Blockchain investment analysis: As of the first quarter of 2016, the total investment amounted to nearly US$1 billion

The digital currency and public blockchain ecosystem has attracted billions of dollars in investment since the wave of the boom three years ago and is now experiencing a period of "rapid growth", but no one can give an actual usage number as to how fast it is.

Ironically, despite the abundance of press coverage, interviews and conferences, only a handful of venture-backed digital currency startups have disclosed any hard numbers.

I've been wanting to do regular quarterly updates (see my previous quarterly update on usage numbers in January), but there isn't enough public data. In fact, there's less data now than there was three months ago.

For example, at some point in the past few months, Coinbase removed its wallet volume charts from its charting website. This was consistent with its February announcement that “Coinbase is not a wallet.” As Coinbase CEO Brian Armstrong put it:

“Over the next year or so, you’ll see a brand transformation of Coinbase from a wallet-exchange hybrid to an exchange focused on retail and institutions. While it will take time to update, it will happen.”

Interestingly, this conflicts with another statement made by Forbes last week regarding Coinbase and Blockchain.info, which stated:

“Currently, 80% of Coinbase customers buy Bitcoin as an investment and 20% use it for trading, but that balance is shifting more toward trading.”

Maybe there is an overall increase in volume, but if so, why remove the chart for wallet volume? Or is it just about volume on exchanges?

The same Forbes article also mentions another specific total:

“We always end up lamenting that startups have played an integral role in this. If you look at the bitcoin users on the network, most of them are major bitcoin companies, said Peter Smith, CEO of Blockchain. Five or six of them represent about 80% of the transaction volume on the network, including Coinbase and Blockchain. Many startups are also using bitcoin to make it easier for their users to send remittances, make cross-border payments, make peer-to-peer payments, and of course make mobile in-app purchases.”

Maybe it’s true that there are 5 or 6 companies that represent the majority of transactions on the Bitcoin network. If that’s the case, we should be able to see it.

This was made using a simplified, color-coded version of a tool that Chainalysis provides to clients, and which is often provided to teams at exchanges doing compatibility testing. This is drawn to scale, with the thickness of the bands accurately representing the size of the corridors. I made up the names of some of the entities.

This graphic is based on data from the first quarter of 2016 and is more recent than the chart I published in a January article.

Based on the chart above, there are indeed 5-6 companies that account for 80% of the trading volume; Coinbase and Blockchain.info are among them (Blockchain.info also operates SharedCoin).

In fact, Chainalysis recently updated their methodology and found that Coinbase transactions represent every sixth or seventh transaction on the Bitcoin blockchain. This particular area of ​​data science is constantly being refined and we will be watching it again in the coming months.

The same Forbes article states that Coinbase has 3.5 million users, while Blockchain.info has 6.5 million wallet holders.

But as we’ve seen before, what does this actually mean? Few companies publicly define what a user or wallet actually is. I’ve seen this described twice before:

1. Consider user interest rather than whether they adopt

2. A brief history of the development of Bitcoin "wallets"

One of the standard ways to measure an app’s actual growth (and success) is the number of “monthly active users” (MAU), but it turns out that this number is still largely unreported by any cryptocurrency-related company that has raised a Series A or more.

Where can we find data that is still being published that reflects the amount of public blockchain usage?

Source: P2SH.info

As shown in the above chart, over the past month, the amount of Bitcoin stored using P2SH addresses has increased from 9.99% to 11.7%.

The apparent large change occurred two weeks ago, and some speculate that it may be related to Liquid-related multisig movement.

Source: opreturn.org

OP_RETURN has also seen an increase in usage. The chart above shows usage over the past 15 months.

As described in Watermarked Tokens, OP_RETURN is an opcode in the Bitcoin Script language that is commonly used in colored coin projects.

At the time of writing this article, the top 5 projects using OP_RETURN (by percentage of transactions) are:

1. Blockstack: 107,254 transactions (28.4%)

2. Open Assets: 68069 (18%)

3. Monegraph: 51601 (13.7%)

4. Factom: 34007 (9%)

5. Coinspark: 25,223 (6.7%)

Two of these five projects are colored coin projects, and these five projects together account for approximately 76% of all OP_RETURN usage.

Are there other numbers?

1. Looking at the chart from January before, “block 400,000 had roughly the same distribution as block 390,000.

2. According to CoinATMRadar, the number of Bitcoin ATMs installed by Bitcoin model increased from 536 at the beginning of January to 612 at the end of March. This is equivalent to 0.84 new ATMs installed every day, and the growth rate is slightly higher than the past two years. (This year's increase should be 308.2 units at this rate, while the increase in 2014 and 2015 was only 275 units each).

3. In terms of market prices, due in part to the ongoing block size debate and other factors, the first quarter (the difference between the highest and lowest levels was approximately $100) still maintained large fluctuations.

4. The BitWage and Blockchain.info wallets are seeing roughly the same level of activity as they did in January.

funds

In the fourth quarter of 2015, some venture capital quietly returned.

According to CoinDesk’s venture capital aggregation, in the first quarter of 2016, there were 14 publicly announced investments in Bitcoin and blockchain-related startups, totaling $148 million. Two of these investments (DASH and Blockstream) accounted for two-thirds of the total investment.

However, this list may be incomplete, for example, there are two investments in Kraken’s Japanese subsidiary that were not disclosed (one from SBI Group in January and another from Money Partners Group in March). Similarly, Ripple also received an investment from SBI Group in January (the amount was disclosed to be 3 billion yen, or about $25 million).

Additionally, CB Insights (a venture capital data company) held a webinar last week covering the “Bitcoin/Blockchain” ecosystem.

While the session gave a good overview, I felt it lacked some context for recent developments in the whole “blockchain” capital markets world.

For example, Tradeblock recently launched Axoni (a private/permissioned blockchain), and Peernova is not really a "blockchain" company anymore. (Peernova has transitioned from a bitcoin mining company to one that provides "blockchain-inspired" tools to other industries.) Also, the webinar was a bit outdated on the developments in cryptocurrencies. For example, Mirror is completely out of the ecosystem, 21Inc is basically a software company at this point, and Buttercoin is bankrupt, and Blockscore doesn't count.

Are there any other charts?

Source: Blockscan

Also consider Counterparty, which is effectively stablecoin as a platform (see above), but is now overshadowed by Ethereum (which is based on multi-sig technology, which includes transaction growth (which may actually end up being tricked by "long chains", just like some Bitcoin transactions)).

What other indicators can we learn about?

Source: Coingecko

Ignoring the liquidity and market cap part (basically all cryptocurrencies are illiquid and easily manipulated), there are significant differences between the two platforms in terms of social media engagement and interest. For example, in terms of public interest, something that might be added to the Coingecko list is the number of organized meetups: Ethereum has about 100 worldwide, while Counterparty has only about 10.

By the way, I attended two Ethereum meetups last month: one hosted by Coinbase in San Francisco, and another hosted by IFTF in Palo Alto. Both meetups were well attended, with the latter having around 120 people.

[Note: I do not own, control or hold any cryptocurrency, nor do I have a trading position in any cryptocurrency]

Why doesn't anyone take the initiative to release the data?

This may be because some startups believe that any user/usage number has significant commercial value and therefore treat it as a trade secret.

Compared with other technology markets, is this market really less transparent?

Maybe, maybe not. So, what is the public market?

Last spring, Blizzard Entertainment announced that it would no longer release World of Warcraft subscription numbers. This was due to a continued decline in subscriptions (down more than half from a peak of 12 million). Similarly, last fall, Microsoft said it would no longer release Xbox One unit sales and would instead release Xbox Live user numbers. (Disclosure: I own an Xbox One.) The move was seen as a way to downplay the growing sales gap between Sony's PS4 and Xbox One.

Source: Statista/Zynga

The exception to this rule is mobile/social gaming company Zynga, which continues to publish data despite a steady decline in monthly active users for more than three years.

Back to the public blockchain space: why have 40+ companies that have closed Series A or higher rounds unanimously decided not to release user/usage numbers in a market that claims to be growing by leaps and bounds?

One of the problems seems to be that when you raise a lot of money, $500 million-plus for a B2C app, you want your charts to look a bit like other high-growth companies.

Source: TechCrunch

For example, above is a two-year chart showing two types of users in Slack: daily active users and paying users. With daily users growing 3.5 times over the past year, Slack announced last week that it raised $200 million and closed its new round of funding after being valued at $3.8 billion. About a third of daily users convert to paying users, a relatively high conversion rate.

Obviously, social media commentary will point out that “cryptocurrency” and communication tools are not the same thing, but the point remains that investor desire will eventually recalibrate with the actual growth trajectory of the platform. And as of now, based on publicly available data, it’s unclear where that traction is in the cryptocurrency world — or maybe it’s somewhere, but no one is publicly revealing those statistics.

It is worth mentioning that according to gossip, there are several digital currency-related startups that have already gained a considerable user base in some aspects, focusing on cross-border payments and remittances involving the Philippines. There are also several companies with positive cash flow in this field that are developing in a low-key and mysterious manner. On the other hand, based on similar gossip, multi-level pyramid schemes like MMM Global also show continued appeal.

in conclusion

Where is the progress and where are the numbers? These are the two questions that continue to drive the blog posts on this site. Perhaps there will be more funding deployments by startups in the public blockchain ecosystem later this year. We will continue to discuss this topic once more information becomes public.

It will also be interesting to see how many crypto-related companies are able to rebrand or become hubs in the “private blockchain” space without actually changing how they interact with cryptocurrencies. Therefore, some of the arguments in my Great Pivot article from October last year should also be reconsidered. In addition, if “private blockchain” platforms eventually become a production model, their usage may start to be worth noting after a year or so of production.

Original article: http://www.ofnumbers.com/2016/04/08/reading-the-tea-leaves/
By Tim Swanson
Translator: Peterhon
Editor: Kyle
Reward address: 16V6PW9wu1pFVb1R3LiGJKEwZAFHu9MMtA
Source (translation): Babbitt Information (http://www.8btc.com/reading-the-tea-leaves)