State of Bitcoin and Blockchain 2016: Blockchain Hits Critical Mass - CoinDesk

NEWS

PRICE & DATA

5/2/16, 5:47 PM

TRENDING

BITCOIN PRICE INDEX (24H)

State of Bitcoin and Blockchain

2016: Blockchain Hits Critical
Mass

$390

GUIDES

EVENTS

RESEARCH

CNY -0.52%

$384.84

$387

EUR

$384

USD -0.97%

PRESS RELEASES

2,591.66

344.86

GBP

265.37

"

Search

NEWS STATE OF BITCOIN REPORTS

State of Bitcoin and Blockchain 2016:

Blockchain Hits Critical Mass
Garrick Hileman (@garrickhileman) | Published on January 28, 2016 at 15:50 GMT

"

27

359

'

ANNOUNCEMENT

DON'T MISS A SINGLE STORY

! " + $ % &
FEATURES
Documents Reveal Divorce
Dispute May Be at Heart of
Cryptsy Issues

Beyond Regulation: Why

Bitcoin's Pressing Problem
is Civil Law

UNICEF Eyes Blockchain

As Possible Solution to
Child Poverty Issues

1 of 124
State of Bitcoin and Blockchain 2016 from CoinDesk

CoinDesk's 2016 State of Bitcoin and Blockchain report summarizes key trends, data and events
from 2015, details findings from our annual Thought Leaders Survey and includes predictions on
what to expect in 2016.

BNY Exec: Lack of Industry

Standards Hurting
Blockchain Tech

This article highlights a few of the key findings from the report.

2015 Review
INDUSTRY PRESS RELEASES

The major story from 2015 is undoubtedly the increasing focus on bitcoin's underlying technology,
commonly referred to as blockchain or distributed ledger technology (DLT). Many parties, from
government authorities to financial institutions, began to examine potential applications of DLT for
securities transaction settlement and other use cases.
Meanwhile, bitcoins price and exchange trading volume bounced back strongly after a gloomy
first half of the year.
Venture capital investment increased 36% year-on-year, although the pace slowed down in the
second half of 2015. Mainstream retail adoption of cryptocurrencies continues to lag due to a lack
of compelling use cases, and there are also signs that bitcoin's use on the dark web has peaked.

Feb 3 | 09:01

Coinmate enables Sofort instant

deposits in 13 European Countries

Feb 2 | 18:32

TradersBit: Launch and Trading

Competition

Feb 2 | 17:19

Got 5000 miners? Monitor them with

Awesome Miner

Feb 1 | 08:24

Closing the Loop: Bringing a Trillion

Dollar Industry to Bitcoin

http://www.coindesk.com/state-of-bitcoin-blockchain-2016/?utm_016&utm_medium=email&utm_term=0_74abb9e6ab-c55982b1b6-79201773

Page 1 of 8

State of Bitcoin and Blockchain 2016: Blockchain Hits Critical Mass - CoinDesk

Bitcons scalability debate was a hot topic in software developer circles in 2015, and it recently
spilled over into mainstream discussion with the high-profile departure of developer Mike Hearn.
While many proposed scalability solutions exist, none have achieved sufficient consensus for
deployment.

5/2/16, 5:47 PM

VIEW MORE

SUBMIT RELEASE

MUST READ

MOST POPULAR

However, industry leaders who were surveyed state they are confident that the question of
bitcon's scalability will be resolved, at least in the short-run.
Overall, the tempo of industry regulation slowed 2015.
The New York BitLicense, the state's industry-specific licensing regime, went into effect in August,
and the European Court of Justice (ECJ) announced that bitcoin transactions are exempt from
value-added tax (VAT) in October.

'Blockchain, blockchain, blockchain!'

R3CEV has made significant progress by gathering 42 major banks and financial institutions to
participate in its DLT initiative.
The combined market cap of the consortium is $600bn, and 60% of the financial institutions
participating are global systemically important financial institution (SIFIs) (Slide 99).

Blockstream Raises $55 Million to Build Out

Bitcoins Blockchain
Commonwealth Pushes Member Countries to
Declare Bitcoin Legal
Blockstream Investors See Commercial Use
Cases for Bitcoin Blockchain
New App Seeks to Use Blockchain as
Immutable Answering Machine

Got a news tip or guest feature?

What is Bitcoin?
It's a decentralized digital currency

How Can I Buy Bitcoins?

From an exchange or an individual

%
%

However, R3 has attracted criticism (Slide 101) and now faces competition in the form the recently
announced SWIFT consoritum.

http://www.coindesk.com/state-of-bitcoin-blockchain-2016/?utm_016&utm_medium=email&utm_term=0_74abb9e6ab-c55982b1b6-79201773

Page 2 of 8

State of Bitcoin and Blockchain 2016: Blockchain Hits Critical Mass - CoinDesk

5/2/16, 5:47 PM

Looking ahead, expect to see various deployments of DLT, along with further attention given to
arguably DLTs 'killer app', smart contracts (Slide 95).

Of particular interest will be whether the Open Ledger Project, which will be managed by the the
Linux Foundation, can address the many governance problems observed around software
development in 2015 (Slide 118).
Also expect to hear more about Ethereum in 2016 and the decentralized applications being built
on its public blockchain, including Slock.it, Augur and Vunk (Slide 109).

http://www.coindesk.com/state-of-bitcoin-blockchain-2016/?utm_016&utm_medium=email&utm_term=0_74abb9e6ab-c55982b1b6-79201773

Page 3 of 8

State of Bitcoin and Blockchain 2016: Blockchain Hits Critical Mass - CoinDesk

5/2/16, 5:47 PM

Bitcoin price ends at one-year high

After gradually picking up in Q3, bitcoins price reached its one-year high of $430.05 in Q4.
Following, a dismal 2014, bitcoin once again sits atop the worlds best performing currencies
leaderboard (Slide 28).

