Getting Schooled On Crypto: 17 Trends From Global Study

The Global Cryptocurrency Benchmarking Study is a new research report on emerging trends in alternative payment systems and digital assets. Curated by principal researcher Dr. Garrick Hileman, Economic Historian at the University of Cambridge and the London School of Economics,  this is the first study of its kind to comprehensively examine the growing global cryptocurrency industry and its key constituents, including exchanges, wallets, payments, and mining.

Hileman is best known for his research on financial and monetary innovation, particularly distributed ledger technology (blockchain) and cryptocurrencies.

This is the first known study to systematically examine key cryptocurrency industry sectors through the collection of empirical, non-public data. Survey data was gathered from nearly 150 cryptocurrency companies and individuals, covering 38 countries from five world regions. The study looks in-depth at key industry sectors which have emerged and the various entities that inhabit them.

Below are 17 of the major findings from the study:

• The current number of unique active users of cryptocurrency wallets is estimated to be between 2.9 million and 5.8 million.

• The (cryptocurrency) exchange sector has the highest number of operating entities and employs more people than any other industry sector covered in the study.

• Between 5.8 million and 11.5 million (cryptocurrency) wallets are estimated to be currently ‘active’.

• While 79% of payment companies have existing relationships with banking institutions and payment networks, the difficulty of obtaining and maintaining these relationships is cited as this sector’s biggest challenge.

• 70% of large miners rate their influence on crypto industry protocol development as high or very high, compared to 51% of small miners.

• The total cryptocurrency market capitalization has increased more than 3x since early 2016, reaching nearly $25 billion in March 2017.

• Although bitcoin remains the dominant cryptocurrency in terms of market capitalization, other cryptocurrencies are increasingly cutting into bitcoin’s historically dominant market cap share.  While bitcoin’s market capitalization accounted for 86 percent of the total cryptocurrency market in March 2015, it has dropped to 72 percent as of March 2017. Privacy-focused cryptocurrencies such as DASH and Monero (XMR) have become increasingly popular and currently constitute a combined 4 percent of the total cryptocurrency market capitalization.

• Market prices of DASH, Monero (XMR) and Ether (ETH) have experienced the most significant growth since June 2016.

• A 2016 joint report from Coinbase and ARK Invest estimates that 54 percent of Coinbase users use bitcoin strictly as an investment.

• The estimated number of unique active users of cryptocurrency wallets has grown significantly since 2013 to between 2.9 million and 5.8 million today. The reported noted that it is impossible to know precisely how many people use cryptocurrency.

• In terms of security, 92 percent of exchanges use cold-storage systems; on average 87 percent of funds are kept in cold storage.  Mult-signature architecture is supported by 86 percent of large exchanges and 76 percent of small exchanges.

• All exchanges support bitcoin, while Ether and Litecoin are listed on 43% and 35 percent of exchanges, respectively.

• 78 percent of incorporated storage-only wallets do not perform any user compliance, but 80 percent of wallets providing currency exchange services do. The report notes that it is important to make a distinction between the compliance requirements (or lack thereof) for the three types of currency exchange models used by wallet providers as discussed above.

• All wallets providing centralized national-to-cryptocurrency exchange services perform KYC and AML checks. The preferred KYC and AML method is internal checks, which are in some cases complemented with traditional third-party KYC/AML service providers. Third-party blockchain analytics specialists are only used by 17 percent of wallets performing KYC/AML checks. All small wallets performing KYC/AML checks only do so internally.

• With respect to the geographic distribution of bitcoin and other cryptocurrency ATMs, it turns out that 94 percent of all publicly known ATMs are based in North America and Europe, with the US and Canada having a total share of 59 percent and 15 percent of all ATMs, respectively. Africa and the Middle East, as well as Latin America, host less than 1 percent of worldwide cryptocurrency ATMs.

• Total bitcoin mining revenues in 2016 have increased compared to 2015 despite the July 2016 bitcoin block reward halving; Nearly 40 percent of cryptocurrency users are based in the Asia-Pacific region, followed by Europe with 27 percent. The share of North American users is surprisingly low and not in-line with the above-mentioned figures.

     Here is a full report of the Global Cryptocurrency Benchmarking Study.