentage Increase in Mining Difficulty

Bitcoin Payment Software Developer Ecosystem Grew
40% in 2015
74State of Bitcoin and Blockchain 2016
Source: GitHub
Number of GitHub repositories that mention payment methods

While Battle Continues Over the First Major 'Post-
Satoshi' Protocol Decision…
75State of Bitcoin and Blockchain 2016
Source: Medium
FAST
SECURE
CHEAPUNLIMITED
DECENTRALISED
Scalability is a trade-off
between decentralisation
and low fees

… A New Solution Proposed at Scaling Bitcoin
Conference Has Support of Bitcoin Core
76State of Bitcoin and Blockchain 2016
Sources: CoinDesk, Pieter Wuille (2015) Segregated witness and deploying it for Bitcoin Presentation
• Segregated witness alters how signature data is handled by the network to
increase transaction capacity without raising block size limit
• This will make transactions appear smaller to current nodes on the network, so
more can be included in a bitcoin block
Pieter Wuille
Core Dev and
Tech Engineer, Blockstream

Number of Bitcoin Nodes Decreased,
Down 6% from 6,030 at End of Q3
77State of Bitcoin and Blockchain 2016
Data source: Bitnodes

78State of Bitcoin and Blockchain 2016
2.f Regulation and
Macro

Bank of England Examines Macroeconomic
Consequences of New ‘Central Bank Digital Currency’
Source: Kumhof and Barrdear (2016)
State of Bitcoin and Blockchain 2016 79
• Bank of England researchers “explore the
macroeconomic consequences of central
banks themselves issuing digital currency
in sizeable amounts, in direct competition
with privately-issued bank deposits.”
• Preliminary findings:
• “A sizeable increase in the steady-
state level of GDP.”
• “Stabilise the business cycle by
granting policymakers an additional
policy instrument that controls either
the price or the quantity of
government-provided liquidity.”
Michael Kumhof John Barrdear

Difficulties Reported by Cryptocurreny Startups in
Gaining Approvals From Swiss Authorities
80State of Bitcoin and Blockchain 2016
• While Switzerland is advertising itself as a haven for cryptocurrency firms, a
number of companies are reporting problems with getting approval from the
Swiss financial market authority, as well as with getting banking accounts
• Opportunities are opening up in London, Luxembourg, and other friendlier
jurisdictions

Bitcoin is Exempt from European VAT, ‘A Big
Milestone’ According to Exchanges
Source: CoinDesk
State of Bitcoin and Blockchain 2016 81
The European Court of
Justice decided to
exempt bitcoin
transactions from Value
Added Tax (VAT). In so
doing, the
court effectively
recognized bitcoin as a
legitimate means of
payment in Europe,
putting it in the same
group as other
currencies for tax
purposes.
”An impetus for the
development of crypto
payments in the EU.”
Filip Godecki, COO of
Bitcurex
“Brings additional
clarity and legal
certainty.”
Nejc Kodric, CEO of
Bitstamp
“A big milestone for
bitcoin in general.”
Nikolaus Kangas,
Founder of
LocalBitcoins
“Reduction of risks and
uncertainties surrounding
the adoption of an
innovation.”
Pierre Noizat, Co-founder
of Paymium
“Regulation is proving to be
more efficient than the
technology to organise the
rights and the correct
functioning of the market.”
Alberto Gomez Toribio, CEO
of Coinffeine
”Absolutely reasonable
and quite expected.”
Victoria Polyakova,
Chief Legal Officer of
CEX.io

Select Country Regulatory Updates
82State of Bitcoin and Blockchain 2016
Source: CoinDesk
• Poland’s Ministry of Finance:
Regulating bitcoin should form "part of
initiatives at the EU level, due to the
trans-border character of
cryptocurrency transactions"
• Japan’s Financial Services Agency:
Financial regulators moving closer to
creating a system for registering and
overseeing domestic digital currency
exchanges
Poland Japan

Viewpoint: Why China Should Consider Promoting
Bitcoin As a New Reserve Asset
Sources: CoinDesk, World Gold Council
• The emergence of a new reserve
asset could weaken US dollar/US’s
grip on global monetary system
• Central banks are openly weighing
pros/cons of acquiring bitcoin
• In an effort to boost China’s global
economic standing, for years the
PBOC has acquired gold
• However, China’s gold holdings still
trail the US, Germany, IMF, etc
• Gold is expensive (global market cap
~$7tn) compared to bitcoin ($6 bn)
• With over half of all bitcoin mining
inside ‘The Great Firewall of China’,
China can exert influence over bitcoin
State of Bitcoin and Blockchain 2016 83

