This article runs through some key findings from the new report, which focuses on events in the bitcoin ecosystem since the beginning of 2015.
All-time bitcoin startup VC investment reaches $676m
The first quarter of 2015 saw a record-breaking amount of venture capital invested in bitcoin startups: $229m.
With a funding total of $121m, 21 Inc has now surpassed Coinbase as the best-capitalized startup in bitcoin. However, very little information is available about the firm beyond its confirmation that it meets the definition of a 'universal' bitcoin company* (Slide 27).
Since 2012, a total of $676m (Slide 29) has been invested in bitcoin startups, with a 51% increase from the end of 2014.
The number of countries that received VC investment also grew from 18 to 22 in the first quarter of 2015.
Looking ahead (Slide 30), this year’s total VC investment in bitcoin startups is currently projected to surpass the $638m invested in first-sequence Internet startups in 1996.
Bitcoin's price stabilizes after rocky start
Overall, the bitcoin ecosystem showed robust growth in the start of 2015, despite the price plunge in the first half of January. Bitcoin’s price surprised many by breaking below $200, considered to be an important psychological marker.
Although bitcoin saw a significant decline at the start of 2015, its price has since stabilized around $250. In turn, the upward trend in monthly trading volume has not been negatively impacted by bitcoin's price decline (Slide 12).
This could be a reflection of expanded opportunities to trade on both bitcoin's upward and downward volatility.
Bitcoin's price action appears to be attracting less attention. For example, the number of price-related stories in the 10 most popular articles on CoinDesk has dropped significantly, from seven in Q3 2014 to only two in this quarter (Slide 21).
Bitcoin struggles to gain mainstream consumer traction
The rate of growth in the number of bitcoin-accepting merchants continued to taper off this quarter (Slide 47). Discussions around the slowdown of merchant adoption suggest the fundamental problem is not a lack of merchant interest in bitcoin, but rather the lack of consumer adoption.
The pace of wallet growth is almost constant over the past year, leading to some concern about the credibility of these numbers and questions about how many wallets are actively used for bona fide transactions.
CoinDesk is forecasting 12 million total bitcoin wallets by the end of 2015 (Slide 53).
Companies both in and outside these industries are seeking to understand how the properties of the blockchain could help reshape these services and improve efficiency (Slide 61).
Positive signs from Wall Street and regulators
Sincerely, the CoinDesk team
Note: You can access CoinDesk’s full spreadsheet of all bitcoin venture capital deals here.
Disclaimer: This article should not be viewed as financial advice or an investment recommendation. Please do your own extensive research before making investment decisions.
* A pure-play bitcoin startup is primarily focused on one particular function, such as serving as a wallet or exchange. A universal bitcoin startup fulfils multiple elements of the bitcoin value chain. For example, Coinbase is all of the following: a wallet, payment processor, exchange, and therefore meets the definition of a universal.
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