20150410stateofbitcoincoindesk 150420052045 Conversion Gate01 PDF

State of Bitcoin Q1 2015
10th April 2015
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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
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State of Bitcoin Credits
Creator and Producer: Garrick Hileman (@GarrickHileman)

Statistical assistance:
Garrick Hileman
Danqing Ying (@DanqingYing)
Danqing Ying
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Contents
Summary and Adoption

Dashboard
Valuation
Media
VC Investment
Commerce
Technology
Regulation and Macro
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Summary and
Adoption Dashboard
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Q1 2015 Summary
Q1 was bitcoins largest VC
investment quarter yet with $226m
raised; all-time bitcoin VC investment
now totals $676m
Sustained pressure on bitcoins price,

which is due to the current demandsupply imbalances, is winnowing the
mining and exchange sectors
Bitcoins price briefly dropped to

$177 in January 2015, and is down
24% so far in 2015
21 Inc, which announced $116m in

new funding, surpassed Coinbase as
the best-capitalized bitcoin startup
Blockchains total wallets passed three

million; merchant adoption slowed due
to bitcoins underwhelming value
proposition for mainstream consumers
Improved regulatory clarity (ie NY

BitLicense revisions, UKs favorable
posture) are building industry
confidence and attracting Wall Street
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Key Bitcoin Adoption Metrics
Commerce
Wallets
Merchants
Merchants annual revenue ($bn)
ATMs
Unique bitcoin addresses
Industry
All-time VC investment ($m)
Number of VC-backed startups
Media
Mainstream media mentions
Technology
Network hash rate (billion/second)
Github no. of updated repositories
Valuation
Bitcoin market capitalization ($bn)
Quarterly
Dec-14
Mar-15
Q/Q
Last 12 Months
Mar-14
8,457,207
88,000
180
374
203,189
7,396,772
82,000
180
342
157,377
14%
7%
0%
9%
29%
4,448,142
52,704
2
47
137,342
2x
2x
78x
8x
1x
$676
103
$447
89
51%
16%
$164
47
4x
2x
458
580
-10%
2,594
-82%
346,028,956
27,857
313,142,289
23,249
11%
20%
41,813,922
9,915
8x
3x
$3.4
$4.3
-21%
$5.3
-36%
Data 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.
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Price and Valuation
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CoinDesk Bitcoin Price Index

Q1 & YTD by the Numbers
Q1 Price Summary
31st Dec Close
$319.70
31st Mar Close
$243.39
Q1/Q4 Close
-23.9%
31st Mar Market Cap
$3.4bn
YTD Price Summary

High (2nd Jan)
$314.59
Low (14th Jan)
$177.28
YTD High-Low
-43.6%
Average
$250.68
Median
$246.85
Source: CoinDesk Bitcoin Price Index, daily data collected at 00:00 UTC
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10
Bitcoins Price in Q1 Remained Volatile Amid

a Mix of Positive and Negative News
$330
$310
5th Jan
10th Mar
Bitstamp
suffers $5m
hot wallet
hack
Bitcoin startup 21
Inc announces
$116m raised,
all-star investor
roster
$290
$270
25th Jan
4th Feb
Coinbase
launches US
bitcoin
exchange
Ross Ulbricht
found guilty in NY
court of operating
Silk Road; Ben
Lawsky releases
revised NY
BitLicense
$250
18th Mar
UK Chancellor
Osborne announces
favorable regulatory
environment and
research investment
$230
$210
$190
14th Jan
Bitcoins price
plunges,
breaks $200
mark
20th Jan
Mainstream financial
institutions join
Coinbase's record
$75m funding round
$170
$150
1-Jan
8-Jan
9th Feb
15-Jan
22-Jan
29-Jan
5-Feb
Hong Kong's
MyCoin
disappears with
up to $387m,
reports claim
12-Feb
19-Feb
26-Feb
5-Mar
12-Mar
19-Mar
26-Mar
Source: CoinDesk Bitcoin Price Index, daily data collected at 00:00 UTC
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11
Bitcoins Price Decline Has Not Stopped Exchange

Trading Volume From Trending Up
7
25
6
20
BTC Millions
$ Billions
Monthly Bitcoin Trading Volume
5
15
10
2
5
1
0
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Monthly bitcoin trading volume (USD)
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Monthly bitcoin trading volume (BTC)
Data sources: Blockchain, CoinDesk, Bitcoinity
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12
Mining
Exchanges
Industry Rationalization: Bitcoins Price Plunge, Other

Issues are Thinning the Ranks of Exchanges and Mining
Aquifer LLC
A number of well-known exchanges and mining operators have recently
gone bankrupt or shuttered operations for various reasons
Source: CoinDesk
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13
Miners Revenue and Transaction Fee (USD)
5.0
30
4.5
25
4.0
3.5
20
$ Thousands
$ Millions
Diminishing Incentives to Mine Bitcoins Will Result in