84State of Bitcoin and Blockchain 2016
3. Q4 2015
State of Blockchain

85State of Bitcoin and Blockchain 2016
3.a Overview

Distributed Ledger Technology (DLT) 101:
‘Blockchain Tech’ vs ‘The Bitcoin Blockchain’
86State of Bitcoin and Blockchain 2016
“Blockchain technology” “The Bitcoin Blockchain”
private (intra-) public (inter-)
Intranets & IT The Internet

Startups Pivoting from Bitcoin (Currency) Focus to
Blockchain (Non-currency) and Hybrid Business Models
Hybrid
State of Bitcoin and Blockchain 2016 87
Bitcoin Blockchain

Blockchain vs Bitcoin: Blockchain and Hybrid (Currency
+ Non-Currency) Startups Raised 35% of All VC Funds
Note: Three new deals in January (including the $50m raised by Digital Asset Holdings) are included
in these two charts. Data sources: CoinDesk, CrunchBase
State of Bitcoin and Blockchain 2016 88
Bitcoin
79%
Blockchain
20%
Hybrid
1%
No. of Companies
Bitcoin
66%
Blockchain
20%
Hybrid
14%
Total VC Raised ($m)

Q4 2015 Blockchain Investment Rounds
89State of Bitcoin and Blockchain 2016
Close Date Company
Size
($m)
Round Select Investors Headquartered
Oct-2015 Factom 0.40 Seed Kuala Innovations Texas
Source: CoinDesk

Consolidation of Blockchain Companies Slows
From Three Q3 Acquisitions to One in Q4
90State of Bitcoin and Blockchain 2016
Source: CoinDesk
Q4 Merger & Acquisitions
Acquirer Acquiree
Oct 2015

Google Search of Blockchain Shows An Increasing
Trend Over the Past One Year, Up 272%
Source: Google Trend search for “blockchain” from January 2015 to December 2015
State of Bitcoin and Blockchain 2016 91
100
0

Google Searches Show ‘Blockchain’ Joins the Top
Bitcoin-Related Searches
92State of Bitcoin and Blockchain 2016
Q4 2015
Related Searches: Top Related Searches: Rising
Past 12
Months
Source: Google Trends search for blockchain

Criticism of Blockchain Hype Raised
Sources: Motherboard, Bloomberg, Tony Arcieri’s blog
State of Bitcoin and Blockchain 2016 93
“Private blockchain is
not ultimately wildly
conceptually different.
It's just some brokers
getting together and
agreeing on who owns
what and who sold
what to whom.”
“Nasdaq's Linq
blockchain can
replace Microsoft
Excel as a way to
keep corporate cap
tables. But why
would you want it
to?”
“Uses
approximately the
same amount of
electricity as could
power an average
American
household for a day
per transaction”
“Certificate
Transparency is
more efficient in
solving the
decentralized audit
log problem.”
Matt Levine
Bloomberg View columnist
Tony Arcieri
Platform security specialist at Square

Regulators Show Interest in Using Blockchain to
Monitor Systemic Risk
Sources: Pantera BitFlash, Bloomberg
State of Bitcoin and Blockchain 2016 94
• “While I am not advocating for the adoption or
effectiveness of blockchain technology, it appears to
offer potential”
• “One can imagine a world in which securities lending,
repo, and margin financing are all traceable through
blockchain's transparent and open approach to
tracking transactions”
• This “could revolutionize regulators’ approach to
monitoring systemic risk in these areas, including
the oversight of collateral reuse, to name just one
potential use”
Kara Stein
Commissioner of the
US Securities and
Exchange Commission

Bonds Are Ideal For Smart Contracts…
State of Bitcoin and Blockchain 2016 95
• UBS announced smart bonds
platform built on Ethereum
• Bonds are well suited for smart
contracts – fungible, relatively
simple to code regularly
scheduled principal/interest
payments
• Can also be fully collateralized
on the blockchain if the bond
issuer fails
Source: International Business Times

Smart Contracts May Have a Negative Impact on
Insurance Industry Profits
Source: BankInnovation
State of Bitcoin and Blockchain 2016 96
• There were 558,000 passengers who did
not files insurance claims for delayed or
cancelled flights in and out of the UK in a
12-month period
• A smart flight cancellation insurance
contract - policy conditions held on a
blockchain
• A delayed flight is a matter of fact and
public record
• If event occurs, a smart contract is
triggered and payout is automatic

