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State of Bitcoin 2015

7th January 2015

Contents
1. 2014 in Review
2. Q4 Summary

State of Bitcoin 2015

Price and Valuation


Media
VC Investment
Commerce
Technology
Regulation and Macro

About CoinDesk

World leader in digital currency news, prices and


information
The Bitcoin Price Index serves as an industry reference
point
International team headquartered in London
Editors based in London, New York, San Francisco and Tokyo

State of Bitcoin 2015

2014 in Review

State of Bitcoin 2015

Summary
Overall, 2014 was a tale of two
bitcoins the bitcoin economy
made progress while bitcoins
price saw a steady decline

Sustained price pressure may


lead to a shakeout in the mining
sector and likely consolidation
among exchanges

Bitcoin was the worstperforming currency in 2014,


down 67% and another 18% so
far in 2015

All-time bitcoin VC investment


passed $400m in Q4 and
exceeded early-stage Internet
investment in 1995

Larger businesses continue to


adopt bitcoin, with Microsoft and
Time accepting bitcoin in Q4

Q4 saw some regulatory clarity


with welcomed revisions to the
NY BitLicense and no new major
regulatory setbacks

State of Bitcoin 2015

Key Bitcoin Adoption Metrics


Quarterly

Dec-14

Last 12 Months

Sep-14

Q/Q

Dec-13

Commerce
Wallets

7,948,272

6,559,978

21%

3,194,584

2x

82,000

76,000

8%

35,903

2x

Merchants annual revenue ($bn)

180

86

109%

N/A

ATMs

341

251

36%

85x

157,377

184,554

-15%

108,166

45%

432.7

302.9

43%

97.9

4x

83

68

22%

30

3x

Merchants

Unique bitcoin addresses


Industry
All-time VC investment ($m)
Number of VC-backed startups
Media

Sources and notes: CoinDesk, Blockchain.info, BitcoinPulse, Github, Coin ATM Radar. Figures are cumulative from start of records,
except unique bitcoin addresses and media mentions, which are figures for the quarter ending that month.

Mainstream media mentions

State of Bitcoin 2015


Technology

673

687

-2%

2,889

-76%
6

Key Events and Price Chart in


2014
$1,000

$900

11 Feb
Massive DDoS attack exploits
transaction malleability bug

$800

$700

6 Mar

18 Jun

Newsweek claims
to have found
bitcoin inventor
Satoshi Nakamoto

List of possible
Silk Road
bitcoin bidders
leaked by US
Marshals

12 Jun
$600

$500

$400

$300

$200

$18m in Silk
Road bitcoins
sold by US
Government

25 Feb
Mt Gox closes,
announces
744,408 BTC
($350m)
missing

11 Apr
PBOC official
says China will
not ban bitcoin

18 Jul
Dell
announces it
will accept
bitcoin

23 Sep
PayPal
announces
bitcoin
partnerships

2 Jul
VC Tim Draper
revealed as
Silk Road
bitcoin auction
winner

11 Aug
Blockchain first
company to
pass over 2m
bitcoin wallets

11 Dec
Microsoft adds
bitcoin payments
for Xbox games
and mobile
content

18 Dec
Favorable revisions
made to proposed
NY BitLicense

Source: CoinDesk Bitcoin Price Index, daily data collected at 00:00 UTC www.coindesk.com/price

State of Bitcoin 2015

Total Exchange Trading Volume


Increased by Over 50%
Total Bitcoin Trading Volume (BTC)

$25,000,000,000

90,000,000

$20,000,000,000

70,000,000
50,000,000

$23,161,018,313

79,755,395

80,000,000
60,000,000

Total Bitcoin Trading Volume ($bn)

%
6
5

$15,000,000,000

51,036,565

40,000,000

7%

5
$14,765,863,042

$10,000,000,000

30,000,000
20,000,000

$5,000,000,000

10,000,000
0

2013

2014

$0

2013

2014

Sources: CoinDesk, Blockchain.info, Bitcoinity

State of Bitcoin 2015

CoinDesk's Top 10 News Stories of 2014


Ran
Title
k

Date

Bitcoin Exchanges Under 'Massive and Concerted Attack'

