2. State of Bitcoin 2015 2
2 March 2015

4. 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
4State of Bitcoin 2015

5. 5State of Bitcoin 2015
The State of Bitcoin?

6. A ‘Tale of Two Bitcoins’?
6
“It was the best of times, it was the
worst of times, it was the age of
wisdom, it was the age of foolishness,
it was the epoch of belief, it was the
epoch of incredulity, it was the season
of Light, it was the season of
Darkness, it was the spring of hope, it
was the winter of despair, we had
everything before us, we had nothing
before us, we were all going direct to
heaven, we were all going direct the
other way”
-Charles Dickens, A Tale of Two Cities
State of Bitcoin 2015

7. Contents
• Price
• Media
• VC Investment
• Commerce
• Technology
• Regulation and
Macro
• Conclusion
7State of Bitcoin 2015

8. 8State of Bitcoin 2015
Price

9. $0
$200
$400
$600
$800
$1,000
$1,200
From Biggest Annual Price
Appreciation in History…
56X
in 2013
2011-13 CAGR of 84,066%
Bitcoin price up
Source: CoinDesk Bitcoin Price Index daily closing price (taken at 00:00 GMT)
9
01/01/2013 01/02/2013 01/03/2013 01/04/2013 1/05/2013 1/06/2013 1/07/2013 1/08/2013 1/09/2013 1/10/2013 1/11/2013 1/12/2013
State of Bitcoin 2015

10. …to 2014’s Worst Performing Currency
10
Source: CoinDesk http://www.coindesk.com/price/
State of Bitcoin 2015
-67.4%

11. CoinDesk Bitcoin Price Index –
2014 & 2015 YTD by the Numbers
11State of Bitcoin 2015
Source: CoinDesk Bitcoin Price Index, daily data collected at 00:00 UTC
www.coindesk.com/price
31st Dec Close $319.70
2nd Mar $258.88
YTD Δ -19.0%
2nd Mar Market Cap $3.6bn
2015 YTD Price Summary
High (6th Jan) $951.39
Low (30th Dec) $309.87
2014 Δ -67.4%
Average $526.92
Median $501.63
2014 Price Summary

12. The Bitcoin Startup Ecosystem:
Seven Different Bitcoin Company Categories
12State of Bitcoin 2015
Payment
Processing
Wallets
Mining
Financial
Services
Exchanges
Infrastructure
Universal
Source: CoinDesk

13. Mining and Exchange Sectors Shrink
13State of Bitcoin 2015
Source: CoinDesk
Exchange companies
go bankrupt
Mining companies
go bankrupt
Aquifer LLC

14. 14State of Bitcoin 2015
Media

15. Bitcoin: Never a Shortage of Bad News
15State of Bitcoin 2015

16. Q1 Negative News
16State of Bitcoin 2015
Bitstamp claims $5 million lost in hot wallet
hack
Bitcoin mining firm CoinTerra files for
chapter 7 bankruptcy
Hong Kong's MyCoin disappears
with up to $387 million

17. Drop in Bitcoin News Coverage in Q1
17State of Bitcoin 2015
News Published Mentioning Bitcoin
Note: Numbers of stories obtained by searching ‘bitcoin’ on respective publishers’ websites, Q1 2015 number of news
coverage calculated by run rate
Sources: respective publishers’ websites
92
67
136
194
41
76
156
235
0 100 200 300 400 500
FT
NYT
WSJ
Sina
Q1 2015
Q4 2014

18. Q1 Positive News
18State of Bitcoin 2015
Coinbase's record $75 million funding round,
opening of US regulation compliant exchange
Bitcoin Core 0.10 gives developers
simplified network consensus access
Blockchain number of wallets passes 3 million

19. 19State of Bitcoin 2015
VC Investment

20. Total VC Investment in
Bitcoin Startups to Date
20
$551m
Source: CoinDesk (www.coindesk.com/bitcoin-venture-capital/)
State of Bitcoin 2015

21. Eventually mainstream products, companies and industries emerge to
commercialize it; its effects become profound; and later, many people
wonder why its powerful promise wasn’t more obvious from the start.
What technology am I talking about? Personal computers in 1975, the
Internet in 1993, and – I believe – Bitcoin in 2014.
- Marc Andreessen, Andreessen Horowitz
As Big as the PC and Internet?
“
”
21State of Bitcoin 2015

22. 2014 Bitcoin VC Investment Surpassed
Early-Stage Internet Investment
22State of Bitcoin 2015
*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/
$95.8
$334.8
$250.1
$0
$50
$100
$150
$200
$250
$300
$350
2013 Bitcoin 2014 Bitcoin 1995 Internet*
Bitcoin vs Early Internet VC Investment ($m)
Sources: CoinDesk, PricewaterhouseCoopers

23. Record Setting VC Deals Continue
after the Price Collapse
23State of Bitcoin 2015
$75m $30.5m
(Series A) October 2014(Series C) Jan 2015
Source: CoinDesk (www.coindesk.com/bitcoin-venture-capital/)

24. Universals Raised the Most Funding in Q1,
Followed by Mining and Infrastructure
24State of Bitcoin 2015
Q1 VC Investment by Ecosystem Category (millions)
Sources: CoinDesk (www.coindesk.com/bitcoin-venture-capital/), CrunchBase
$1.1 $1.7 $2.0
$5.0 $6.1
$15.0
$75.0
0
10
20
30
40
50
60
70
80
Payment Processor
Exchange
Wallet
Financial Services
Infrastructure
Mining
Universal

25. Number of Universal Bitcoin Companies
Doubled in 2014
25State of Bitcoin 2015
• Universals operate across more than
one aspect of the bitcoin value chain
(e.g. 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
The Universals
2013
2014

26. 26State of Bitcoin 2015
Commerce

27. What Do People Buy with Bitcoins?
Home Goods & Consumer Electronics
27State of Bitcoin 2015
Source: most popular items purchased through Purse.io by November 2014
Trashbags Coffee Grinder Infant Formula
Home
Goods
Bluetooth SpeakerDigital CameraPlaystation
Consumer
Electronics

28. Companies Representing >$180 Billion in
Annual Revenue Now Accept Bitcoin
28State of Bitcoin 2015
Top 10 Largest Bitcoin-Accepting Retailers
*Monprix is a private company; most recent revenue data is from 2005. TigerDirect estimate provided by parent company investor relations. Other divisions
that are part of a larger parent organization, but do not break out individual divisional revenues, are excluded.
Rank Company Annual Revenue ($bn)
1 Microsoft 86.8
2 Dell 56.9
3 Dish Network 13.9
4 Expedia 5.0
5 Intuit 4.5
6 Monprix* 4.3
7 Time Inc.** 3.4
8 NewEgg 2.8
9 Overstock 1.3
10 TigerDirect* 1.0
Total $179.9
**The revenue is Time Inc. FY 2013 revenue
Sources: CoinDesk, Coinbase, BitPay, companies’ annual reports

29. >82,000 Merchants Now Accept Bitcoin,
Up From 75,000 in Q3 (+9%)
29State of Bitcoin 2015
44K 38K
Sources: Coinbase and BitPay

30. Growth in Bitcoin-Accepting Businesses
Slowed Throughout 2014
30State of Bitcoin 2015
Sources: CoinDesk, Bitcoinity
13,903
16,800
12,936
10,360
6,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014
Number of New Bitcoin-Accepting Businesses Added Each Quarter

31. Total merchants Forecasted merchants
140,000 Bitcoin-Accepting Merchants
Forecast by End of 2015
31State of Bitcoin 2015
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.
R² = 0.962
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000

32. Well-Funded Bitcoin Startups are Able
to Secure Banking Relationships
32State of Bitcoin 2015
Source: CoinDesk (http://www.coindesk.com/bitcoin-venture-capital/)
$27.5m funding
$10.0m funding
$9.0m funding
$5.0m funding
Reasons banks
hesitate on
bitcoin:
• bigger risks
• higher costs
• more work
• Low ROI
• regulatory
pressure
• prohibited by
regulators

33. Blockchain Wallet Growth Rate Has Been
Flat for Last 12 Months
33State of Bitcoin 2015
Source and note : Blockchain.info, 2015 quarter one wallet number is calculated by run rate
120
515
481
343
481
451
465
0
100
200
300
400
500
600
Sep-2013 Dec-2013 Mar-2014 Jun-2014 Sep-2014 Dec-2014 Mar-2015
Thousands
No. of New Wallets
No. of New Wallets

34. Total Wallets Forecasted Wallets
Approximately 12 Million Bitcoin Wallets
Forecast by End of 2015
34State of Bitcoin 2015
R2 = 0.971
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.
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16

35. Bitcoin Remains the Coin of Choice in
the Post-Silk Road Online Black Market
35State of Bitcoin 2015
• The view that bitcoin would be quickly supplanted by DarkCoin or another
theoretically more anonymous altcoin for black market use appears to be
unfounded
Source: Wired http://www.wired.com/2014/09/agora-bigger-than-silk-road/
Agora, which is larger than Silk Road 2.0, only accepts bitcoins

36. 36State of Bitcoin 2015
Technology

37. 520 Altcoins, Bitcoin’s Market Cap is 8X Larger
Than the Next Biggest
37State of Bitcoin 2015
Source: CoinMarketCap data as of 27th Feb 2015
Rank Name MarketCap
1 Bitcoin $ 3,500,578,678
2 Ripple $ 417,883,964
3 Litecoin $ 67,896,496
4 BitShares $ 27,093,299
5 Darkcoin $ 16,441,742
6 MaidSafeCoin $ 14,798,328
7 Dogecoin $ 14,131,219
8 Nxt $ 13,100,862
9 Paycoin $ 12,638,054
10 Stellar $ 11,167,006

38. Crypto 2.0 Projects to Keep an Eye on
in 2015
38State of Bitcoin 2015
BitAssets – allowing traders to hedge
against bitcoin's fluctuations
Alternative blockchain to bitcoin’s
Decentralised social messenger
Bringing smart contracts to market
Source: CoinDesk