97State of Bitcoin and Blockchain 2016
3.b Private Blockchains

Q4 Blockchain Top News
98State of Bitcoin and Blockchain 2016
R3’s distributed ledger initiative
grows to 42 bank members
Nasdaq formally debuts its
blockchain product, Nasdaq Linq
Source: CoinDesk

R3 CEV’s Consortium: 42 Banks with Combined
$600bn+ Market Cap; 60% Are Global SIFIs
Source: CoinDesk
State of Bitcoin and Blockchain 2016 99

Critical Mass: R3’s Wall St Founders Have the
Formula For Attracting Top Blockchain Talent
100State of Bitcoin and Blockchain 2016
Sources: R3 CEV, Diginomics 2016 Bitcoin Investor’s Report
Jesse Edwards
Co-founder
David Rutter
CEO
Todd McDonald
Co-founder
Richard Brown
CTO
Mike Hearn
Chief Platform Officer

Not Everyone is Thrilled About R3 and Megabank
Blockchain Initiatives
101State of Bitcoin and Blockchain 2016
Sources: Diginomics 2016 Bitcoin Investor’s Report , 2016 Bitcoin Investor's Report
“The problem is not the regulators. I think the regulators
want this to happen. They don’t want to be under the
thumb of Wall Street. They understand Wall Street has
monopolistic power.”
“What’s happening is Wall Street is trying to slow us
down while they come up with their own version, and
that’s, I think, R3. That’s a consortium that’s really going
to be there — so Wall Street comes up with their own
version, and then they’re going to outlaw [the
competition].”
Patrick Bryne
CEO of Overstock

Wall St Mainly Interested in ‘Private’ or ‘Permissioned’
Blockchains
Sources: CoinDesk, BitFury Group in collaboration with Jeff Garzik (2015) Public versus Private Blockchains Part 2: Permissionless
Blockchains White Paper
State of Bitcoin and Blockchain 2016 102
• Many permissioned blockchain applications can be layered on top of permissionless
blockchains (eg Ethereum, Bitcoin) using existing technology
• For example, ‘colored coins’, which aim to ease the transfer of assets on
blockchains, could make public ledgers useful for financial institutions

Blockchain Companies and Financial Institutions Apply
for Cryptocurrency Patents
103State of Bitcoin and Blockchain 2016
Source: CoinDesk
• “Real-time conversion system”
• “Cryptocurrency transaction payment system”
• “Cryptocurrency suspicious user alert system”
• "Cryptographic Currency For Securities Settlement" that allows
peer-to-peer participants to exchange cryptographic tokens
representing securities with instant settlement
• “Mining circuitry” which described herein may be used for any digital
medium of exchange such as digital currencies, rewards or points

Will Other Large Database Companies Remain
Conspicuously Quiet in 2016 About Blockchain Tech?
Sources: ServerWatch, Microsoft
State of Bitcoin and Blockchain 2016 104
$29.09bn
$38.60bn
$10.64bn
$16.13bn
$0.30bn
$2.73bn
2014 Total Revenue • Only two large database
firms have made
significant blockchain
tech announcements:
IBM and Microsoft
• In Nov 2015 Microsoft
announced “Blockchain
as a Service”,
incorporating Ethereum
and bitcoin into Azure
• IBM recently announced
support for the Open
Ledger Project

105State of Bitcoin and Blockchain 2016
3.c Public Blockchains

Too Many Blockchains?
Image via Tony Arcieri’s blog
State of Bitcoin and Blockchain 2016 106

Interledger Could Be Solution to the “Too Many
Blockchains” Interoperability Dilemma
107State of Bitcoin and Blockchain 2016
Sources: A Protocol for Interledger Payments, CoinDesk, Wired
• A protocol for payments across payment systems
• Secure transfers between ledgers and allows anyone with accounts
on two ledgers to create a connection between them
• No global coordinating system or blockchain required
• “Rather than trying to create a global ledger that everyone can agree
on,” Ripple chief technology officer Stefan Thomas explains, “we’re
trying to tie together all the ledgers that are already out there.”

Viewpoint: To Reap the Main Benefits of Distributed Ledgers,
Banks Must Use ‘Permissionless’ Blockchains
State of Bitcoin and Blockchain 2016 108
• “Banks naturally hate the loss of power; it's
extremely difficult for them to implement seamless
global systems”
• "So they keep trying to re-inject points of
control, and thus points of vulnerability, into
blockchains, eg through 'permissioning’
• However, “this nullifies the main benefits (of
blockchains), which come from removing points
of vulnerability”
Nick Szabo
Smart contract and
cryptocurrency pioneer
Source: International Business Times

Can the Linux Model Address Governance Issues
That Have Stalled Blockchain Development?
109State of Bitcoin and Blockchain 2016
Sources: Fortune, Wired, Bloomberg, CoinDesk
• The Open Ledger
Project is a development
library that will allow
businesses to build
custom distributed ledger
solutions, without having
to rely on open, public
blockchains like bitcoin
and Ethereum
• Will use the Linux Foundation approach to provide governance
• But how will this approach work without a ‘benevolent dictator’ to
settle contentious disputes?

