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1/ Today, I'd like to have a look at Section 1 of @CambridgeAltFin's recently published 2nd Global Cryptoasset Benchmarking Study, which covers the cryptoasset industry structure.
2/ What do we mean by cryptoasset industry? While there are many additional service providers (e.g. data, ICOs, analytics/screening, etc.), we focus exclusively on four key industry segments in the context of this study:
- Mining
- Storage
- Exchange
- Payments
- Mining
- Storage
- Exchange
- Payments
3/ The figure above shows that the exchange segment is the most popular among surveyed companies (72%), followed by storage (61%) and payments (49%).
4/ Note: we only take into account companies that provide *direct* services in either segment, as opposed to outsourcing services via third parties.
5/ The lines between exchange, storage, and payments segments have become increasingly blurred: in 2017, 69% of surveyed service providers (excl. miners) were active in a single segment, as opposed to 43% of service providers in 2018.
6/ This figure exhibits what we call the mining value chain: from hardware manufacturers to hashers and finally pool operators. Hashing can be performed in various ways (proprietary, cloud services, remote hosting services).
As we'll see in Section 7, hashers ≠ pool operators.
As we'll see in Section 7, hashers ≠ pool operators.
7/ Next, we have the storage segment - also often referred to as "wallets". Web wallets have greatly increased in popularity, although mobile wallets still dominate. 2018 has seen the rise of specialised vault services targeting institutional investors.
8/ Exchanges serve as on- and off-ramps for users to buy and sell cryptoassets for fiat currency, other cryptoassets, or other asset types (e.g. gold). The share of exchanges offering over-the-counter (OTC) services has massively increased in 2018.
9/ A quick note on "decentralised exchanges" (or DEXes): despite the name, most existing "DEXes" currently rely on some degree of centralised control over certain exchange processes, and are at best non-custodial exchanges.
10/ Finally, there's the payments segment - composed of service providers that aim to facilitate the use of cryptoassets for actual payments rather than pure speculation. Merchant services remain the most supported activity in 2018.
11/ The industry is global in nature, although North America, China, India, and Western Europe seem to dominate the geographic distribution. The map below is based on a list of the operational HQ of more than 500 companies.
12/ The majority of surveyed industry actors have both operational and legal HQs in the same country, which suggests that having greater familiarity with local regulatory structures seems more important than looking for the most permissive legal environment ("reg. arbitrage").
13/ How much has the industry grown? A lot, according to aggregate full-time equivalent (FTE) staff levels! This growth was primarily driven by exchanges and storage providers in 2017. Interestingly, Q1 2018 growth was still a staggering 78% despite prices plunging.
14/ Analysing median firm sizes confirms the picture: cryptoasset industry actors have considerably grown in size since 2016, with the average mining firm growing most in 2017.
15/ That's it for today - next time we'll have a look at Section 2 and cover global usage patterns + user figures!
In the meantime, you can find the full report on our website: jbs.cam.ac.uk/faculty-resear….
In the meantime, you can find the full report on our website: jbs.cam.ac.uk/faculty-resear….
16/ Continue to Part 2:
