This Global Cryptocurrency Benchmarking Study is our inaugural research focused on alternative payment systems and digital assets. Led by Dr Garrick Hileman, it is the first study of its kind to holistically examine the burgeoning global cryptocurrency industry and its key constituents, which include exchanges, wallets, payments and mining. The findings are both striking and thought-provoking. 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. I hope this study will provide value to academics, practitioners, policymakers and regulators alike. We thank Visa very much for its generous support of independent academic research in this important area.

Introduction 13 What is a blockchain? 13 Why use a blockchain? 15 Blockchain myths 17 A brief history of permissioned blockchains 18 Open versus closed blockchains 20 Terminology 21 Deciphering blockchain jargon 21 Framework 23 Wrapping up 24 USE CASES AND BUSINESS MODELS Key findings Market targeting and usage Use cases and industry sectors Type of DLT users Usage Business models Type of activites Codebases and licensing Revenue models Maturity Platform stage Lack of large-scale deployments Future trajectory THE DLT LANDSCAPE 25 Key findings 25 DLT system layers 26 Overview 26 Protocol layer 26 Network layer 26 Application layer 26 Ecosystem actors 27 Overview of ecosystem participants 27 Software services 28 Operators and users 29 Peripheral actors 30 State of the ecosystem 31 Emergence and evolution 31 DLT employment levels 33 ARCHITECTURE AND GOVERNANCE Key findings Architecture Differences between DLT architectures Data diffusion Data storage Consensus Smart contracts Governance Introduction Key roles of gatekeepers Access to regulators Tokenised assets: governance and architecture Trust boundaries: connecting the ledger to the real world CHALLENGES AND INTEROPERABILITY Key findings Challenges Obstacles to DLT adoption Privacy and confidentiality Data protection laws Performance and scalability Interoperability Cross-chain interoperability Implementing cross-chain interoperability Integration with existing enterprise systems Industry initiatives CONTENTS | 2 APPENDICES 104 Appendix A: Blockchain as a simple data structure 104 Appendix B: List of DLT use cases 105 PUBLIC SECTOR 78 Key findings 78 Introduction and landscape 80 Geography 81 Institutions 82 Staff involved in DLT activities 84 Use cases 85 Central banks 85 Other public sector institutions (OPSIs) 86 Number of use cases investigated 87 Benefits of using DLT 88 Central banks 88 OPSIs 89 Key advantages-summary 90 Maturity 91 Protocol testing and experimentation 92 Projects 94 Roadmap 96 Challenges 99 Challenges breakdown 100 Other challenges 101 Potential issues with central bank-issued digital currency (CBDC) 103 3 | FOREWORDS FOREWORDS 'Blockchain' and distributed ledger technology (DLT) are beginning to rewire our digital infrastructure and challenge our thinking on how data, information, assets, and even governance can be reorganised and reimagined. Substantial amounts of funding have been invested in blockchain firms over a short span of time. The DLT ecosystem is thriving with participation from both private and public sector actors. The potential use cases are ever expanding, from payments to asset ownership, from insurance claims to intellectual property, from applications in RegTech to integration with the Internet of Things (IoT). However, technological breakthroughs often come with hype and hyperbole. In reality, 'blockchain' is still an often misconstrued and misunderstood concept. DLT as a whole is still lacking maturity and, in many cases, remains undeployed and unadopted. Issues related to scalability, privacy and confidentiality are ...

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