While Still Two Years Away From Providing a Robust
Platform, Expect to Hear More About Ethereum in 2016
110State of Bitcoin and Blockchain 2016
Sources: Slock.it, Augur, FreeMyVunk, Bank Innovation, Medium, CoinDesk
Slock.it
• Rent, sell or share
anything - without
middlemen
• Use cases: washing
machines and bikes
Augur
• Get precise forecasts
on any topic
• Augur enables the
long tail of prediction
markets
Vunk
• Trade your “virtual
junk” that you
accumulate while
playing video games
• Decentralized value
exchange
• Ethereum
development now
focused on
decentralized apps
• General view remains
that if you need to
deploy something on
a blockchain right
now, use bitcoin,
private DLT, etc; if
your time horizon is
two years, consider
Ethereum

Two Big Challenges for Public Blockchain Tech:
Scalability and Privacy
111State of Bitcoin and Blockchain 2016
Sources: Ethereum, Bitcoin Wiki
Scalability
• Currently, the network process 3-20 transactions per second
• Several orders of magnitude away from mainstream payment systems
such as VISA, which handles around 2,000 transactions per second
• Several solutions are available like Segregated Witness
Privacy
• Companies or individuals are unwilling to publish all of their information
onto a public database which is accessible by government, competitors
and family members.
• Difficult to provide solutions with privacy and full capability of blockchain

112State of Bitcoin and Blockchain 2016
4. Thought Leader
Survey and 2016
Forecasts

Survey Highlights
State of Bitcoin and Blockchain 2016 113
Source: Bitcoin and Blockchain Thought Leaders Annual Survey
What were the highlights for bitcoin and blockchain in 2015?
• 43% mentioned blockchain initiatives by major
established companies like Nasdaq
• 21% mentioned the CoinDesk Consensus Conference
• 14% mentioned transaction growth
What was the biggest challenge or setback for bitcoin and
blockchain in 2015?
• 23% mentioned the block size debate
• 23% mentioned the slow adoption of bitcoin as an
alternative payment method

Survey Highlights (cont.)
State of Bitcoin and Blockchain 2016 114
Source: Bitcoin and Blockchain Thought Leaders Annual Survey
What do you think is the main driver behind the price
surge in October 2015?
• 29% mentioned “China” and “Chinese economic
worries”
• 14% mentioned growing demand
• Factors like “Fed interest rates”, “increased visibility”
were also mentioned
What do you think about the slowdown in bitcoin and
blockchain venture capital investment?
• 29% mentioned lack of realization of the promises
they made when they got funding initially
• 21% believed it is cyclical and temporary

Survey Highlights (cont.)
State of Bitcoin and Blockchain 2016 115
Source: Bitcoin and Blockchain Thought Leaders Annual Survey
Which areas do you think blockchain technology will have the greatest impact in?
15%
15%
23%
23%
38%
54%
77%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
other
Privacy
Decentralised coordination (e.g.: Prediction,
Voting)
Communication (e.g.: machine to machine)
Property title
Identity
Finance (e.g.: Transaction settlement)

Survey Highlights (cont.)
State of Bitcoin and Blockchain 2016 116
What are your views on industry regulation,
both what's happened and what's to come?
• 36% expressed negative attitudes
towards current regulations, saying they
are “stifling innovation”, “poorly-crafted”
and “not friendly”
• 29% expressed positive views,
suggesting they believe the laws increase
“transparency” and “awareness”
Source: Bitcoin and Blockchain Thought Leaders Annual Survey

Views on 2015 Events and What Lies Ahead in 2016
Source: Bitcoin and Blockchain Thought Leaders Annual Survey
State of Bitcoin and Blockchain 2016 117
Gil Luria
Managing Director,
Wedbush Securities
“(Bitcoin and blockchain VC investment) will
reaccelerate once some of the early ventures
become successful.”
“(Block size debate) will only be resolved when
participants recognize that this or any subsequent
increases in block size are a continuing transaction fee
subsidy provided by the network and financed ultimately
by the bitcoin investors.”
Jon Matonis
Former Executive Director,
Bitcoin Foundation