Why Mt. Gox, the Worlds First Bitcoin Exchange, is Dying

11th
Feb
8th Feb

Alpha Technology Takes Pre-Orders for Litecoin ASIC Miners

3rd Jan

Mt. Gox Halts ALL Bitcoin Withdrawals, Price Drop Follows

Mt. Gox Allegedly Loses $350 Million in Bitcoin, Rumoured Insolvent

List of Possible Silk Road Bitcoin Bidders Leaked by US Marshals

CoinDesk Removes Mt. Gox from Bitcoin Price Index

56% of Bitcoiners Believe the Bitcoin Price Will Reach $10k in 2014

7th Feb
25th
Feb
18th Jun
10th
Feb
2nd Jan

Leading Adult Site Porn.com Now Accepts Bitcoin


3rd Jan
Bitcoin Price Hits $135 on Mt. Gox Following Office Move and Verification 20th
10
Demand
Feb
Sources and notes: CoinDesk. Based on total pageviews.

State of Bitcoin 2015

2014 Bitcoin Venture Capital


Investment
2014 bitcoin VC investment:

Total VC investment in
cryptocurrency startups to
date:

$335 $433
m
m
$96
+342
m
%
2013 bitcoin VC investment:

Increase in total to-date VC


investment from end of 2013:

Source: CoinDesk (www.coindesk.com/bitcoin-venture-capital/)

State of Bitcoin 2015

10

Two Biggest VC Deals in 2014

$30
m

(Series A) May 2014

$30.5
m
(Series A) October 2014

Source: CoinDesk (www.coindesk.com/bitcoin-venture-capital/)

State of Bitcoin 2015

11

2014 Bitcoin VC Investment Surpassed


Early-Stage Internet Investment
Bitcoin vs Early Internet VC Investment ($m)
$350

$332.6

$300
$250.1

$250
$200
$150
$95.7

$100
$50
$0

2013 Bitcoin

2014 Bitcoin

1995 Internet*

*Includes first sequence venture deals but excludes late-stage 1995 Internet investments ($257.6m). For
additional disclosure on methodology see
www.coindesk.com/following-money-trends-bitcoin-venture-capital-investment/
Sources: CoinDesk, PricewaterhouseCoopers

State of Bitcoin 2015

12

Number of Countries With Bitcoin VC


Investment Grew From 8 to 18 in 2014

Countries
receiving
first VC
investment
in 2012-13
Countries
receiving
first VC
investment
in 2014

New countries receiving investment for bitcoin companies in 2014: Japan,


Netherlands, Panama, Denmark, Luxembourg, Sweden, Germany, India, Mexico,
Argentina
Source: CoinDesk (www.coindesk.com/bitcoin-venture-capital/), generated by DataWrapper

State of Bitcoin 2015

13

2013 vs 2014 Investment Shift Towards


Wallets, Mining and Financial Services
2013 vs 2014 VC Investment by Ecosystem Category

Source: CoinDesk (www.coindesk.com/bitcoin-venture-capital/)


2014 VC Investment (millions)

State of Bitcoin 2015

2013 VC Investment (millions)

14

Companies Moving into New


Product Categories
Wallet

+ Exchange
Sep 2014

Payment + Infrastructure
Processor
Feb 2014
Wallet

Infrastructu Exchange
+ re
+
Sep 2014
Jul 2013

Source: CoinDesk

State of Bitcoin 2015

15

Mergers and Acquisitions


Announced in 2014, More
Expected in 2015
Oct 2014

Aug 2014

Aug 2014

Jul 2014
Source: CoinDesk

State of Bitcoin 2015

16

Number of Universal Bitcoin Companies


Doubled in 2014
The Universals

Universals operate across more


than one aspect of the bitcoin
value chain (eg Coinplug
provides payment processing,
wallet and ATMs)

More and more bitcoin startups


continue to pursue the universal
model

Universal bitcoin companies


leverage two key elements of
financial services: efficiency and
trust

2014

2013

State of Bitcoin 2015

17

Total Altcoins Grew from 64 to 590 in 2014,


Bitcoins Market Cap is 6X Larger Than the
Next Biggest
Rank

Name

MarketCap

Bitcoin

$ 4,132,670,815

Ripple

$ 706,795,764

Litecoin

$ 79,521,355

BitShares

$ 38,420,086

PayCoin

$ 35,959,731

MaidSafeCoin

$ 23,917,169

Nxt

$ 18,392,947

Stellar

$ 17,713,142

Dogecoin

$ 17,145,911

10

Peercoin

$ 11,573,821

Source: CoinMarketCap data as of 3rd Jan 2015

State of Bitcoin 2015

18

Q4 2014

State of Bitcoin 2015

19

Price and
Valuation

State of Bitcoin 2015

20

CoinDesk Bitcoin Price Index


Q4 & YTD by the Numbers

Source: CoinDesk Bitcoin Price Index, daily data collected at 00:00 UTC
www.coindesk.com/price

State of Bitcoin 2015

21

Bitcoins Price Fluctuated Throughout


Q4 on Mixed News
$450

$425

$400

16 Oct
Bitcoin Group
seeks to
launch world's
first Bitcoin IPO

$375

12 Nov

4 Dec

Bitcoin price
surges past
$400 mark for
the first time
since midOctober

Daily bitcoin
transactions
pass 100,000
milestone

10 Dec
Hacker returns
225 BTC taken
from Blockchain
wallets

11 Dec

$350

Microsoft adds bitcoi


payments for Xbox
games and mobile
content

3 Oct
$325

$300

Russia proposes
monetary
penalties for
bitcoin use and
promotion

22 Nov
Boost VC goes
full bitcoin' for
next startup
mentor round

18 Dec
Lawsky outlines
relaxation of
New York
BitLicense

Source: CoinDesk Bitcoin Price Index, daily data collected at 00:00 UTC www.coindesk.com/price

State of Bitcoin 2015

22

Monthly Exchange Trading Volume


Increased in Q4
18,000,000

Monthly Bitcoin Trading Volume (bitcoins)

16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0

Sources: CoinDesk, Bitcoinity

State of Bitcoin 2015

23

and Recently Surpassed Previous


Highs From End of 2013
Monthly Bitcoin Trading Volume (bitcoins)
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0

Sources: CoinDesk, Bitcoinity

State of Bitcoin 2015

24

State of Altcoins: Growth Rate of New Altcoins


Slowed in Q4 by More Than 15%, Market Cap Share
Steady at 9%*
Total Number of Altcoins

700

237.5%

600

250%
Total Number of Altcoins
Quarterly Growth in
New Altcoins
483

500

590
200%

150%

400

347

300

100%

216
200
100
0

68.4%

60.6%

50%

39.2%

64

41609.0

22.2%
41699.0

41791.0

41883.0

41974.0

0%

*Altcoin market cap share calculated by dividing the sum of all non-bitcoin cryptocurrency market caps by all
cryptocurrency market caps (including bitcoin). For example, if altcoins have 8% market value share, then bitcoin has 92%
market value share. Total number of altcoins is the number at the end of each quarter.
Sources: CoinMarketCap, Internet Archive

State of Bitcoin 2015

25

Media

State of Bitcoin 2015

26

Selection of Q4s Biggest Bitcoin


Stories
White-hat hacker exploits security flaw in
Blockchain wallets to take255 BTC

Overstock significantly misses


2014 bitcoin sales projections

State of Bitcoin 2015

Microsoft is now the most notable


business on the list of bitcoin-accepting
businesses

Bitcoin
network
difficulty
declined for
first time in
two years

27

Most Popular CoinDesk Q4 Stories


Rank Title

Date

Bitcoin Price Finds Hard Floor Following 26,000 BTC Sell Order

Bitcoin Price Surges Past $400 Mark

State of Bitcoin Q3 2014: Ecosystem Maturing Amid Price Pressure 7th Oct

4
5

MIT Bitcoin Trading Simulation Yields Profit of 89% in 50 Days


Microsoft Adds Bitcoin Payments for Xbox
Games and Mobile Content

Fire Destroys Thai Bitcoin Mining Facility

Gavin Andresen Proposes Bitcoin Hard Fork to Address Network Scal 8th Oct
ability
Markets Weekly: Bitcoin Price Resilience Crumbles
27th Oct

8
9
10

Why Wall Streeters are Turning to Bitcoin for a Living


Markets Weekly: Bitcoin Bulls Return in Wake of BearWhale
Slaying

6th Oct
12th Nov

14th Oct
11th Dec
6th Nov

26th Oct
13th Oct

Source: CoinDesk

State of Bitcoin 2015

28

News Coverage of Bitcoin Declined on


Most Mainstream News Sites in Q4
News Published Mentioning Bitcoin
Sina

WSJ
Q4 2014
Q3 2014

NYT

FT
0

100

200

300

400

500

600

Note: Numbers of stories obtained by searching bitcoin on respective publishers


websites
Sources: respective publishers websites

State of Bitcoin 2015

29

Bitcoin Price is Top Q4 Search Term,


Bitcoin Bowl Achieved High Share
Related Searches:
Top

Related Searches:
Rising

Past 90
Days

Past 12
Months

Source: Google Trends data as of 3rd Jan 2015

State of Bitcoin 2015

30

VC Investment

State of Bitcoin 2015

31

Two Biggest Bitcoin VC Deals in Q4

$30.5
m
(Series A) October 2014

$21
m

(Series A) November
2014

Source: CoinDesk (www.coindesk.com/bitcoin-venture-capital/)

State of Bitcoin 2015

32

Q4 Bitcoin Venture Capital Investment


Nearly Doubled Q3 Total
Q4 2014 bitcoin VC investment:

Total VC investment in
cryptocurrency startups to
date:

$130m$433
m
$64m +43
%
Q3 2014 bitcoin VC investment:

Increase in total to-date VC


investment from end of Q3:

Sources: CoinDesk (www.coindesk.com/bitcoin-venture-capital/),


CrunchBase

State of Bitcoin 2015

33

Europe Continues to Heat Up as Overall Investment


Share Increased in Q4, Largest Regional Q/Q% Increase
$ Invested as of Q4

$ Invested as of Q3
Region Q4
Q3 Q/Q
Q/Q
s
($m) ($m) ($m)

Asia; 7%

Middle East ; 2% L. America ; 1%

Europe; 23%
US & Canada ; 66%

US &
285.4 215.8
Canada

69.6

32%

Europe

99.2

48.7

50.5

104%

Asia

31.0

26.9

4.1

15%

5.5

5.0

91%

6.0

0.0

0%

Middle
10.5
East
Latin
6.0
America
Total

430.5 303.5 127.4

Middle East ; 2% L. America ; 2%


Asia; 9%
Europe; 16%

US & Canada ; 71%

42%

Middle East had the second largest Q/Q% increase in investment


US & Canada share declined slightly, but still dominated with 66% of
all VC $ to date
Note: $ invested represents all-time total bitcoin VC investment at the end of each respective quarter.
The headquarters of one company receiving VC investment in Q4 is unknown.
Sources: CoinDesk (www.coindesk.com/bitcoin-venture-capital/), CrunchBase

State of Bitcoin 2015

34

While the US Continues to Dominate Bitcoin VC


Investment, Total Share Declined by 11% in Q4
Total Funding (millions)
$300
$260.4

$250
$200
$150
$100
$40.7 $42.9

$50
$0

$14.9 $18.1
$6.9 $10.5
$4.0
$3.4
$1.8
$1.2
$0.8
$0.6
$0.5
$0.2 $0.3 $0.3 $0.3

$25.0

Sources: CoinDesk (www.coindesk.com/bitcoin-venture-capital/),


CrunchBase

State of Bitcoin 2015

35

Silicon Valleys Share of All-Time Bitcoin VC


Investment Declined Slightly From 29% in Q3 to 27%
in Q4
$ Invested

No. of Companies

Tech hub
concentratio
n
Silicon Valley; 27%

Value
($m)

No. of
companie
s

Silicon Valley

116.4

15

Rest of World

316.3

68

Total

432.7

83

Rest of World; 73%

Silicon Valley; 18%

Rest of World; 82%

Total number of VC-backed bitcoin companies increased from 68 in


Q3 to 83 in Q4, a 22% increase
Sources: CoinDesk (www.coindesk.com/bitcoin-venture-capital/),
CrunchBase

State of Bitcoin 2015

36

The Bitcoin Startup Ecosystem:


Six Different Bitcoin Company
Categories
Exchanges

Wallets

Universal

Financial
Services

Payment
Processing

Mining

State of Bitcoin 2015

37

Wallets Raised the Most Funding in Q4,


Followed by Mining and Financial
Services
Q4 VC Investment by Ecosystem Category (millions)
$45
$40.0

$40
$33.6

$35
$30
$25
$20

$16.0

$15

$34.8
Universal
Exchange
Payment Processor
Mining
Financial Services
Wallet

$10
$5

$2.7

$2.7

$0
Sources: CoinDesk (www.coindesk.com/bitcoin-venture-capital/),
CrunchBase

State of Bitcoin 2015

38

Financial Services Took Over Universal,


Receiving the Most VC Investment
$ Invested as of Q4

$ Invested as of Q3
Sector

Payment Processor; 13%

Universal ; 15%

Exchange ; 13%
Financial Services; 20%
Wallet; 20%

Mining ; 19%

Q/Q
($m)

Q/Q

Universal

66.5

63.8

2.7

Financial
Services

90.4

55.6

34.8

62%

Mining

81.6

48.0

33.6

70%

Wallet

89.2

49.2

40.0

81%

50.7

48.0

2.7

6%

54.3

38.3

16.0

42%

432.7 302.9

129.8

43%

Exchang
e
Payment
Processo
r
Total

Q4
Q3
($m) ($m)

4%
Payment Processor; 13%
Universal ; 21%
Exchange ; 16%

Financial Services; 18%


Wallet; 16%
Mining ; 16%

Wallets, Financial Services and Mining sectors continued to receive the


lions share of investment in Q4
Universals only received $2.7m in last quarter
Note: $ invested represents all-time total bitcoin VC investment at the end of each respective
quarter.
Sources: CoinDesk (www.coindesk.com/bitcoin-venture-capital/), CrunchBase

State of Bitcoin 2015

39

Q4 Investment Rounds in Bitcoin


Startups
Close
Date

Company

Size ($m)

Dec-14

Bitreserve

9.5

Roun
d
Secon
d

Dec-14

BitGold

3.5

Third

Dec-14

PeerNova

8.6

First

Dec-14

ChangeTip

3.5

First

Dec-14

DigiByte

0.25

Seed

Dec-14

GetGems

0.6

Seed

Nov-14

Purse.io

0.3

Seed

Nov-14

Blockstream

21

Select Investors

Headquarter
ed

Undisclosed

San Francisco

PowerOne Capital, Soros


Brothers Investments,
Toronto
Sandstorm Gold
Mosaik Partners, Steve Case,
San Jose
Crypto Currency Partners
Pantera Capital, 500 Startups,
Boldstart Ventures,
San Francisco
CryptoCurrency Partners
Undisclosed
Santa Monica
Magma VC

Unknown

Roger Ver, Bobby Lee, Terrence


San Francisco
Yang, FundersClub, StrongVC
Reid Hoffman, Khosla Ventures,
First Real Ventures, Crypto Currency
Montreal
Partners

Source: CoinDesk (http://www.coindesk.com/bitcoin-venture-capital/)

State of Bitcoin 2015

40

Q4 Investment Rounds in Bitcoin Startups


(contd.)
Close
Date

Company

Size ($m)

Roun
d

Select Investors

Headquarter
ed

Blackbird Ventures, Scott and


Cyan Banister, Individual
Redding
Investors
BitcoinShop
New York
Agile Wings, BRM Group,
Genesis Partners, Olivier
Kiryat Gat
Janssens
LAUNCHub
San Francisco
Highland Capital Partners,
Rakuten, James Pallotta, Stuart San Francisco
Peterson
Ben Franklin Technology
New York
Partners, Robin Hood Ventures

Nov-14

Dogetipbot

0.45

Seed

Nov-14

CoinOutlet

0.05

Seed

Oct-14

SpondooliesTech

Secon
d

Oct-14

BitLendingClub

0.25

Seed

Oct-14

Bitnet

14.5

First

Oct-14

AlphaPoint

1.35

Seed

Oct-14

Coinsetter

1.3

First

Unknown

New York

Oct-14

BitFlyer

0.24

Seed

Bitcoin Opportunity Corp.

Tokyo

Source: CoinDesk (http://www.coindesk.com/bitcoin-venture-capital/)

State of Bitcoin 2015

41

Q4 Investment Rounds in Bitcoin Startups


(contd.)
Close
Date

Company

Size ($m)

Oct-14

Libra

0.5

Oct-14

Melotic

1.18

Oct-14

Devign Lab

0.2

Oct-14

BitFury

20

Oct-14

Coinplug

2.5

Oct-14

Blockchain

30.5

Oct-14

SolidX

Oct-14

Snapcard

1.5

Roun
d

Select Investors

Headquarter
ed

Liberty City Ventures, James


San Francisco
Pallotta, Ben Davenport
Ceyuan Ventures, Lightspeed
Seed
China, Bitcoin Opportunity
Hong Kong
Corp
Seed
K Cube Ventures
Seoul
Bill Tai, Bob Dykes, Georgian
Secon
Co-Investment Fund, Lars
Amsterdam
d
Rasmussen
Mirae Asset Venture
First
Investment, Bokwang
Seoul
Investment Corp
Lightspeed Ventures, Wicklow
First
York
Capital, Mosaic Ventures
Liberty City Ventures, James
First
New York
Pallotta
Tim Draper, Crypto Currency
Seed
San Francisco
Partners, Insikt Ventures
Seed

Source: CoinDesk (http://www.coindesk.com/bitcoin-venture-capital/)

State of Bitcoin 2015

42

Commerce

State of Bitcoin 2015

43

>82,000 Merchants Now Accept


Bitcoin,
Up From 75,000 in Q3 (+9%)

44K

38
K

Sources: Coinbase and BitPay

State of Bitcoin 2015

44

140,000 Bitcoin-Accepting Merchants


Forecast by End of 2015
90,000
80,000

R = 0.96

70,000
60,000
50,000
40,000
30,000
20,000
10,000
0

Total merchants

Forecasted merchants

Sources and notes: total current merchants based on data from Coinbase and BitPay. Historical Coinbase data provided by
BitcoinPulse. BitPay historical data between new merchant press release announcements of 10,000 (16 th Sep 2013),
20,000 (13th Jan 2014) and 30,000 (28th May 2014), respectively, calculated using linear interpolation.

State of Bitcoin 2015

45

Growth in Bitcoin-Accepting Businesses


Slowed Throughout 2014
Number of New Bitcoin-Accepting Businesses Added Each Quarter
18,000
16,000
14,000

13,903
12,936

12,000

10,360

10,000
8,000
6,000

6,000
4,000
2,000
0

Q4 2013

16,800

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Sources: CoinDesk, Bitcoinity

State of Bitcoin 2015

46

Companies Representing >$180 Billion


in Annual Revenue Now Accept Bitcoin
Top 10 Largest Bitcoin-Accepting Retailers
Rank
1
2
3
4
5
6
7
8
9
10

Annual Revenue
($bn)
86.8
56.9
13.9
5.0
4.5
4.3
3.4
2.8
1.3
1.0

Company
Microsoft
Dell
Dish Network
Expedia
Intuit
Monprix*
Time Inc.**
NewEgg
Overstock
TigerDirect*
Total

$179.9

*Monprix is a private company; most recent revenue data is from 2005. TigerDirect estimate provided by parent company investor
relations. Other divisions that are part of a larger parent organization, but do not break out individual divisional revenues, are excluded.
**The revenue is Time Inc. FY 2013 revenue

Sources: CoinDesk, Coinbase, BitPay, companies annual reports

State of Bitcoin 2015

47

What Do People Buy with Bitcoins?


Home Goods & Consumer Electronics
Home
Good
s
Trashbags

Coffee Grinder

Infant Formula

Consumer
Electronics

Playstation

Digital Camera

Bluetooth Speaker

Source: most popular items purchased through Purse.io by November 2014

State of Bitcoin 2015

48

Approximately 12 Million Bitcoin


Wallets Forecast by End of 2015
9,000,000
8,000,000

R2 = 0.971

7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0

Total Wallets

Forecasted Wallets

Sources and notes: total wallets based on data from Blockchain.info, MultiBit, Coinbase, Andreas Schildbach (Android
Bitcoin Wallet developer). Historical Coinbase data provided by BitcoinPulse.

State of Bitcoin 2015

49

Daily Bitcoin Transactions Passed


100,000 for the First Time in Q4

Questions linger over how significant a milestone this is, given


uncertainty over how many of these transactions represent bona fide
economic activities
Source: Blockchain.info
State of Bitcoin 2015

50

1213246

Now Over 320 Bitcoin ATMs


Around the World

Source: CoinDesk (www.coindesk.com/bitcoin-atm-map/)

State of Bitcoin 2015

51

Approximately 750 Bitcoin ATMs


Forecast by End of 2015
400
R = 0.973
2

350
300
250
200
150
100
50
0

Total ATMs

Forecasted ATMs

Sources: CoinDesk, CoinATMRadar

State of Bitcoin 2015

52

Lamassu Led ATM Deployments in 2014,


Skyhook Became Second Largest

Lamassu
accounts
for over a
third of
the bitcoin
ATM
market

Sources: CoinDesk, CoinATMRadar

State of Bitcoin 2015

53

Most Bitcoin ATMs Located in Stores,


Restaurants and Coffee Shops

Source: CoinDesk, www.coindesk.com/6-charts-show-massive-bitcoin-atm-growth-2014/

State of Bitcoin 2015

54

Technology

State of Bitcoin 2015

55

Bitcoin Network Difficulty Declined for


First Time in Two Years
Bitcoin Mining Difficulty
45,000,000,000
40,000,000,000
35,000,000,000
30,000,000,000
25,000,000,000
20,000,000,000

The drop in difficulty was


expected due to depressed
bitcoin prices*

15,000,000,000
10,000,000,000
5,000,000,000
0

*CoinDesk examined the issue in September 2014 and concluded that difficulty could reverse if prices do not recover
www.coindesk.com/bitcoin-mining-can-longer-ignore-moores-law/
Source: CoinDesk

State of Bitcoin 2015

56

Mining Pools: GHash Continues to Shrink,


No Permanent Solution for 51% Attack Risk Yet
CloudHashing
Polmine
mmpool
EclipseMC
MegaBigPower
Uknown
Megabigpower

Discus Fish

BitMinter
Unknown with 1BwZeHJ Address
Bitcoin Affiliate Network

P2Pool

AntPool
BTC
Guild
Eligius
BTCChina Pool
Unknown with 1AcAj9p Address
KnCMiner GHash.IO
Slush

Source: 4-day average as of 3rd Jan 2015 blockchain.info/pools

State of Bitcoin 2015

57

CoinBases API Gaining Traction With


44 Bitcoin Apps Built on it

Source: CoinBase

State of Bitcoin 2015

58

Bitcoin Developer Ecosystem Continues to


Grow
Number of created repositories in GitHub with bitcoin in the name or
description

Source: BitcoinPulse

State of Bitcoin 2015

59

Number of Bitcoin Nodes Has Leveled Off in


Last Two Quarters

Source: BitcoinPulse

State of Bitcoin 2015

60

Crypto 2.0 Projects to Keep an Eye


on in 2015
Alternative blockchain to
bitcoins

BitAssets allowing traders to


hedge against bitcoin's
fluctuations

Bringing smart contracts to


market
Decentralised social
messenger
Source: CoinDesk

State of Bitcoin 2015

61

Bitcoin Companies are Collaborating


on Security Across Industry Sectors

Source: CoinDesk

State of Bitcoin 2015

62

Adoption of Multi-signature (Multisig) Wallet


Security Increased in 2014

Multisig: advertised as the digital equivalent of a safe


deposit box.

At the beginning of 2014, only 0.02% of all bitcoins featured


multisig security, that number isnow more than 5%.

These companies now utilize multisig:

Source: BitGo

State of Bitcoin 2015

63

Regulation and Macro

State of Bitcoin 2015

64

Over 250 Academic Articles on Bitcoin


to Date Cover a Wide Range of Research
Topics

Source: Peer-to-Peer Review: The State of Academic Bitcoin Research 2014 by Brett Scott.
Word Cloud of 250 article titles generated using Tagul.

State of Bitcoin 2015

65

A Number of Countries Expressing


Interest in Regulating Bitcoin as a
Commodity

US Commodities Futures and Trading Commission said it had oversight


over bitcoin and digital currencies because they could be defined as a
commodity.

Bitcoin has been classified as a commodity in Finland after the


Scandinavian countrys central bank declared that it did not meet the
definition of a currency.

Grant Spencer, deputy governor of New Zealand's Reserve Bank,said


bitcoin "behaves more like a commodity
Source: CoinDeskthan a currency.

State of Bitcoin 2015

66

Some Positive Developments with


New Yorks BitLicense Regulatory
Framework

Ben Lawsky

Source: CoinDesk

State of Bitcoin 2015

New Yorks BitLicense regulatory


proposal widely regarded as a possible
framework for other jurisdictions.
Ben Lawsky announced the latest
revisions to the draft BitLicense in midDecember.
Clarified and narrowed which players in
the digital currency industry would be
required to obtain a BitLicense.
Fewer disclosure and record-keeping
requirements for transactions.
The proposedrecord-keeping
requirementfor licensees reduced from
10to seven years.
Broader range of financial assets (that
includes virtual currency)that canbe
counted towards licensees' capital
requirements.
67

Some Bitcoin Firms are Making


Progress with Banking Relationships

UK Banks

Safello first to
partner with
UK bank

Unisend reestablished
partnership
with a state
bank

Source: CoinDesk

State of Bitcoin 2015

68

Russia is Illustrative of the Topsy-Turvy


Nature of Bitcoin Regulation
6 Oct
Russia seizes
bitcoin mining
equipment in
incident at China
border
3 Oct
Russia proposes
monetary
penalty for
bitcoin usage
and promotion