Further Mining Sector Consolidation
3.0
15
2.5
2.0
10
1.5
1.0
0.5
0.0
01/01/2014
0
01/04/2014
30/06/2014
Miners Revenue
28/09/2014
27/12/2014
Transaction Fee
While mining is the only bitcoin sector to date to generate significant revenues,
at current (or lower) price levels, further sector consolidation is anticipated
Data source: Blockchain. Note: Miners revenue = (number of bitcoins mined per day + transaction fees) * market price.
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14
Bitcoin Primarily Functions as a Store of Value,

Less Frequently Used as a Medium of Exchange
Total Trading Volume vs Transaction Ratio
7
6
5
4
3
2
1
0
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Data sources: Bitcoinity, Blockchain
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15
Peak Altcoin? For the First Time, Quarter-overQuarter Altcoin Growth Was Flat
700
25%
23%
594
590
600
20%
483
500
15%
400
347
300
9%
216
7%
200
10%
9%
8%
7%
5%
100
64
0%
Dec-13
Mar-14
Jun-14
Total Number of Altcoins
Sep-14
Dec-14
Mar-15
Altcoin Market Cap Share (%)
*Note: Altcoin market cap share is calculated by dividing the sum of all non-bitcoin cryptocurrency market caps by all cryptocurrency market caps (including
bitcoin). For example, a market value share of 7% for altcoins indicates that bitcoin by itself represents 93% of the market cap of all cryptocurrencies combined.
Data source: CoinMarketCap
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16
Bitcoins Market Cap is 14x Larger Than the Next

Altcoin, up 6x from End of 2014
Rank
Name
Market Cap
Bitcoin
$ 3,428,547,561
Ripple
$ 245,984,620
Litecoin
$ 62,695,671
Dash
$ 20,785,772
BitShares
$ 16,084,946
Dogecoin
$ 12,518,429
Stellar
$ 12,222,510
Nxt
$ 9,887,171
MaidSafeCoin
$ 8,090,823
10
Paycoin
$ 7,683,946
Data source: CoinMarketCap data as of 1st Apr 2015
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17
Media
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18
Q1 Negative News
Bitstamp claims at least $5m lost in hot
wallet hack
Hong Kong's MyCoin disappears

with an initially reported $387m
Steady stories of bitcoin-related crime

undermine mainstream user trust in bitcoin
Bitcoin mining firm CoinTerra heads for

Chapter 7 bankruptcy battle amid
acrimonious claims on both legal sides
Source: CoinDesk
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19
Q1 Positive News
Coinbase's record $75m funding round,

opening of US-based exchange
Bitcoin startup 21 Inc announces $116m

raised, with all-star VC backing
Blockchain reports its total number of

wallets passes three million
Bitcoin Core 0.10 gives developers simplified

tools and sophisticated fee suggestions
Source: CoinDesk
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20
Q1 Most-Viewed CoinDesk Articles: Relative Interest

in Bitcoins Price Articles Continues to Decline
CoinDesks Top 10 Most Viewed Stories in Q1
Rank Title
Date
Roger Ver Denied US Visa to Attend Miami Bitcoin Conference
7th Jan
IBM Reveals Proof of Concept for Blockchain-Powered Internet of Things 17th Jan
Bitstamp Claims $5 Million Lost in Hot Wallet Hack
5th Jan
Bitcoin Price Continues to Fall, Breaks $200 Mark
14th Jan
State of Bitcoin 2015: Ecosystem Grows Despite Price Decline
7th Jan
Research: Hackers Could Install Backdoor in Bitcoin Cold Storage
16th Jan
Hong Kong's MyCoin Disappears with up to $387 Million, Reports Claim
9th Feb
Bitcoin Price Crashes Through $250 Mark
13th Jan
Apple Approves iOS Game That Tips Players in Bitcoin
8th Jan
10
Goldman Sachs Report Says Bitcoin Could Shape Future of Finance'
11th Mar
Source: CoinDesk top 10 Q1 stories based on pageviews
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21
Mainstream Bitcoin Media Coverage Dropped

Quarter-Over-Quarter
News Published Mentioning Bitcoin
78
FT
41
73
76
NYT
127
WSJ
156
180
Sina
235
0
50
100
Q1 2015
150
200
250
Q4 2014
Note: Numbers of stories obtained by searching bitcoin on respective publishers websites

Sources: Financial Times, New York Times, Wall Street Journal and Sina websites
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22
Bitcoin Price Continues to be the Top Search Term;

Utorrent Mining Malware Scare Rising
Related Searches: Top
Related Searches: Rising
Past 90
Days
Past 12
Months
Source: Google Trends data as of 1st Jan 2015
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23
VC Investment
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24
Two Biggest Bitcoin VC Deals in Q1
$116m $75m
(Series A) March 2015*
(Series C) January 2015
*Note: The precise timing of when the $116m was raised, or whether it was raised in various individual stages, has not been revealed.
Source: CoinDesk
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25
Both Deals Broke the Previous Record for

Largest Single VC Investment Round
Millions
Top Five All-Time VC Investment Deals

$120
$116
The Coinbase $75m

raise does sound like
a Pre-IPO round. A
Bitcoin IPO such as
Coinbase could
trigger mainstream
merchant adoption
$100
$80
$75
$60
$40
$31
$30
$25
- Bernard Lunn,
Bank Innovation
$20
$0
Sources: CoinDesk, Crunchbase, Bank Innovation
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26
Bitcoins $121 Million Question