Source: Bitcoin and Blockchain Thought Leaders Annual Survey
State of Bitcoin and Blockchain 2016 118
“The established players are mostly acting out of fear and
still do not trust the technology. Most of the initiatives to
date exhibit an unwillingness to embrace the distributed
ledger technology completely.” David Yermack
Professor of
Finance, New York
University
“In general, regulatory certainty is good, but the industry
must work together to educate regulators so they don't
act out of fear, anxiety or misinformation. I would look for
more regulatory activity in Europe and for more
enforcement activity in the US in 2016.”
Jason Weinstein
Partner,
Steptoe & Johnson LLP
Views on 2015 Events and What Lies Ahead in 2016

Source: Bitcoin and Blockchain Thought Leaders Annual Survey
State of Bitcoin and Blockchain 2016 119
Bill Barhydt
CEO & Founder,
Abra
“Most of the regulation is not helping consumers and it's
helping the industry even less. Smart regulators will watch
what happens first, figure out if and where regulatory pain
manifests itself and then respond in kind.”
“I think services like Purse.io and Fold will drive many
more people to start using bitcoin simply because it is
useful to them. We will also see bitcoin wallets
become even easier for people to use.”
Roger Ver
CEO,
Bitcoin.com
Views on 2015 Events and What Lies Ahead in 2016

Source: Bitcoin and Blockchain Thought Leaders Annual Survey
State of Bitcoin and Blockchain 2016 120
Scott Robinson
Founder & Director,
Plug and Play FinTech
“I am supporting the growth of innovation in using bitcoin
and blockchain, whether by bank or not. I believe the
industry to be growing and that the legacy domains will
need to change to account for the extremely fast-moving
ecosystem.”
“(Slowdown in VC investment) is a telling sign that
there’s not enough real use-cases and business cases
yet. But, at the same time, new sectors are coming
online who see potential in bitcoin and the blockchain all
the time, for example, insurance, fine art, trade finance
and supply chain.”
Wong Joon Ian
Tech Correspondent,
Quartz
Views on 2015 Events and What Lies Ahead in 2016

Source: Bitcoin and Blockchain Thought Leaders Annual Survey
State of Bitcoin and Blockchain 2016 121
“The UK will continue to be a leader in innovation-friendly
policy for digital currency. In 2015, the UK released a
policy that is much more amenable to innovation, and
this will be put into place in 2016.
2016 will likely see more regulatory activity outside of
just the money transmission realm, be it around
securities or futures, or law enforcement efforts.
We will also see more states in the US cement their
digital currency-specific policy, but they will be competing
to be the anti-New York.”
Elizabeth Stark
Co-founder,
Lightning
Views on 2015 Events and What Lies Ahead in 2016

2016 Forecasts From Survey Participants
122State of Bitcoin and Blockchain 2016
Sources: Bank Innovation, CoinDesk, Bitcoin and Blockchain Thought Leaders Annual Survey
• More blockchain hype
• Bitcoin community will (at least temporarily)
solve scalability challenges
• Private and public blockchains will co-exist
• There will be more blockchain proofs-of-
concept and minimal viable
product/experimentation from Fortune 500
• Regulators will come to understand (and love)
blockchain technology

About CoinDesk
• Find out more at www.coindesk.com
• Follow us on Twitter: @CoinDesk
• Subscribe to our daily email newsletters for the latest digital currency news
• If you have data you think should be included in future State of Bitcoin
reports, email stateofbitcoin@coindesk.com
• We also welcome any feedback you have on the report
123State of Bitcoin and Blockchain 2016

Disclaimer
• CoinDesk makes every effort to ensure the information used these slides is
accurate and up to date. We cannot, however, accept responsibility for any
loss or inconvenience caused by reliance on the material contained here.
• This presentation does not constitute financial advice or an investment
recommendation in any way whatsoever. It is recommended you perform
your own independent research and/or speak with a qualified investment
professional before making any financial decisions.
• CoinDesk is owned by Digital Currency Group, one of the most active
investors in the bitcoin and blockchain technology industry. Many DCG
investments are referenced in this report, and a full list can be reviewed
at www.dcg.co. CoinDesk is run as an independent entity, and its editorial
team does not give preferential treatment to DCG investments when they
are referenced in research reports or news posts. DCG portfolio companies
referenced in this report include Abra, Align Commerce, BitGo, Bitnet,
BitPay, BitX, BTCC, Chain, Circle, Coinbase, Colu, itBit, Kraken, and Xapo.
124State of Bitcoin and Blockchain 2016