10 Nov
Russia lowers
proposed
penalties for
bitcoin
activities

9 Oct
Russia's startups
seek refuge
abroad under
threat of bitcoin
ban

29 Dec
Russian
ministry
criticises
draft bill
banning
bitcoin

4 Dec
Russian
conference
presses on under
threat of bitcoin
ban

Source: CoinDesk

State of Bitcoin 2015

69

Highlights from Bitcoin Thought


Leaders Survey
Highlights for bitcoin in 2014
25% mention more merchants acceptance, VC
investment and technology improvement
Biggest setback for bitcoin in 2014
33% mention price drop and Mt Goxs collapse
What to look forward to for bitcoin in 2015
83% expect bitcoin VC funding to surpass investment in
2014
54% indicate US and Argentina are likely to see greater
relative adoption of bitcoin
42% mention security development as a focus
33% mention bitcoin seeing more traction in emerging
markets
Source: CoinDesk Bitcoin Thought Leader Annual Survey (an informal survey sent to a small number of bitcoin community
influencers)

State of Bitcoin 2015

70

Views on the Highs and Lows for


Bitcoin in 2014

Ola Doudin, BitOasis &


YellowPay

Brett Scott, author

Tyson Cross, tax


attorney

I think 2014 was a


I'm pleased that
From a tax
positive year (for
people began to
prospective, the
bitcoin) in Middle East
discuss non-monetary
biggest setback for
where you see more
uses of blockchain
bitcoin in 2014 was its
startups launching,
technology more
classification as
more eager and serious
during 2014.
property instead of
players in the space,
and more consumer Source: CoinDesk Bitcoin Thought Leader Annual Surveyforeign currency.
awareness.

State of Bitcoin 2015

71

Views On What Lies Ahead for


Bitcoin Regulation and Price
Volatility in 2015

Gil Luria, Wedbush


Securities

Izabella Kaminska,
Financial Times

Ivan Brightly, SolidX


Partners

Volatility is part of the


currency and is unlikely
to go away.

Regulation is an
existential threat for
bitcoin because it can
only compete
effectively if it remains
an unregulated asset
class.

In 2015, I expect that


the marginal buyers
are hedge funds,
family offices, high net
worth individuals and
the like.

Source: CoinDesk Bitcoin Thought Leader Annual Survey

State of Bitcoin 2015

72

Views On What Lies Ahead for


Bitcoin Regulation and Price
Volatility in 2015

David Yermack, NYU Professor of


Finance

Will OBrien, BitGo

I believe bitcoin commerce will


become increasingly
concentrated online. Accepting
bitcoin makes little sense for
face-to-face transactions with
ordinary merchants due to the
delays in validation.

I believe there will be


continued adoption by top
merchants and we may see
the first adoption by a
mainstream consumer
payment network.

Source: CoinDesk Bitcoin Thought Leader Annual Survey

State of Bitcoin 2015

73

Views on Bitcoin

Jon Matonis
Founding Director
Bitcoin Foundation

Source: CoinDesk Bitcoin Thought Leader Annual Survey

State of Bitcoin 2015

74

Factoring in Remittance Fees Makes SubSaharan Africa Most Fertile Market for Bitcoin
BMPI Regional Distribution Top 10

Post-Soviet/Communist; 10% Europe; 10%


Middle East & North Africa; 10%

Sub-Saharan Africa; 40%

Latin America; 20%

U.S. & Canada; 10%

BMPI Regional Distribution


Top 30

Asia; 7%
Post-Soviet/Communist; 17%
Europe; 3%
Middle East & North Africa; 13%

Latin America; 17%


Sub-Saharan Africa; 40%
U.S. & Canada; 3%

Source: Hileman (2014) Bitcoin Market Potential Index, London School of Economics working
paper.
Announcement article: www.coindesk.com/argentina-most-likely-adopt-bitcoin/

State of Bitcoin 2015

75

Yet Bitcoin Regulation in Africa


Lags Behind the Rest of the World

Source: Wikipedia

State of Bitcoin 2015

https://team.cartodb.com/u/andrew/viz/365aa620-c273-11e4-bac7-0e018d66dc29/embed_map

76

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

State of Bitcoin 2015

77

Disclaimer

CoinDesk makes every effort to ensure that the information in this


presentation 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 that you perform your own independent research
and/or speak with a qualified investment professional before
making any financial decisions.

State of Bitcoin 2015

78

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