Is it a supercharged mining operation?
Is it a hardware wallet?
Matthew Pauker
CEO, 21 Inc
No, its bitcoins newest universal, 21 Inc!*

*No announcement has been made on 21 Incs exact business strategy beyond confirmation that it meets CoinDesks definition of a universal bitcoin company.
Sources: CoinDesk, Crunchbase. Superman artwork courtesy of Tattoosales.com, trademark owned by DC Comics
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27
Q1 Set a Record for Bitcoin Venture Capital Investment,

Nearly Doubling Q4 2014
Millions
Quarterly Total VC Investment (USD Millions)

$250
$229
$200
$150
$133
$100
$84
$66
$66
$50
$0
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Note: The precise timing of when 21 Inc raised the $116m it announced in Q1 is unclear; 21 Incs full $116m is included in the Q1 2015 total.
Data sources: CoinDesk, CrunchBase
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28
All-Time Bitcoin Venture Capital Investment Increased

51% from End of 2014 to $676m
Q1 2015 bitcoin VC investment:
Total VC investment in
cryptocurrency startups to date:
$229m $676m
Q4 2014 bitcoin VC investment:
Increase in total to-date VC

investment from end of Q4:
$133m +51%
Data sources: CoinDesk, CrunchBase
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29
Bitcoin VC Investment Projected to Continue

Outpacing Early-Stage Internet Investment
$ Millions
Bitcoin vs early Internet VC investment ($ millions)

1000
$916
900
800
700
$638
600
500
400
$349
$250
300
200
100
0
2014 Bitcoin
1995 Internet
2015 Bitcoin - projected 1996 Internet
Note: Internet figures include only first sequence venture deals. 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
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30
US Continues to Dominate Bitcoin VC Investment;

First VC Funded Africa-Based Startup in Q1
$ Invested as of Q1
Africa 0%
Europe
18%
Asia 6%
Middle
East 2%
Latin
America
1%
US &
Canada
73%
$ Invested as of Q4 2014
Regions
Q1
($m)
Q4
($m)
Q/Q
($m)
Q/Q
US &
Canada
492.3
289.7
202.6
70%
Europe
119.1
99.2
19.9
20%
Asia
42.1
41.0
1.1
3%
Middle
East
14.0
11.1
2.9
26%
Latin
America
7.5
6.0
1.5
25%
Africa
1.1
0.0
1.1
N.A.
Total
676.1
447.0
229.1
51%
Europe
22%
Africa 0%
Asia 9%
US &
Canada
65%
Middle
East 3%
Latin
America
1%
US & Canada had the largest Q/Q% increase in investment

Asia saw almost no investment in Q1
Note: $ invested represents all-time total bitcoin VC investment at the end of each quarter.
Data sources: CoinDesk (www.coindesk.com/bitcoin-venture-capital/), CrunchBase
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31
Startups in 4 New Countries Received VC Investments;

22 Countries in Total Have a VC-Backed Bitcoin Startup
Barbados
France
Kenya
Switzerland
Data source: CoinDesk (www.coindesk.com/bitcoin-venture-capital/)
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32
US-Based Bitcoin Venture Capital Investment Nearly

2x Greater Than Rest of the World Combined
Millions
Total Funding by Country (USD Millions)

$500
$400
$300
$200
$100
Sources: CoinDesk (www.coindesk.com/bitcoin-venture-capital/), CrunchBase
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United States
United Kingdom
The Netherlands
Sweden
China
Israel
South Korea
Canada
Argentina
France
Singapore
Japan
Barbados
Mexico
Kenya
Panama
Switzerland
Australia
Denmark
Germany
India
Luxembourg
$0
33
Silicon Valley Pulling Away: Share of All-Time Bitcoin

VC Investment Jumped from 45% in Q4 to 59% in Q1
$ Invested
No. of Companies
Location
Rest of
World
41%
Silicon
Valley
59%
Value ($m)
No. of
companies
Silicon Valley
$400.0
30
Rest of World
$276.1
73
Total
$676.1
103
Silicon Valley
29%
Rest of World
71%
87% of the total Q1 bitcoin VC funding went to Silicon Valley-based startups

Total number of VC-backed bitcoin companies increased from 89 in Q4 2014
to 103 in Q1, a 16% increase
Note: Prior State of Bitcoin data may differ due to new funding information obtained.
Date sources: CoinDesk (www.coindesk.com/bitcoin-venture-capital/), CrunchBase
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34
Q1 Deal Summary: Acquisitions and Reverse

Merger Activity Accelerates
Acquisitions
Jan 2015
Jan 2015
Apr 2015
Reverse Mergers
Jan 2015
Loma Vista Capital