39. CoinBase’s API Gaining Traction With
44 Bitcoin Apps Built on it
39State of Bitcoin 2015
Source: CoinBase

40. 40State of Bitcoin 2015
Regulation and Macro

41. NY BitLicenses 2.0: Bitcoin Still Being
Held to Higher Standard
41State of Bitcoin 2015
• New York’s BitLicense regulatory proposal
widely regarded as a possible framework for
other jurisdictions.
• Ben Lawsky announced the latest revisions
to the draft BitLicense in mid-December.
• 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 proposed record-keeping
requirement for licensees reduced from 10 to
seven years.
• Broader range of financial assets (that
includes virtual currency) that can be
counted towards licensees' capital
requirements.
Ben Lawsky
Source: CoinDesk

42. Bitcoin Startups are Pulling Out of NY
42State of Bitcoin 2015
NY’s Ben Lawsky UK’s George Osborne
New York
vs
London
• UK Chancellor George Osborne has announced he is looking to make
the UK attractive to bitcoin startups and capital
• Startups like Epiphyte have already relocated from NY to seemingly
friendlier London

43. Light Touch UK Bitcoin Regulation
43State of Bitcoin 2015
Source: CoinDesk (http://www.coindesk.com/bitcoin-regulation-uk/)
Consumer
Protection
HMRC (HM Revenue
& Customs) and FCA
Taxation
Prevention
of money
laundering
Financial Conduct
Authority (FCA)
No regulation on digital
currencies and no intention of
doing so.
No formal obligation from HMRC. But
Registering as an MSB brings a firm
under the UK's anti-money laundering
(AML) regulations.
HMRC
VAT on bitcoin purchase
withdrawn. HMRC considering
how best to tax bitcoin.

44. UK-London Based Bitcoin
Companies
44State of Bitcoin 2015
Source: CoinDesk
(News & Analytics)
(Wallet)
(Wallet)
(Exchange)
(Payment Processor) (Exchange)
(Exchange)(Networking)

45. Illegal
Restricted
Legal
45State of Bitcoin 2015
Source: Wikipedia
Bitcoin Regulation Could Be Much Heavier

46. Will Bitcoin First Gain Traction in Advanced
Economies…
46State of Bitcoin 2015

47. … or in the Under-banked Developing World?
Due to lack of credit cards, approximately 65% and 35% of all e-commerce in
China and India respectively is conducted with cash
… bitcoin may help it leapfrog credit cards
47State of Bitcoin 2015

48. Bitcoin Market Potential Index (BMPI)
48
• Remittances • Inflation
• Technology penetration • Financial repression
• Bitcoin penetration
• Financial crisis –
historical
• Black market
‘Positive’ Index Drivers ‘Negative’ Index Drivers
State of Bitcoin 2015

49. Sub-Saharan Africa is the Most Fertile Region for
Bitcoin, Followed by Latin America & Post-Soviet
49
BMPI Regional Distribution -
Top 30
BMPI Regional Distribution -
Top 10
Asia 0%
Europe
10%
Middle East
& North
Africa 10%
Latin
America
20%
US &
Canada
10%
Sub-
Saharan
Africa 40%
Post-
Soviet/Com
munist 10% Asia
7%
Europe 3%
Middle East
& North
Africa 13%
Latin
America
17%
US &
Canada 3%
Sub-
Saharan
Africa 40%
Post-
Soviet/Com
munist 17%
State of Bitcoin 2015

50. The BMPI Top 10
50
Rank Country
1 Argentina
2 Venezuela
3 Zimbabwe
4 Malawi
5 United States
6 Belarus
7 Nigeria
8 Congo (DR)
9 Iceland
10 Iran Cristina Fernández de
Kirchner’s Argentina is #1
State of Bitcoin 2015

51. BMPI Interactive Heat Map located at:
51
BitcoinIQ.info
State of Bitcoin 2015

52. 52State of Bitcoin 2015
Conclusion

53. A ‘Tale of Two Bitcoins’
53State of Bitcoin 2015

54. Type Historical Contemporary
DigitalPhysical
Intrinsic
value
Token
Closed
Centralized
Open
Decentralized N/A
Source: Hileman (2013) ‘History and Prospects for Alternative Currencies’, London School of Economics
working paper
Bitcoin is Unlike Any Previous
Alternative Currency
54State of Bitcoin 2015

55. Investments in FinTech Dwarf Bitcoin
55State of Bitcoin 2015
BitcoinFinTech
Sources: CoinDesk, Medium (https://medium.com/@UnitedVentures/fintech-key-trends-2014-5124b6088677)
FinTech
$3b invested in 2014
$0.3b
invested in
2014
100
Deals
Biggest Deal
$31m
216
Deals
Biggest Deal
$150M

56. FinTech Investment Continues Growing
56State of Bitcoin 2015
Sources: CoinDesk, Medium (https://medium.com/@UnitedVentures/fintech-key-trends-2014-5124b6088677)

57. Thank you
@GarrickHileman
State of Bitcoin 2015