Tag Archives: OP_RETURN

Notes from in-depth University of Cambridge study on the cryptocurrency ecosystem

Published / by kgao

Great report. Highly recommend reading the full PDF (116 pages but goes quick). In a nutshell:

First, the user adoption of various cryptocurrencies has really taken off, with billions in market cap and millions of wallets estimated to have been ‘active’ in 2016. Second, the cryptocurrency industry is both globalised and localised, with borderless exchange operations, as well as geographically clustered mining activities. Third, the industry is becoming more fluid, as the lines between exchanges and wallets are increasingly ‘blurred’ and a multitude of cryptocurrencies, not just bitcoin, are now supported by a growing ecosystem, fulfilling an array of functions. Fourth, issues of security and regulatory compliance are likely to remain prevalent for years to come.

Here are my notes and takeaways:

  • crypto is worth $27B = Airbnb
  • 3M to 6M active crypto wallets
  • 2K+ people working full-time in the industry
  • crypto exchanges (eg, Kraken, BitFlyer) employ the most people
  • 70% of large miners say they have “high influence” on protocol development
  • report divides industry players into #1 exchanges, #2 wallets, #3 payments, and #4 mining with growing levels of crossover
  • companies surveyed have 21 full-time employees on average (still early days)
  • “A 2016 joint report from Coinbase and ARK Invest estimates that 54% of Coinbase users use bitcoin strictly as an investment”
  • “Non-monetary use of Bitcoin has also increased. For example, the use of the OP_RETURN feature in the bitcoin scripting language (frequently used for embedding metadata in bitcoin transactions, for enabling e.g., time-stamping services and overlay networks) has increased roughly 100x since January 2015”
  • four currencies (USD, EUR, JPY and CNY) dominate trading
  • impression is that we’re still in very early days of proper security and auditing; as an investor, remember to turn on 2FA and only keep small amounts on exchanges
  • “The average business (B2B) payment has a transaction size of $1,878, whereas P2P transfers ($351) have higher average transaction sizes than consumer (C2B) payments ($210)”

3 important charts from the report

…Bitcoin dominates but Ethereum has shown impressive growth

…trading in Chinese RMB dropped precipitously after the government crackdown on margin accounts and no-fee trading

…Mining is now a multi-billion dollar industry!