MGT Capital
Investment
Feb 2015
Source: CoinDesk
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35
Keeping Bitcoins Size in Perspective FinTech Investments Dwarfed Bitcoin in 2014
FinTech
216
Bitcoin
FinTech
100
$3bn invested in 2014
Deals
Deals
Biggest Deal
Biggest Deal
$150m
$31m*
$0.3bn
invested in
2014
Data sources: CoinDesk, Medium (https://medium.com/@UnitedVentures/fintech-key-trends-2014-5124b6088677)

*Note: All data are 2014 only.
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36
The Bitcoin Startup Ecosystem:

Seven Different Bitcoin Company Categories
Infrastructure
Wallets
Exchanges
Universal
Payment
Processing
Source: CoinDesk
Financial
Services
Mining
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37
A New Ecosystem Category Takes Shape:

Infrastructure
Bitcoin infrastructure companies build security tools, develop protocol
enhancements and provide APIs for other bitcoin businesses to build on
The eight companies in the infrastructure category have raised a combined

$56m to date
Sources: CoinDesk
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38
Ecosystem Sector Trends: Universals Raised Most

Funding in Q1, Followed by Mining and Infrastructure
Millions
Q1 VC Investment by Ecosystem Category (USD Millions)

$200
$191.0
$160
$120
$80
$40
$20.0
$1.1
$2.0
Wallet
Exchange
$3.8
$5.0
$6.1
$0
Payment Processor
Financial Services
Infrastructure
Mining
Universal
Data sources: CoinDesk (www.coindesk.com/bitcoin-venture-capital/), CrunchBase
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39
Universals Are Pulling Away From Other Sectors in

Total VC Investment
Millions
2013 to 2015 VC Investment by Ecosystem Category (USD Millions)

$300
$250
$200
$150
$100
$50
$0
Q3 2013
Payment Processor
Q4 2013
Exchange
Q1 2014
Universal
Q2 2014
Mining
Q3 2014
Financial Services
Q4 2014
Wallet
Q1 2015
Infrastructure
Data source: CoinDesk
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40
Universals Now Command Nearly 40% of VC

Investment; Mining and Wallets at 14% Each
$ Invested as of Q1
$ Invested as of Q4 2014
Sector
Q1
($m)
Q4
($m)
Q/Q
($m)
Q/Q
Payment
Processor
55.4
54.3
1.1
2%
Infrastructure
55.7
49.6
6.1
12%
Exchange
Financial
Services
Mining
Universal
Wallet
Total
65.8
62.0
3.8
6%
48.5
43.5
5.0
12%
96.5
262.6
91.6
676.1
76.5
71.6
89.6
447.3
20.0
191.0
2.0
229.0
26%
267%
2%
51%
Wallet
20%
Payment
Processor
12%
Infrastructure
11%
Universal
16%
Exchange
14%
Mining
17%
Financial
Services
10%
83% of Q1 investment was made in Universals

The number of Universals also continues to climb, now up to 10
Note: $ invested represents all-time total bitcoin VC investment at the end of each respective quarter.
Data Sources: CoinDesk (www.coindesk.com/bitcoin-venture-capital/), CrunchBase
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41
Q1 2015 Investment Rounds in Bitcoin Startups

Close Date
Company
Size ($m)
Round
Select Investors
Headquartered
Mar-15
PeerNova
5.00
First
OverStock
San Jose
Mar-15
Bitt
1.50
Seed
Avatar Capital
Christ Church
Mar-15
TabTrader
0.07
Seed
Rockstart
Amsterdam
Mar-15
Coinigy
0.10
Seed
Undisclosed
Milwaukee
Mar-15
21 Inc
116.00
First
Andreessen Horowitz, Data

Collective, Khosla Ventures
San Francisco
Mar-15
ShapeShift
0.53
Seed
Barry Silbert and Roger Ver
Zug
Feb-15
Ledger
1.50
Seed
XAnge Private Equity, Hi-Pay (HiMedia group), Fred Potter
Paris
Feb-15
BitPesa
1.10
Second
Pantera Capital, Bitcoin Opportunity

Corp, Crypto Currency Partners
Nairobi
Source: CoinDesk (http://www.coindesk.com/bitcoin-venture-capital/)
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42

(contd.)
Close Date
Company
Size ($m)
Round
Select Investors
Headquartered
Feb-15
HashRabbit
0.50
Seed
Draper Associates,
VegasTechFund
San Francisco
Feb-15
KnCMiner
15.00
Second
Accel Partners, GP Bullhound,

Creandum, Martin Wattin
Stockholm
Feb-15
NeuCoin
1.25
Seed
Patrik Stymne, Emil Michael,

Henrik Kjellberg
Paris
Feb-15
Ziftr
0.85
Seed
10x Venture Partners
Milford
Feb-15
Bonafide
(Bonifide.io)
0.85
Seed
Quest Venture Partners, Crypto

Currency Partners
New York
Jan-15
BitFlyer
1.10
Seed
Bitcoin Opportunity Corp, RSP

Fund No. 5, GMO Venture Partners
Tokyo
Jan-15
Colu
2.50
Seed
Aleph, Spark Capital, Bitcoin

Opportunity Corp, Box Group
Tel Aviv
Jan-15
Anycoin Direct
0.56
Seed
Undisclosed
Veghel
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43

(contd.)
Close Date
Company
Size ($m)
Round
Select Investors
Headquartered
New York Stock Exchange (NYSE),

San Francisco
USAA, BBVA, DoCoMo
Jan-15
Coinbase
75.00
Third
Jan-15
TrustAtom
0.10
Seed
Brian Cartmell, Vinny Lingham
Vancouver
Jan-15
Ciphrex
0.50
First
Undisclosed
San Diego
Jan-15
BlockCypher
3.10
Seed
Tim Draper, AME Cloud Ventures,

Boost VC, 500 Startups
San Mateo
Jan-15
Airbitz
0.03
Seed
Plug and Play Tech Center
San Diego
Jan-15
LibertyX
0.40
Seed
Project 11
Boston
Jan-15
GetGems
0.40
Seed
Magma VC
Unknown
Jan-15
CoinOutlet
0.10
Seed
BitcoinShop
New York
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44
Commerce
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45
Everyday Items Rank Above Consumer Tech on

Overstocks List of Most Often Bought with Bitcoin
1. Sheets
6. Cables and
tools
2. Donations
to non-profits
3. Headphones
4. Cases and
holders
7. Mattresses
8. Coffee tables
9. A/V cables
5. Area rugs
10. Fashion
sunglasses
Sources: CoinDesk, Overstock
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46
Growth of New Bitcoin-Accepting Merchants

Plummeted in Q1, Continuing Downward Trend
Number of New Bitcoin-Accepting Businesses Added Each Quarter
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Sources: CoinDesk, CoinBase, BitPay, International Business Times
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47
More than 88,000 Merchants Now Accept Bitcoin, up

from 82,000 in Q4 (+7%)
50K
38K
Data sources: Coinbase, BitPay
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48
Bitcoin-Accepting Merchant Forecast Slashed to

Approximately 120,000 by End of 2015
140,000
R = 0.95861
120,000
100,000
80,000
60,000
40,000
20,000
0
Nov-13
Feb-14
May-14
Aug-14
Total merchants
Nov-14
Feb-15
May-15
Aug-15
Nov-15
Forecasted merchants
Data 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 (16th Sep 2013), 20,000 (13th Jan
2014) and 30,000 (28th May 2014), respectively, calculated using linear interpolation.
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49
Bitcoins Lack of Use in Commerce is Not Just a

Chicken and Egg Problem
Merchants generally welcome bitcoin adoption
Lack of consumer adoption is the fundamental problem
Consumers need compelling reasons to use the volatile
and still relatively hard to acquire bitcoin over alternatives
Steve Beauregard,
CEO of GoCoin
"I believe merchants have been widely

disappointed by the number of transactions
they see in bitcoin. Most merchants have
taken a passive approach to integrating
bitcoin as a payment method, instead of
strategically testing and optimizing checkout
flows to encourage consumer adoption."
Sources: Pantera Capital, ZepChain, CoinDesk (http://www.coindesk.com/is-bitcoins-merchant-appeal-fading/)
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50
CoinCenters Public Sentiment Survey Indicates Low

Bitcoin Awareness in US
People
who are
familiar
with
bitcoin
are more
likely to
think it is
useful
64.3%
of the general American population
are not familiar at all with bitcoin
6.2%
of the general American population
say they have used bitcoin
Distrust in
bitcoin
decreases
from 50%
to 37% as
familiarity
with
bitcoin
increases
53.1%
of those who are very familiar with
But the distrust in bitcoin is
bitcoin have never used it
similar (47%) among those
who frequently use bitcoin
and those who never use
Source: CoinCenter
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51
Blockchains Quarterly New Wallet Growth Rate

Has Been Remarkably Consistent
Thousands
No. of New Wallets Added Each Quarter

600
515
481
500
481
451
454
Dec-2014
Mar-2015
400
343
300
200
120
100
0
Sep-2013
Dec-2013
Mar-2014
Jun-2014
Sep-2014
Data Source: Blockchain.info
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52
Millions
Forecast for Total Bitcoin Wallets by End of 2015

Maintained at 12 million
14
R = 0.98069
12
10
0
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Total Wallets
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Forecasted Wallets
Data 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.
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53
The Five Types of Bitcoin User

1. People who want a cheap, fast, global online payment experience
2. People who want access to a new suite of consumer payment
applications
3. People who want to connect to the global economy for the first time
4. People who believe bitcoin is an attractive investment
5. People who value financial privacy
Sources: CoinDesk, Coinbase Blog
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54
Bitcoin Transactions Have Been Rising; Average of

10,000 Daily Transactions by Popular Addresses*
Number of Transactions per Day
120,000
100,000
80,000
60,000
40,000
Apr-14
Jul-14
Total no. of daily transactions
Oct-14
Jan-15
No. of daily transactions excluding popular addresses
The milestone of 100,000 daily transactions by addresses excluding popular

ones was reached in February, which is two months later than total transactions
Source and note: Blockchain.info, *100 most popular addresses.
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55
Now Over 374 Bitcoin ATMs Around the World, but

Growth in New ATMs is Slowing
Increase in Number of Bitcoin ATMs
120
112
104
100
79
80
60
43
40
32
20
0
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Data source: CoinATMRadar
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56
Break Even for Bitcoin ATM Owners is 11 Months;

Average ATM Generates $5,520 profit per year
Operation Metrics
Number of transactions/month
100
Average transaction size ($)
200
Transaction fee revenue (%)
Revenue per year ($)
12,000
Cost Metrics
Bitcoin ATM acquisition cost ($)
5,000
Place rent/month ($)
200
Exchange fee (%)
0.2
Cash logistics/month ($)
300
Costs per year ($)
6,480
Profits per Year ($)
5,520
Notes: Annual profits vary significantly depending on transaction volume. BitAccess machines are doing about $30,000 in transactions
per month (Montreal installed machine). Skyhook Bitcoin ATM in Philippines has on average 40-50 transactions per month. However,
the average bitcoin purchase size is not revealed.
Sources: CoinDesk, BitAccess, Reddit, CoinATMRadar
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57
High Transaction Fees May be Discouraging People

from Using Bitcoin ATMs
Social media comments on bitcoin ATM fees
Sources: CoinDesk, Reddit, CoinATMRadar
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58
Half of Bitcoin ATMs are Located in North America,

Nearly One-Third are in Europe
Bitcoin ATMs by Continent
Europe
32%
Asia
11%
Oceania Latin
America
6%
1%
North
America
50%
Africa
0%
Data source: CoinATMRadar
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Gem
59
Technology
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60
Profiles of Four Alternative Uses of Blockchain

Technology
1. Property title
2. Smart contracts
3. Voting
4. Notary services
Sources: CoinDesk, Coinbase Blog
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61
Property Title: Blockchain Technology Could Empower

the Poor, Reduce Global Inequality
An elite minority enjoys the
economic benefits of the law and
globalization, while the majority of
entrepreneurs are stuck in poverty,
where their assets adding up to
more than $10tn worldwide
languish as dead capital in the
shadows of the law.
- Hernando de Soto, economist
Lima, Peru
With protected property title, people could better engage in economic

activities such as investment and infrastructure construction.
Blockchain technology could 'parachute' property title services into
many poverty stricken countries. - Balaji S. Srinivasan, 21 Inc
Sources: Hernando de Soto (2002) Law and Property Outside the West, Housing Finance International
June 1994, de Soto, Hernando. 2000. The Mystery of Capital. UK: Black Swan.
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62
Financial Automation: Smart Contracts are Being

Deployed by a Number of Companies
Sample smart contract: A dog with a GPS chip

in his collar is walked by a dog walker. On
completing the walk the collar sends a network
signal, and the contract automatically executes
a cryptocurrency payment to the walker.
Sources: CoinDesk, Ripple Labs, BitHalo, Reality Keys, Fast Co.labs, Morton Fraser
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63
Voting: Blockchain-Based Tech is Already Being

Used in Elections
In a traditional voting system, you have no idea about whether your vote is
counted. However, blockchain voting allows you to have the ability to audit
whether your vote is counted by viewing your vote using a public ledger.
At the same time, anonymity is also protected.
Source: CoinDesk
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64
Notary: Blockchain Technology Could Reshape

Notarization Services and Reduce Inefficiency
A study carried out for the European
Commission in 2007 found that house buyers in
countries with highly regulated notarial systems
paid much higher legal fees than house buyers
elsewhere (see chart).
Blockchains can store and certify the existence
of documents without relying on a central
authority. Companies like CoinSpark and Proof
of Existence are providing the service.
Sources: The Economist, Proof of Existence, CoinDesk
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65
Views on the Application of Bitcoin Technology to the

Internet of Things
Applying the blockchain concept to the world of the
Internet of Things offers fascinating possibilities.
Right from the time a product completes final assembly, it
can be registered by the manufacturer into a universal
blockchain representing its beginning of life. Once sold, a
dealer or end customer can register it to a regional
blockchain (a community, city or state).
Paul Brody,
Technology Strategy
Consulting, IBM
We demonstrate how a humble washer can become a

semi-autonomous device capable of managing its own
consumables supply, performing self-service and
maintenance, and even negotiating with other peer
devices both in the home and outside to optimize its
environment.
Sources: CoinDesk, LinkedIn
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66
Functional Bitcoin Applications Can Be

Grouped into 10 Categories
Email Email applications that eliminate spam by
requiring BTC for email delivery
Video Video applications that require one-click
micropayments to view video content
News News sites that eliminate advertising for users by
requiring BTC for time spent viewing content
Crowdfunding Global crowdfunding applications that
allow project creators to raise funds from around the world
Payouts Applications that allow creators or service
providers anywhere in the world to get paid by a global
audience
Source: CoinBase Blog
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67
Bitcoin Functional Applications (contd.)

Remittances Global remittance applications that enable
worldwide cross-border payments
Ecommerce Bitcoin-focused merchant directories that
offer a beautiful UI for consumers
Communication Networks Applications that incentivize
nodes to provide resources to communications networks
by rewarding BTC for participation
Identity Distributed identity applications that give
people control of their own identity, built on top of a
distributed identity protocol
Attribution Attribution applications that allow users to
prove ownership of data, built on top of an attribution
protocol
Source: CoinBase Blog
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68
Bitcoin Mining Arms Race Slows:

Bitcoins Network Difficulty QoQ Growth Rate Flattens
Billions
Hashes
Quarterly Increase in Bitcoin Mining Difficulty

20
250%
236%
18
17.8
16
200%
14
11.8
12
150%
10
106%
100%
6.1
6.0
6
4
50%
17%
15%
0%
Q2 2014
Q3 2014
Quarterly Increase in Mining Difficulty
Q4 2014
Q1 2015
Qtr.-over-Qtr. Percentage Increase in Mining Difficulty
Notes: Difficulty represents the number of necessary hash calculations to mine a new block.
Data source: CoinDesk
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69
Mining Pools: No News is Good News;

Still No Permanent Fix for 51% Attack Risk
AntPool
Unknown
Unknown with
1BwZeHJ
Address
BitMinter
P2Pool
MegaBigPower
Bitcoin
Affiliate EclipseMC
Network
Eligius
F2Pool
BTC Guild
Ghash.io
Ghash.io
continues to
shrink, down
to less than
10% share
from 50% in
July 2014
BW.com
Slush
BTCChina
Pool
KnCMiner
Data source: Four-day average as of 1st Apr 2015 blockchain.info/pools
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Gem
70
Software Developer Interest in Bitcoin Continues

Steady Growth
Number of Created Repositories in Github with Bitcoin in the Name or Description
Data source: BitcoinPulse
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71
Nodes: Levelling Off in Node Numbers Eases Bitcoin

Network Centralization Concerns
Data sources: Bitnodes
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72
Quiet, Successful Update to the Bitcoin Core

Protocol in Q1
New features added to Bitcoin Core software version 0.10 include:
Consensus library:
The consensus library makes it easier to build competing full node
implementations by reusing the most sensitive and difficult part of the
Core source code
Transaction fees:
Core wallet users are provided with an estimate of the fees to pay in
order to get quicker confirmations
Headers-first syncing:
A node first downloads parts of a block before proceeding to download
the entire blockchain, which speeds up communications between
nodes. This makes running a full node a more attractive prospect even
as there are fears over a declining number of nodes in operation
Source: CoinDesk
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73
Regulation and Macro
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74
Bitcoin Startups Targeting the Worlds 2.5 Billion

Unbanked
Percentage of total adult

population that does not use
formal or semiformal financial
services
0-25%
26-50%
51-75%
76-100%
Estimates used to calculate regional averages

Sources: CoinDesk, Mckinsey, Bitcoin for the Unbanked
Sponsored by
Gem
75
Wall Street Interest in Bitcoin is Growing
Three blockchain startups selected

for Barclays Accelerator, with one
aiming to provide blockchain
solutions for the insurance industry
Citi wants to [accelerate]

emerging technologies that
have the potential to transform
financial services experiences
for Citis customers
UBS is set to open a London-based research

lab to explore the application of blockchain
technology in the financial services industry
Sources: CoinDesk, Bank Innovation
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76
Migration of Wall Street Executives to Bitcoin

Companies Continues
Duncan
Niederauer, NYSE.
Now advisor at
TeraExchange
Jason Weinstein,
US Department of
Justice. Now advisor at
BitFury
Blythe Masters,
JP Morgan Chase.
Now at Digital Assets
Holdings LLC
Timo Schlaefer,
Goldman Sachs.
Now at Crypto
Facilities
Gene Sperling,
National Economic
Council. Now advisor at
Ripple Labs
Paul Camp,
JP Morgan Chase.
Now at Circle
Arthur Levitt,
SEC. Now advisor at
BitPay and Vaurum
Arthur Hayes,
Citi. Now at BitMEX
Sources: WSJ, CoinDesk, LinkedIn
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77
Nine Banks in Total Have Established Banking

Relationships with Bitcoin Startups to Date
Newly Announced Banking Relationships
27th Mar 2015
24th Mar 2015
Securing banking partnerships has hindered the operations of bitcoin companies, often
forcing them to halt part of their offerings
However, partnership between banks and bitcoin companies could improve security
and efficiency
Source: CoinDesk
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Gem
78
Views on How Bitcoin Technology Can Transform

Financial Services
Digital Assets has a revolutionary
technology platform that eliminates
the counterparty risk and lack of
transparency that has hindered
mainstream adoption of
cryptographic technology.
Blythe Masters,
CEO of Digital Assets
Holdings LLC
The possibilities for reducing

cost and risk in settlement are
enormous.
Sources: CoinDesk, LinkedIn
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79
Select Country Regulatory Updates
The government does not see a need to regulate or ban bitcoin

activities. Bitcoin does not pose a substantial threat to Hong
Kong's financial system.
Hong Kong
Spanish political party, Unin Progreso y Democracia (UPyD),
has submitted a proposal to the country's Congress outlining
why bitcoin regulation is needed.
Spain
Digital currency businesses will have to comply with
the Isle of Man's anti-money laundering (AML) laws
from 1st April.
Isle of Man
Source: CoinDesk
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80
In Q1 There Were Positive Developments With the NY