Most believe bitcoins price has been largely driven by financial instability in China (Slide 30),
while others point to the expected July 2016 halving of the block reward to 12.5 BTC and the
resultant reduction in the supply of new bitcoins entering the market.
Sixty percent of the top 10 most-viewed stories on CoinDesk in Q4 were price-related (Slide 42).
Furthermore, media coverage of bitcoin on Chinas Sina increased 42% quarter-on-quarter (Slide
43) as Chinese yuan denominated trading represented 95% of total exchange volume (Slide 44).

http://www.coindesk.com/state-of-bitcoin-blockchain-2016/?utm_016&utm_medium=email&utm_term=0_74abb9e6ab-c55982b1b6-79201773

Page 4 of 8

State of Bitcoin and Blockchain 2016: Blockchain Hits Critical Mass - CoinDesk

5/2/16, 5:47 PM

Total exchange volume, which tends to increase during periods of higher volatility, was eight
times greater in December than in September (Slide 33).

VC investment continues to slow

Total bitcoin venture capital increased by 3% to $949m in Q4.
The growth rate of VC investment has been declining for the past three quarters after peaking at
50% in Q1 2015 (Slide 14).

Investors may be concerned by the viability of current business models and slow consumer
adoption. New investment in digital wallets and payment processors has effectively ceased over
the past year (Slide 58).
Two more startups announced closure this quarter, bringing the bitcoin deadpool to a total of 24
companies (Slide 17). In addition to lack of funding, security is the most commonly cited reason
for closure.

http://www.coindesk.com/state-of-bitcoin-blockchain-2016/?utm_016&utm_medium=email&utm_term=0_74abb9e6ab-c55982b1b6-79201773

Page 5 of 8

State of Bitcoin and Blockchain 2016: Blockchain Hits Critical Mass - CoinDesk

5/2/16, 5:47 PM

However, most survey respondents remain optimistic about the venture capital investment in the
bitcoin and blockchain ecosystems in 2016, and Digital Asset Holdings recently announced $50m
round lends this view some early support.

Regulation and central bank digital currency initiatives

Towards the end of the 2015, the European Court of Justice announced its decision to exempt
bitcoin transactions from value-added tax (VAT).
European bitcoin companies welcomed this rule and regarded it as a milestone in bitcoin
regulation (Slide 81).

Overall, regulation remained light touch in 2015, and some European countries, like Luxembourg,
are are actively seeking to attract startups by fostering a friendly regulatory environment.
The Bank of England recently released a paper examining the macroeconomic consequences of
central bank digital currency (Slide 79), and is also actively developing the technology that would
allow the bank to deploy its own bitcoin-like currency.

http://www.coindesk.com/state-of-bitcoin-blockchain-2016/?utm_016&utm_medium=email&utm_term=0_74abb9e6ab-c55982b1b6-79201773

Page 6 of 8

State of Bitcoin and Blockchain 2016: Blockchain Hits Critical Mass - CoinDesk

5/2/16, 5:47 PM

Along with a recent announcement by China, it would not be surprising to see one of the worlds
governments deploy its own digital currency or blockchain-based system in 2016.

View the full State of Bitcoin and Blockchain 2016 report by subscribing to our research
newsletter.
Investors

Prices

State of Bitcoin

"

27

PREVIOUS ARTICLE

359

'

NEXT ARTICLE

Deloitte: New Blockchain Applications Will

Accelerate...

Blockchain Startup Symbiont Partners With

Security Giant...

RELATED STORIES

FEATURE

Feb 4, 2016 at 19:27 | Pete Rizzo

Blockstream Investors See Commercial Use Cases for

Bitcoin Blockchain
Following Blockstream's $55m funding yesterday, CoinDesk speaks to
investors who participated in the round.

NEWS

Feb 3, 2016 at 14:00 | Pete Rizzo

Blockstream Raises $55 Million to Build Out Bitcoins

Blockchain
Blockstream has raised $55m in Series A funding, bringing its total capital
raised to $76m over two investment rounds.

NEWS

Feb 2, 2016 at 16:35 | Pete Rizzo

Digital Asset Funding Tops $60 Million With IBM,

Goldman Sachs Investments
Digital Asset Holdings has announced it has raised more than $60m with the
addition of IBM and Goldman Sachs to its latest round.

Feb 1, 2016 at 23:05 | Stan Higgins

UNICEF Innovation Fund Hints at Blockchain

http://www.coindesk.com/state-of-bitcoin-blockchain-2016/?utm_016&utm_medium=email&utm_term=0_74abb9e6ab-c55982b1b6-79201773

Page 7 of 8

State of Bitcoin and Blockchain 2016: Blockchain Hits Critical Mass - CoinDesk

NEWS

5/2/16, 5:47 PM

Investments
The United Nations Children's Fund (UNICEF) has hinted it could invest in
blockchain startups or initiatives through its innovation fund.

CoinDesk 2016 About Press Events Editorial policy Comments policy Terms & conditions Privacy policy Jobs Advertising Newsletter Contact

http://www.coindesk.com/state-of-bitcoin-blockchain-2016/?utm_016&utm_medium=email&utm_term=0_74abb9e6ab-c55982b1b6-79201773

Page 8 of 8