Bitcoin is speculation and ownership is concentrated and increasingly international: takeaways from a Coindesk report

Thanks Coindesk for your terrific State of Bitcoin and Blockchain 2016 report. Here were some of my takeaways:

Speculation dominates other metrics: Trading grew 4x while most other measures (hash rate, number of wallets) grew 1-2x. This is in part why bitcoin was the world’s top performing currency in 2013, its worst in 2014, and then its best in 2015 and probably 2016.

VC investment is slowing: $500M of VC investment in 2015, but the rate of growth is slowing, and the vast majority is in the US.

While the US dominates, Bitcoin is increasingly international: 23 countries are now home to at least one VC-backed Bitcoin startup. On Coinbase – a leading Bitcoin exchange and wallet provider – a majority of its users are now outside the US.

Bitcoin is concentrated: among miners (Antpool and F2Pool consistently have 25% of the hash rate) and the top 500 addresses own ~30% of all bitcoins. Number of full nodes continues to decrease, currently around 5500.

Bitcoin is winning among cryptocurrencies: currently Bitcoin represents 88.3% of the total cryptocurrency market cap. While the top altcoins remain fairly stable (eg, Ethereum, Litecoin), there are now 400 dead altcoins.

Store of value seems to be the dominant motivation: on-chain transaction growth is comparatively slow (50% in 2015 when you remove long-chains which represent questionable and spammy transactions). Merchant acceptance and interest are slowing. And this Needham analyst report estimates 75% of purchasing behavior is driven by a view of bitcoin as digital gold.

The full report is embedded below. Let me know if you have additional thoughts or questions!