report investment strategies for blockchain: a …...invest in public market blockchain proxies 12...

REPORT

Investment Strategies for Blockchain: A $2.5 Trillion Opportunity?

22

Contacts:For more information on transacting in the private market:

Jennifer PhillipsManaging Director, Private Securities Group

Email: [email protected]: 650.492.6885

For information on research and analysis:

Rohit KulkarniManaging Director, Investment Research Group

Email: [email protected]: 650.300.5128

Table of Contents

Executive Summary 3

A Multi-Trillion Dollar Value Creation Opportunity 5

Invest In Cryptocurrencies 7

Invest In Public Market Blockchain Proxies 12

Invest In Tokens Via ICOs 14

Invest In Blockchain Private Growth Companies 17

For important disclosures and analyst certification, please see page 19.

Report: Unlocking Blockchain | 3

Executive Summary A Multi-Trillion Dollar Value Creation Opportunity: The emergence of Blockchain technology, cryptocurrencies and Blockchain tokens promises to fundamentally remake the innovation economy and the private capital market. While still early, Blockchain applications offer a large revenue opportunity and could significantly impact financial services, commerce, media, supply chain management, cybersecurity, and several other industries. The applications built on top of Blockchain technology focus on markets exceeding several trillion dollars. Blockchain startups need to work with incumbents and regulators and identify clear business use cases. Our upside scenario analysis of specific use-cases spanning 20 industry verticals suggests a value creation opportunity exceeding $2.5 trillion over the next ten years, a 15x growth potential over the estimated value of cryptocurrencies and Blockchain startups today.

With such potential, Blockchain technology could be increasingly important to individual and institutional investors over the next couple of years. We highlight four ways investors should approach markets impacted, either directly and indirectly, by Blockchain technology.

y Invest In Cryptocurrencies: If you bought $1,000 in Bitcoin in January 2010, your investment today would be worth $680,000, a compound annual growth rate (CAGR) of 8,400 percent. Theoretically, a fixed supply of cryptocurrencies combined with growing demand might partially explain these rising values. However, we believe investors have not yet fully explored the use cases of cryptocurrencies. As a reference guide to investing in cryptocurrencies, we compiled a list of top 100 cryptocurrencies and top 100 cryptocurrency exchanges.

y Invest in Publicly Traded Blockchain Proxies: We have witnessed launch of Exchange Traded Funds (ETFs) that exclusively invest in companies working on Blockchain technology. As a reference guide to investing in these assets, the report includes a sample list of publicly traded companies and ETFs that could provide investors exposure to Blockchain technology in their portfolio.

y Invest in Tokens via Initial Coin Offerings (ICOs): In 2017, the aggregate value of all tokens grew to $37.7 billion, a nearly 19,000 percent increase from the prior year. Current ICO capital raises suggest companies will raise $12 billion this year compared to $5.4 billion last year. By comparison, U.S. startups (i.e., seed and Series A) raised an estimated $8 billion in 2017 using traditional methods. We suggest accredited investors to conduct careful due diligence on companies that issue tokens and adopt a long term approach to these assets. We believe this emerging form of capital raising is clearly disrupting the traditional venture ecosystem. As a reference guide to investing in tokens, in this report, we have created a list of top 100 tokens and top 100 token exchanges.

y Invest In Blockchain Startups: Blockchain’s applications extend well beyond cryptocurrencies. Accredited investors can access Blockchain startups through the venture capital funds backing the companies or through the secondary market. The technology offers significant potential to improve inefficient markets hobbled by large numbers of people, especially “middlemen” or intermediaries that slow transaction times. Though new, companies and people are already putting Blockchain to good use beyond payments and digital currencies. As a reference guide to investing in Blockchain, in this report, we compiled a list of top five Blockchain leaders and emerging Blockchain startups.

http://sharespost.com/


Potential Risks to Monitor: Investors can get exposure to the crypto and Blockchain space in several ways, depending on their risk appetite. Typically, fewer than 10 out of 1,000 venture backed companies raise a 6th round of funding, implying a valuation approaching $1 billion. For reference, we illustrate below the venture capital investment funnel. We believe cryptocurrencies and Blockchain startups could follow a somewhat similar funnel of value creation. But given the number of companies claiming to offer investment opportunities, investors should carefully research ICOs or cyrptocurrencies before writing any checks.

Exhibit 1: Less than 1% of seed round startups make it till the end

Source: SharesPost Research; https://www.cbinsights.com/research/venture-capital-funnel-2/

Below is a quick checklist for investors researching Blockchain startups:

a. Team: Does the executive team have verifiable credentials and relevant experience? Does the company have advisors with investing or technology expertise?

b. Product: Does the company have a website with product and technology descriptions? Does the company offer a clear explanation of the problem they intend to solve and why they need to use a Blockchain instead of using traditional databases?

c. Product updates: What is the state of the product the company claims to build? Is the company providing regular updates and revisions to its products with bug fixes or new versions?

d. Community: Does the company have a community of developers interested in the product? Does the community actively engage with the team?



A Multi-Trillion Dollar Value Creation Opportunity People normally associate Blockchain technology with crytpocurrencies, especially as valuations continue to rise. But the technology holds far greater potential to disrupt several industries. We estimate its value creation potential at more than $2.5 trillion. The cryptocurrency market that includes currency mining, exchanges and wallets is built over the Blockchain technology and has created over $200 billion in new value. Financial services firms were the first to explore Blockchain but as the technology matures and adoption increases, we expect industries like computing, storage, supply chain, real-estate and media to follow suit.

The table below shows Blockchain’s potential to create value in up to 10 percent of the addressable market across 20 sectors by helping companies to reduce costs (money, time or labor), increase revenue, or boost efficiency so they don’t require as much capital. So with roughly a $37 trillion addressable market, we see about $2.8 trillion opportunity. Companies and investors can gradually capture this value over the next decade if central governments can develop effective regulations and consumers and enterprises recognize the technology’s benefits.

Exhibit 2: Blockchain has almost $3 trillion in value creation potential

Source: SharesPost Research; Financial Services includes Payments, Asset Mgmt & Securities Trading, Other includes Digital Media, Social Media, Real Estate, Online Marketing, Gaming, Insurance, Computing, Storage and Healthcare

$2,820

$200

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$950

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Exhibit 3: Blockchain disruption spreads across several sectors

Source: SharesPost Research

# Sector Use Cases

Total Addressable Market ($ in

billions)

Blockchain Value

Creation Potential ($ in billions)

Value Drivers

Lower Cost(incl. time & resources)

Increase Revenue

Reduce Capital

Req.

1Blockchain Infrastructure

• Bitcoin mining• Cryptocurrency exchanges • Digital wallets

N/A $200

2 Payments• Lower fees from increased security• Greater speed and transparency

$2,000 $200 3

Identity Management

• Secure storage of login credentials • Prevent fraud with transaction authentication

$150 $10

4Asset Management IT

• Client onboarding• 3rd party portfolio management• Trade order generation and fulfi llment

$1,000 $100

5 Securities Trading • Secure real-time transaction matching• Custody and securities servicing• Alternative assets trading services

$1,250 $100

6KYC/AML management

• Smart contracts to automate customer verifi cation

• Distributed registry for secure storage $75 $10

7 Cloud Computing• Use surplus computing for distributed systems • Online infrastructure for decentralized apps

$450 $100

8 Insurance Tech• Registry for pricing and underwriting• Automate claims and payments with smart

contracts$500 $75

9 Online Storage• Secure, encrypted, and redundant storage • No single point of failure

$250 $50

10 Cyber Security • Eliminate human factor from authentication• Protects identities with keys published on the

blockchain$350 $25

11 Real Estate

• Transparent transaction tracking with P2P communication

• Secure storage of records and escrow management

$4,000 $200

12Supply Chain Management

• Shared ledger with real time udpates and validation

• Anytime traceability throughout the network$6,000 $300

13 Digital Media • Enhanced data privacy control• Better terms for royalty payments and content

rights$1,500 $100

14 Social Media• Individual control over personal information and

content• Control over meta data

$750 $150

15 E-Commerce• Eliminate need to pay marketplace vendor • Facilitates direct seller-buyer interactions

$4,000 $300

16 Online Marketing • Enhanced data safety and privacy control• Opens up newer monetization avenues for

content creators$1,000 $150

17 Gaming• Opens up game development for players and

outside developers• Decentralized compensation model

$750 $100

18IoT/Device Management

• Transparent data tracking and analysis• Direct device to device communication and

monitoring$3,500 $250

19 Health Care IT• Transparent billing management• Smoothens the data between health care

providers$4,000 $200

20 Government IT • Increased transparency through public

blockchain• Cut out ineffi ciencies and middlemen

$6,000 $200

Total Opportunity $37,525 $2,820



Invest In Cryptocurrencies Buying cryptocurrencies is the easiest way for consumers and investors to access Blockchain technology. From Bitcoin’s debut in early 2009, investors have traded 800 cryptocurrencies across the world. Interest and investment in cryptocurrencies has exploded over the past 18 months. The top 5 traded currencies alone are now worth more than $500 billion compared to less than $100 billion a year ago. Bitcoin, Ethereum, Ripple, Bitcoin Cash and Litecoin account for about 80 percent of the market value of all cryptocurrencies globally.

Investors can acquire cryptocurrencies in one of two ways: through a computer (mining) or an exchange (trading). Mining poses high barriers to entry: operating mining “rigs” can be expensive and complicated. More novice investors can buy the assets with U.S. dollars and British pounds at cryptoasset exchanges and brokerages like Coinbase, Kraken, and Bitstamp. They can also use credit cards and bank transfers.

However, the U.S. Securities and Echange Commission has begun to more closely scrutinize and even penalize cryptocurrency startups and exchanges. As a result, cryptocurrencies have been fairly volatile since the beginning of the year. The overall market cap for the top 5 currencies has declined to under $200 billion at the end of first quarter 2018 from a peak of over $580 billion in late 2017. We expect volatility for the rest of the year.

Exhibit 4: Market cap for top 5 cryptocurrencies rose to > $500 billion in early 2018

Source: SharesPost Research; Coinmarketcap.com; the top 5 cryptocurrencies include Bitcoin, Ethereum, Ripple, Bitcoin Cash and Litecoin as of Apr 13 2018

Below is the list of top 100 cryptocurrencies by valuation, out of the 800+ digital currencies investors currently trade on the market. The market caps across range from > $140 billion for Bitcoin to <$30 million for Crown coin. To enter the market, investors can choose from a wide range of price points. While Bitcoin trades at a whopping high of > $8,000, Experience Points coin trades at just $0.000175. Once an investor owns a crypto currency, the exchanges allow easy coin to coin trading on their platforms leading to larger trading volumes.

$0

$100

$200

$300

$400

$500

$600

$700

Jan-2017 Mar-2017 May-2017 Jul-2017 Sep-2017 Nov-2017 Jan-2018 Mar-2018

Bill

ion

s

Market Cap for the top 5 cryptocurrencies



Exhibit 5: Growing list of cryptocurrencies

Source: SharesPost Research; Coinmarketcap.com as of Apr 13 2018 ; the top 100 cryptocurrencies are chosen by Market cap and arranged alphabetically

The top 20 currencies capture over 95 percent of overall market cap. Although a large number of cryptocurrencies trade on the market, most are unknown and lack liquidity. As expected, Bitcoin leads the list capturing over 40 percent of the overall market cap followed by Ethereum and Ripple. Though not exactly a decentralized blockchain, Ripple XRP is heavily traded due to its huge popularity and association with payments.

Top 100 Cryptocurrencies - sorted alphabetically

1 Achain 26 Cryptonex 51 Hshare 76 Qtum

2 Aeon 27 Dash 52 ION 77 Ravencoin

3 Ardor 28 DECENT 53 IOTA 78 ReddCoin

4 Ark 29 Decred 54 Komodo 79 Ripple

5 Asch 30 DeepOnion 55 LBRY Credits 80 SaluS

6 BitBay 31 DigiByte 56 Lisk 81 Shift

7 Bitcoin 32 DigitalNote 57 Litecoin 82 Siacoin

8 Bitcoin Cash 33 Dogecoin 58 Litecoin Cash 83 Skycoin

9 Bitcoin Diamond 34 ECC 59 Metaverse ETP 84 SmartCash

10 Bitcoin Gold 35 Einsteinium 60 MinexCoin 85 Steem

11 Bitcoin Private 36 Elastic 61 MonaCoin 86 Steem Dollars

12 BitcoinDark 37 Elastos 62 Monero 87 Stellar

13 Bitcore 38 Electra 63 Nano 88 Stratis

14 BitShares 39 Electroneum 64 NavCoin 89 Syscoin

15 Blocknet 40 Emercoin 65 Neblio 90 TokenPay

16 BOScoin 41 Ethereum 66 NEM 91 Ubiq

17 BridgeCoin 42 Ethereum Classic 67 NEO 92 Verge

18 Burst 43 Experience Points 68 Nexus 93 Vertcoin

19 Byteball Bytes 44 Factom 69 Nxt 94 Viacoin

20 Bytecoin 45 Feathercoin 70 Particl 95 Wanchain

21 Cardano 46 GameCredits 71 Peercoin 96 Waves

22 CasinoCoin 47 Greencoin 72 PIVX 97 XTRABYTES

23 CloakCoin 48 Groestlcoin 73 POA Network 98 Zcash

24 Counterparty 49 Gulden 74 PotCoin 99 ZCoin

25 Crown 50 GXChain 75 Pura 100 ZenCash



Exhibit 6: Bitcoin, Ethereum and Ripple lead the pack with highest Market Caps

Source: SharesPost Research; Coinmarketcap.com as of Apr 13 2018

As the number of cryptocurrencies grew, so did the number of exchanges to help trade those currencies. Over 200 cryptocurrency exchanges, most of them located outside the United States, host daily trading volume exceeding $18 billion as of April 2018. The top 100 exchanges capture over 99 percent of the daily trading volumes. The remaining exchanges suffer from a lack of familiarity and security concerns. Exchanges that operate in the United States include Coinbase’s GDAX, Gemini, Bitstamp and Kraken.

There have been some reports of fake trading volumes across some of the exchanges. Fake trading, also known as wash-trading, is when the same person buys and sells his/her own order, sometimes through automated bots for higher volumes. But data scientists have found ways to help investors identify the exchanges where wash-trading occurs.

$0.67

$0.73

$0.75

$0.75

$0.97

$1.37

$1.39

$1.54

$2.32

$2.72

$2.93

$3.40

$3.97

$4.17

$5.08

$6.82

$12.07

$22.02

$45.64

$130.11

Steem

Nano

Bitcoin Gold

Zcash

Lisk

Qtum

Verge

Ethereum Classic

NEM

Dash

Monero

IOTA

NEO

Stellar

Cardano

Litecoin

Bitcoin Cash

Ripple

Ethereum

Bitcoin

Market Cap ($ in billions)



Exhibit 7: Growing list of global cryptocurrency exchanges

Source: SharesPost Research; Coinmarketcap.com as of Apr 13 2018 ; the top 100 exchanges are chosen by trading volume and arranged alphabetically

Top 100 Cryptocurrency Exchanges - sorted alphabetically

1 B2BX 26 BtcTrade.im 51 Gate.io 76 OKEx

2 Bancor Network 27 BTCTurk 52 GDAX 77 Omicrex

3 BCEX 28 BuyBitcoin 53 Gemini 78 OOOBTC

4 Bibox 29 BX Thailand 54 GOPAX 79 OTCBTC

5 BigONE 30 C2CX 55 HitBTC 80 Ovis

6 Binance 31 CEX.io 56 Huobi 81 Paribu

7 Bit-Z 32 ChaoEX 57 IDAX 82 Poloniex

8 Bitbank 33 CoinBene 58 IDEX 83 QBTC

9 BitBay 34 CoinExchange 59 itBit 84 Qryptos

10 Bitcoin Indonesia 35 Coinfl oor 60 Koineks 85 QuadrigaCX

11 Bitfi nex 36 Coinhub 61 Koinex 86 Quoine

12 bitFlyer 37 Coinone 62 Korbit 87 RightBTC

13 Bithumb 38 Coinrail 63 Kraken 88 Simex

14 Bitinka 39 Coinroom 64 Kucoin 89 Sistemkoin

15 BitMEX 40 CoinsBank 65 LakeBTC 90 Tidex

16 Bits Blockchain 41 Coinsquare 66 Lbank 91 TOPBTC

17 BitShares Asset Exchange 42 Cryptopia 67 Liqui 92 Trade By Trade

18 Bitso 43 DSX 68 Livecoin 93 Upbit

19 Bitstamp 44 Ethfi nex 69 Luno 94 Vebitcoin

20 Bittrex 45 Exmo 70 MBAex 95 WEX

21 BL3P 46 Exrates 71 Negocie Coins 96 xBTCe

22 BTC Markets 47 EXX 72 Neraex 97 YoBit

23 BTC-Alpha 48 Fatbtc 73 OasisDEX 98 Zaif

24 BTCBOX 49 Fisco 74 Octaex 99 ZB.com

25 BTCC 50 Foxbit 75 OEX 100 Zebpay



The top 20 exchanges boast 90 percent of the daily volume. BitMEX drives the highest volume with over $3.3 billion in daily volume, followed by Binance and OKEx with $2.4 billion and $1.8 billion respectively. After that, the volumes drop significantly: Gate.io, ranked 20, trades under $130 million, about 25 times less than BitMEX. Out of the top 10 exchanges, only GDAX and Kraken reside in the United States. Not all exchanges trade every cryptocurrency. For example, Coinbase, the largest exchange in the United States, trades only 4 cryptocurrencies.

Exhibit 8: The top 20 exchanges trade over $16 billion daily in cryptocurrencies

Source: SharesPost Research; Coinmarketcap.com as of Apr 13 2018; **GDAX is Coinbase’s cryptoexchange platform; *Poloniex was acquired by Circle in Feb 2018

$129

$170

$171

$179

$201

$207

$210

$258

$293

$408

$414

$465

$1,204

$1,603

$1,621

$1,790

$1,860

$2,431

$3,327

Gate.io

Poloniex*

ZB.com

bitFlyer

Bit-Z

Quoine

Lbank

HitBTC

Bitstamp

Kraken

Bittrex

GDAX**

Bithumb

Bit�nex

Huobi

Upbit

OKEx

Binance

BitMEX

Trading Volume ($ in millions)



Invest In Public Market Blockchain Proxies Investing in publicly traded companies working with cryptocurrencies and Blockchain technology offers people a less risky way to access digital assets. Over the past 2 to 3 years, several large technology and financial services companies have developed applications based on the Blockchain technology, including payments, supply chain, and real estate.

Credit card companies such as MasterCard and Visa used Blockchain to minimize costs and delays in processing payments across borders. Commercial banks like Citigroup and Barclays launched projects to bring liquidity to private markets. Goldman Sachs rolled out a crypto trading desk to for investors to trade shares in Blockchain companies.

Technology companies have focused on developing hardware and software for Blockchain infrastructure and helping companies adapt Blockchain for their business models. Intel, AMD, and Nvidia created chips designed to boost crypto mining. IBM and Microsoft are working on ways to use Blockchain to improve supply chains.

Investors could also tap funds and ETFs specific to Blockchain companies although the SEC does not allow ETFs to specifically market Blockchain. BLCN from Reality Shares and BLOK from Amplify are among some of the more popular Blockchain ETFs, each with over $100M in assets.

Exhibit 9: Finance Services & Tech take the lead in Blockchain application development


Public Companies With Blockchain Interests

Sector Blockchain Application Description

IBM Technology Most number Blockchain-related patents fi led. Leading Blockchain as a Service provider. Working with major companies on blockchain applications in supply chain

Amazon Technology Provides Blockchain Templates for developers through AWS. Created a portal for partners to deploy blockchain based solutions such as Sawtooth, PokitDok and Qurom

Intel Technology Builds chips used in executing blockchain transactions. Introduced Sawtooth Lake, a distributed ledger platform for enterprises

AMD Technology Builds graphic chips used in executing Ethereum and other cryptocurrency transactions

Nvidia TechnologyBuilds graphic chips used in executing Ethereum and other cryptocurrency transactions. Company working to create mining specifi c GPU chips to cater to the increasing # of crypto coins

Hitachi Technology Developed a blockchain platform for supplychain using technology from open-source Hyperledger consortium

Daimler Technology First company to use blockchain to issue bonds, Part of the Hyperledger consortium

Hive Blockchain Technologies

Technology First publicly listed blockchain infrastructure company focussed on mining Ethereum

Nasdaq Financial ServicesLaunched Nasdaq Linq for private securities transactions. Also launched Blockchain based ETFs starting Jan 2018. Received a patent for Blockchain data matching system to boost effi ciency in the clearing house process

Mastercard Financial Services Part of the Enterprise Ethereum Alliance. Launched a blockchain based payments network.

Visa Financial Services Launched Visa B2B Connect for processing corporate cross-border payments

Citigroup Financial Services Partnered with Chain.com and Nasdaq's Linq platform to launch the CitiConnect blockchain project to bring liquidity for private market assets.

Goldman Sachs Financial Services Crypto trading desk announced. Active investor in blockchain companies

Barclays Financial Services Founding member of the R3 blockchain consortium. Performed the fi rst live trade fi nancial transaction using blockchain

Reality Shares Investment Mgmt Creator of the Blockchain ETF BLCN on Nasdaq with over $100M in assets as of Apr 2018

Amplify Data Investment Mgmt Creator of the Blockchain ETF BLOK on Nasdaq with over $170M in assets as of Apr 2018



The Blockchain space has also attracted fraud with companies gaining sudden jump in valuations by just adding the word Blockchain to their name. Some companies, including Riot Pharmaceutical and Long Island Tea-Beverages, saw their market values rise after adding Blockchain to their names even though they are not connected to the technology. But the SEC has taken notice. The regulators are closely watching Kodak, Overstock and Xunlei that operate non-Blockchain businesses but claim otherwise. Over the next 1-2 years we can expect to regulators to sanction companies that have falsely used the Blockchain name to boost valuations.

Exhibit 10: SEC investigating companies for suspicious business models around Blockchain


Public Companies With Blockchain Interests

Sector Blockchain Application Description

Overstock.com Internet Retailer eCommerce retailerstarted a digitaltoken sales platform tZero. Received a subpoena from SEC to investgate digital token sales on tZero's platform

Xunlei Media streamingVideostreaming service turned crypto and blockchain company. Creator of OneCoin (later renamed to LinkToken). Company involved in lawsuits for allegedly making misleading statements to investors

Kodak ElectronicsAnnounced Kodakcoin for photography copyright protection but with no details on the solution. Struck a licensing deal for a Bitcoin-mining computer called the Kodak KashMiner which can be rented for bitcoin mining but has questionable business model

Riot Blockchain PharmaceuticalMedical testing company renamed itself to include Blockchain before even entering into the blockchain space. Company currently pivoting into bitcoin mining and blockchain software

Long Island Blockchain

Beverages Tripled its value overnight with the addition of Blockchain to its name. Recently pulled out of Nasdaq



Invest In Tokens via ICOs Initial Coin Offerings have grown extremely popular over the past year. Startups can tap a wider global pool of investors, big and small, eager to take part in the high risk high reward economy once the exclusive domain of venture capitalists. Companies can also attract larger amounts of capital through ICOs compared to VC deals. Blockchain startups, many of them less than a year old, raised a total of over $6 billion through 500 ICOs in 2017 compared to a little less than $1 billion from traditional VC funding. Some of the larger ICOs last year include Hdac, a South Korean IoT Blockchain startup ($258 million); Filcoin, a Blockchain data storage startup ($257 million) and Tezos, a Blockchain platform for smart contracts ($232 million).

The numbers suggest that token offerings can possibly solve entrepreneurs’ financing needs far more effectively than current approaches like venture capital. Instead of courting just a handful of local VCs, entrepreneurs now use digital “coin” offerings to access thousands of investors around the world. We won’t know if the market justifies such hype for a least a few years. