STATEOF,BLOCKCHAIN,Q32017,Q32017StateofBlockchain:TableofContents,1. EXECUTIVESUMMARY2. PUBLICBLOCKCHAINSA. BitcoinB. Ethereum3. ENTERPRISE,BLOCKCHAINSStateofBlockchainQ32017 | 2,4. INVESTMENT5. GOVERNMENT&REGULATION6. SENTIMENTSURVEY7. COINDESKA. ResearchFramework,1,EXECUTIVESUMMARY,StateofBlockchainQ32017 | 3,Q32017OverallSummary,DataSource:CoinDeskStateofBlockchainQ32017 | 4,Marketgrowsdespiteregulatorychallenges:-Multipleexecutive regulatorsannouncedaggressiveaction,marketsboomtoall-time highabove$170bn.Bitcointestedbysoftandhardfork:-Oftendebatedsoftforkresultedinsegregatedwitness,openedBitcointocryptographicinnovations;hardforkresultedinbigblockBitcoinCash.Keymetricsupacrosspublicblockchains:-Hashrate,>1MBBitcoinblocks;ethereumhitarecordforblockchaintransactions.,ICOsandVChitnewhighs:-ICOsraise$1.24bn,ledbyFilecoin,Tezos.Coinbaseraises$100mn:putsvaluationat$1.6bn,becomingtheindustrysfirstunicorn.Tokendiversitysparksgrowthofbuyside:-Cryptocurrenciesseedevelopmentofbuyside,andsophisticatedanalysisforvaluations.Majorlawfirmsdevelop blockchainspecialties.Sentimentsurvey:-HedgeagainstmonetarypolicywasBTCsbestquality;83%checked priceseveryday(50%)orcompulsively,everyhour(33%).,Q32017Trends:PublicBlockchains,DataSources:CoinDesk,Image,Notes:ExpandeduponinSection2:PublicBlockchains,-Bitcointestedbyregulators,forks,breaksalltimehighof$5000.,-BitcoinbeginstoreassertmarketdominanceoverETH,XRP.,-Globaltradingvolumesaccelerateandgrowindiversityintermsofgeography,exchanges,andcurrency pairs.,StateofBlockchainQ32017 | 5,-Transactionsonmajorblockchainsincreased,except forBitcoin.Ethereumsetstransactionrecordforanyblockchain.,-MajordigitalassetsBTC,ETH,XRP,DASH,andXMRrally3000%,almost5%dailyreturn.,-IndustrytermslikeBitcoin,CryptocurrencyandBlockchainhitall-timehighinGooglesearchfrequencies.,Q32017Trends:EnterpriseBlockchains,-10lawfirmsthatincludeCooley,Debevoise &Plimpton,HoganLovells,JonesDay,PerkinsCoie,MorrisonFoersterjoinEnterpriseEthereumAlliance.,-R3launchesCordav1.0,workstradefinanceapplications.,-Agroupoftelecom companiesthatincludesSprintandSoftBanklaunchCarrierBlockchainStudyGroup.,StateofBlockchainQ32017 | 6,DataSources:CoinDesk,Image,Notes:ExpandeduponinSection3:EnterpriseBlockchains,-MicrosoftandHyperledgereachworkoninteroperabilitybetween enterprisechains.,Q32017Trends:,Investment,-YTDreturnsfordigitalreached690%,withincreaseddiversificationofassetsandinvestors.,-Q3sentICOtotalfunding($2.38bn)abovetotalVCfundingforblockchaininvestment($1.95bn).,-Tokendiversificationledtosophisticatedbuyside,100+cryptohedgefundslaunchandpioneervaluations.,StateofBlockchainQ32017 | 7,DataSources:CoinDesk,Image,Notes:ExpandeduponinSection4:Investment,Q32017Trends:Regulation&Government,StateofBlockchainQ32017 | 8,DataSource:CoinDesk,Notes:ExpandeduponinSection5:Regulation&Government,-ChinesecrackdownonICOsandcryptocurrencyexchanges,allexchangesceaseoperationsonfinaldayofQ3.,-SECpublishedICOguidance,demonstratesnewdepthofexpertise.,-CFTC granted LedgerX registration as a derivative clearing,organization and a swap execution facility.,-Virtual Currency Tax Act tabled in the House, would see an,exception to gains tax for small transactions.,StateofBlockchainQ32017 | 9,2,PUBLICBLOCKCHAINS,Q32017PublicBlockchainSummary,DataSource:CoinDeskStateofBlockchainQ32017 | 10,Bitcoindominancereturnsto50%range:-Bitcoin reasserted market dominance itceded in Q1 and Q2 (trend continued into Q4).Somemajorassetsgrew30xYTD:-ETH,XRP,andDASHareallupapproximately3,000%Transactionshitnewhighs:-Transactionsonmajorblockchainsincreased,except forBitcoin;ethereumbrokerecords.,Aggregatemarketcapbreaks$100bn:-Publicblockchainassetsrallied4x,over$75bninvaluewithinthequarter.Tradingvolumegrowsanddistributes:-Exchangetradingvolumesincreasedworldwide,nowmoredistributedthanever.Sectorseesall-timehighinterest:-Googlesearchesforblockchainterms(exceptethereum)seenewhighs.,DataSource:Yahoo! Finance,Coincap,Coin.danceNotes:Dailydata,RWO,GLD,SPY,CWI,&BTCprices,allcryptocurrencymarketcap,datathrough9/30/2017StateofBlockchainQ32017 | 11,4.0%,10.1%,13.1%,20.8%,332.2%,690.8%,0%,700%600%500%400%300%200%100%,GlobalRealEstate,Gold,U.S.Equities,GlobalEquities,Bitcoin,AllDigitalAssets,DigitalAssetsOutperformedTraditionalAssetsNearly7XReturnYTD2017YTDReturns800%,DataSource:CoinmarketcapNotes:Limitedtocryptocurrencieswith>$20 MMmarketcap,launchedby7/1/2017; basedon7/1/2017 USDopencomparedto9/30/2017 USDcloseStateofBlockchainQ32017 | 12,590%,771%,856%,1334%,1000%500%0%,1500%,AdEx,Rise,Triggers,NoLimitCoin,Pura,FiveCryptocurrenciesReturnedAtLeast500%inQ3Top Performing Cryptocurrencies of Q33000%2666%2500%2000%,Aggregate MarketCap($,billions),$180bn$160bn$140bn$120bn$100bn$80bn$60bn$40bn$20bn-,Jul-1,Jul-8 Jul-15 Jul-22 Jul-29 Aug-5 Aug-12 Aug-19 Aug-26 Sep-2 Sep-9 Sep-16,Sep-23,Sep-30,TotalCryptocurrencyMarketCap,TotalCryptocurrencyMarketCapIncreasedOver50%ReachedAll-TimeHighAbove$170bninQ3,2017DataSource:Coin.danceStateofBlockchainQ32017 | 13,Jul.1:$93.3bn,Sep.30:$146.0bn56.5%$52.7bn,Forsomecontext,themarketcapof:,WesternUnion$9billionEther$30billionBitcoin$70billionAllCryptocurrencies$150billionVisa$240billionGold$8trillion,BitcoinRegainedShareApproached50%ofTotalCryptocurrencyMarketCapinQ3,DataSource:CoinmarketcapStateofBlockchainQ32017 | 14,Feb17,Mar17,Apr17,May17,Jun17,Jul17,Aug17,Sep17,PercentageofTotalCryptocurrencyMarketCap,Bitcoin:48.65%,Ethereum:19.41%BitcoinCash:4.94%Litecoin:1.98%Ripple:5.16%Dash:1.69%NEM:1.44%Monero:0.98%IOTA:1.18%NEO:1.11%Others:13.45%,100%,90%80%70%60%50%40%30%20%10%,0%Jan17,CumulativeReturn(%,sinceJanuary1,2017),3000%2000%1000%0%,6000%5000%4000%,7000%,January,February,March,April,May,June,July,August,September,2017,ETH,XRP,DASH,XMR,MajorAssetPricesRallied3000%YeartoDateExceeded5%AverageDailyVolatility2017PriceMovementCumulativeReturn(%),DataSource:CoincapNotes:Averagedayoverdaypricemovement(absolutevalue)StateofBlockchainQ32017 | 15,BTCAverageDailyPriceMovement,AssetBitcoinEthereumRippleDashMonero,SymbolBTCETHXRPDASHXMR,Q120172.6%4.7%2.9%6.0%4.7%,Q220173.1%5.5%11.3%5.2%5.2%,Q320173.9%5.0%4.9%5.3%6.0%,YTD20173.2%5.1%6.4%5.5%5.3%,AverageDailyTransactions(#),TransactionsonMajorBlockchainsIncreased,ExceptforBitcoinDailyCryptocurrencyTransactions,BTC,ETH,BCH,LTC,DASH,XMR,ETC,ZEC,700,000600,000500,000400,000300,000200,000100,0000Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3'09 '09 '09 '09 '10 '10 '10 '10 '11 '11 '11 '11 '12 '12 '12 '12 '13 '13 '13 '13 '14 '14 '14 '14 '15 '15 '15 '15 '16 '16 '16 '16 '17 '17 '17DataSource:BitinfochartsStateofBlockchainQ32017 | 16,AverageTransactionFees($),DataSource:BitinfochartsStateofBlockchainQ32017 | 17,$3.50$3.00$2.50$2.00$1.50$1.00$0.50$0.00,Q1'16,Q2'16,Q3'16,Q4'16,Q1'17,Q2'17,Q3'17,AverageTransactionFeesRoseforAllMajorCryptocurrenciesBTCFeesAbove$3CryptocurrencyTransactionFees,BTC,ETH,BCH,LTC,DASH,XMR,ETC,ZEC,BCHPriceinBTC,HashRate(TH/s),BCHPriceinUSD,BitcoinCashForkedOffofBitcoinonAugust1stBitcoinCashDifficultyAdjustmentLedtoHashPower>Bitcoinfor OneDay,12m10m8m6m4m2m-,BitcoinandBitcoinCashNetworkSecurity,BCH,BTC,0.50.40.30.20.10,$800$600$400$200$0,BitcoinCashPrice,USD,BTC,WhiletheBCHHashRatestartedoffnearBTC,itgenerally fellbelowinsubsequentweeksDataSources:Bitinfocharts,BlockchainStateofBlockchainQ32017 | 18,TrafficRelativetoMaximuminPeriod(%),DataSource:Google TrendsStateofBlockchainQ32017 | 19,100%90%80%70%60%50%40%30%20%10%0%,Sep-12,Mar-13,Sep-13,Mar-14,Sep-14,Mar-15,Sep-15,Mar-16,Sep-16,Mar-17,Sep-17,ManyBlockchainTermsHitanAll-TimeGoogleSearchHighEthereumSearchesFellfromaPeakinQ22017GlobalGoogleSearchTrends,Bitcoin,Ethereum,Blockchain,Cryptocurrency,StateofBlockchainQ32017 | 20,2A,BITCOIN,Q32017BitcoinSummary,Bitcoinbreaks$5,000:-Mostvariationinhistory,secondstraightlargestquarterly$variation.Importantsoftandhardforksoccur:-Segregatedwitnessadoptedafterasoftfork,BitcoinCashcreatedafterahardfork.First>1MBblocksmined:-Atblock48197,BitFuryminedfirstever>1MBblock.,Transactionfeesurgeslowed:-Averagetransactionfees rose33%afternearlytriplinginQ2.Globaltradingvolumecontinuesgrowth:-JPY,USDdominate,KRWjumps.Hashrateup50%tonewalltimehigh:-Networksecuritygrows,buthashrateslippedoneday,fromcompetition.DataSource:CoinDeskStateofBlockchainQ32017 | 21,4/1/17,7/1/13,1/1/14,4/1/14,7/1/14,1/1/15,4/1/15,7/1/15,1/1/16,4/1/16,7/1/16,1/1/17,10/1/13,10/1/14,10/1/15,10/1/16,7/1/17,$90bn$80bn$70bn$60bn$50bn$40bn$30bn$20bn$10bn-,Jul,BitcoinQ32017MarketCapAug,BitcoinEndedVolatileQuarterUp69%SetaNewAll-TimeHighAbove$80bn,DataSource:CoincapStateofBlockchainQ32017 | 22,Jul.1:$41.2bn,Sep.30:$69.8bn69%$28.6bnSep2017,$90bn$80bn$70bn$60bn$50bn$40bn$30bn$20bn$10bn-,BitcoinHistoricalMarketCap,$1,000$-,$3,000$2,000,$4,000,$5,000,Jul,Aug,Sep,2017,Bitcoin:KeyMarketEvents,DataSources:CoinDesk,bitcoin price pageStateofBlockchainQ32017 | 23,Jul.16:Debatearound impendingBitcoinCashfork,initiates transactions tocustodyprivatekeysandhold bothchains.,Aug.1Bitcoin Cashforktakesplace.,Jul.20:Minersvote97%on BIP 91,stageissettoactivatesegregatedwitness.,Jul.26:Itsnotreal!,Sept.29:BTCC,worldsoldestexchange,stoppedtradesafter2305 days.,Sept.7:Equifax DataBreachmadepublic.,Aug.23:Firstblocks>1mbminedafter SegWitadoption.,Sept.12:Any JP Morgan tradercaughttradingBTC risksjob lossforbeingstupid.,Sept.14:Chineseexchangesannounceshutdownsafterregulators,signalatotal resetforBitcoininthecountry .,Aggregate TradingVolume($,billions),DataSource:CryptocompareStateofBlockchainQ32017 | 24,$12bn$10bn$8bn$6bn$4bn$2bn-,January,April,July,October,January,April,July,2016,2017,GlobalTradingVolumesBegantoReboundOtherMarketsGrewDespitePeoplesBankofChinaActionsGlobalDailyBitcoinExchangeTradingVolume,USD,JPY,CNY,EUR,KRW,PLN,HKD,BitcoinBehavesasCrisisCurrencyinVenezuelaandZimbabwe,ExchangeRatesatPremiumasDemandSurges,DataSource:Coindesk,The Street,The Atlantic,StateofBlockchainQ32017 | 27,%ofAggregate TradingVolume,%ofAggregate TradingVolume,40%20%,60%,80%,100%,0%February,March,April,June,July,August,September,GlobalDailyBitcoinExchangeTradingVolume,USD,JPY,CNY,EUR,KRW,PLN,HKD,0%,40%20%,60%,80%,100%,GlobalDailyBitcoinExchangeTradingVolume,USD,JPY,CNY,EUR,KRW,PLN,HKD,GlobalTradingVolumeDominatedbyUSDandJPY,2017DataSource:CryptocompareStateofBlockchainQ32017 | 26,CNY,USD,JPY,USDMay,CNY,JPY,KRW,Aggregate TradingVolume($,billions),$5.0bn$4.0bn$3.0bn$2.0bn$1.0bn-2017DataSource:CryptocompareStateofBlockchainQ32017 | 27,ExchangeTradingVolumeIncreasedBitfinex,WithMarginTrading,istheLargestUSDExchangeGlobalDailyBitcoinExchangeTradingVolume,USD,JPY,CNY,EUR,KRW,PLN,HKD,1000%,400%300%200%100%0%,500%,$1,500$1,000$500$0,$3,500$3,000$2,500$2,000,($),(%),BitcoinPriceVariedFrom$2,000to$5,000SecondStraightLargestQuarterly$VariationQuarterlyPriceRange,10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15 16 16 16 16 17 17 17DataSource:CoinDesk bitcoin price pageStateofBlockchainQ32017 | 28,Q2 11:,4,253%,Q4 13:1,049%,Q3 17:$3,012 900%800%700%600%,Q4 13:$1,047Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3,Q1 13:683%,HashRate(TH/s),Difficulty,HashRateandMiningDifficultyUp50%toAnotherAll-TimeHigh,DataSource:BlockchainNotes:Dailydata.'TH/s'istheestimatednumberofterahashes(trillionsofhashes)persecond,'difficulity'isarelativemeasureofhowdifficultitistofindanewblock,whichisadjustedperiodicallyasafunctionofhowmuchhashingpowerhasbeendeployed.StateofBlockchainQ32017 | 29,HashRate,-,600bn400bn,1000bn,-,2m200bn1m,4m3m,6m800bn5m,7m,Q12016,Q22016,Q32016,Q42016,Q12017,Q22017,Q32017,BitcoinNetworkSecurity,AverageHashRate(TH/s),AverageDifficulty,Fees,TheTransactionFeeSurgeSlowedFeesRose33%AfterNearlyTriplinginQ2$3.21,$3.50$3.00$2.50$2.00$1.50$1.00$0.50$0.00,Q3,Q4,Q1,Q2,Q3,Q4,Q1,Q2,Q3,Q4,Q1,Q2,Q3,Q4,Q1,Q2,Q3,2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017DataSource:BlockchainStateofBlockchainQ32017 | 30,BitcoinTransactionFeeGrowth(Average$pertransaction),Average#perday,TransactionVolumesFellBy17%,242,334,Q3,Q4,Q1,Q2,Q3,Q4,Q1,Q2,Q3,Q4,Q1,Q2,Q3,Q4,Q1,Q2,Q3,2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017DataSource:BlockchainStateofBlockchainQ32017 | 31,TransactionsBitcoinTransactions300,000250,000200,000150,000100,00050,000-,AverageBlockSize(MB),Blocks,AverageBlockSizeAlsoFellby9%to0.88MBasTransactionsDecreased0.88,1.000.900.800.700.600.500.400.300.200.100.00,Q3,Q4,Q1,Q2,Q3,Q4,Q1,Q2,Q3,Q4,Q1,Q2,Q3,Q4,Q1,Q2,Q3,2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017DataSource:BlockchainStateofBlockchainQ32017 | 32,BitcoinBlockSize,Blocks,SegWitActivatedonAugust23BitFuryProcessedtheFirstBTCBlockOver1MB,