BitLicense Proposal, but
Businesses that store, hold, issue,

administer, exchange or control digital
currency on behalf of their customers require
a license to operate
An exemption added for companies
engaging in mere software development and
dissemination
Eliminates the prohibition on digital
currency investments, so long as they are
held in an acceptable ratio
Demands that the licensee must submit
non-customer identities to the extent
practicable
NY regulators accepted new comments,
further revisions are a possibility
Sources: CoinDesk. Manhattan photo courtesy of Symmetry50
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81
Problems Remain with BitLicenses Duplicative and

Redundant Requirements
We should be mindful of this 'tax on innovation' that
regulations place on the startup sector and high
growth companies in general.
Fred Wilson,
Union Square Ventures
1. Anti-money laundering (AML) requirements:

Virtual currency exchangers and
administrators are already required to
comply with federal AML regulations
2. State money transmission regulations are
already in place and are applicable to all
virtual currency businesses
Source: CoinDesk (http://www.coindesk.com/fred-wilson-on-the-proposed-bitlicense-regulations/)
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82
Generally Favorable Response to UKs Initial

Cryptocurrency Regulatory Framework
Core elements of the HM Treasury proposal:
Curb criminal activity via AML regulation
Allow cryptocurrency companies to opt-in to
standardized consumer protections
Proposed injecting 10m into digital currencies
research
Negative Reactions
Positive Reactions
A light touch approach (Marc
Warne, Bittylicious)
Help score banking
relationships (Hugh HalfordThompson, QuickBitcoin)
[Should] limit this to fiat-tocrypto exchanges (Marc

Warne, Bittylicious)
Will force the UK's bitcoin
companies to move
abroad (Akin Fernandez,
Azteco)
Sources: HM Treasury, CoinDesk
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83
Views on Bitcoin Regulation and its Potential

Positive Impact on Economic Growth
Among other things, [the programme] will look at

whether regulation of the sector is required, so that
virtual currency businesses can continue to be set up
in the UK, and people and businesses can use
[cryptocurrencies] safely.
George Osborne
Chancellor of the Exchequer,
Second Lord of the Treasury
It's only by harnessing innovations in finance, alongside

our existing world class knowledge and skills in financial
services, that we'll ensure Britain's financial sector
continues to meet the diverse needs of businesses and
consumers, here and around the globe, and create the
jobs and growth we all want to see in the future.
Source: CoinDesk
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84
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
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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.
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State of Bitcoin Q1 2015

10th April 2015

State of Bitcoin Q1 2015

World leader in digital currency news, prices and information

State of Bitcoin Q1 2015

State of Bitcoin Q1 2015

State of Bitcoin Credits

Creator and Producer: Garrick Hileman (@GarrickHileman)

State of Bitcoin Q1 2015

Danqing Ying (@DanqingYing)

Summary and Adoption

State of Bitcoin Q1 2015

State of Bitcoin Q1 2015

Sustained pressure on bitcoins price,

Bitcoins price briefly dropped to

21 Inc, which announced $116m in

Blockchains total wallets passed three

Improved regulatory clarity (ie NY

State of Bitcoin Q1 2015

Key Bitcoin Adoption Metrics

State of Bitcoin Q1 2015

Price and Valuation

State of Bitcoin Q1 2015

CoinDesk Bitcoin Price Index

31st Mar Close

31st Mar Market Cap

YTD Price Summary

Low (14th Jan)

State of Bitcoin Q1 2015

Bitcoins Price in Q1 Remained Volatile Amid

State of Bitcoin Q1 2015

Bitcoins Price Decline Has Not Stopped Exchange

Monthly Bitcoin Trading Volume

Monthly bitcoin trading volume (USD)

Monthly bitcoin trading volume (BTC)

Data sources: Blockchain, CoinDesk, Bitcoinity

State of Bitcoin Q1 2015

Industry Rationalization: Bitcoins Price Plunge, Other

State of Bitcoin Q1 2015

Miners Revenue and Transaction Fee (USD)

Diminishing Incentives to Mine Bitcoins Will Result in

State of Bitcoin Q1 2015

Bitcoin Primarily Functions as a Store of Value,

Data sources: Bitcoinity, Blockchain

State of Bitcoin Q1 2015

Altcoin Market Cap Share (%)

Data source: CoinMarketCap

State of Bitcoin Q1 2015

Bitcoins Market Cap is 14x Larger Than the Next

Data source: CoinMarketCap data as of 1st Apr 2015

State of Bitcoin Q1 2015

State of Bitcoin Q1 2015

Hong Kong's MyCoin disappears

Steady stories of bitcoin-related crime

Bitcoin mining firm CoinTerra heads for

State of Bitcoin Q1 2015

Coinbase's record $75m funding round,

Bitcoin startup 21 Inc announces $116m

Blockchain reports its total number of

Bitcoin Core 0.10 gives developers simplified

State of Bitcoin Q1 2015

Q1 Most-Viewed CoinDesk Articles: Relative Interest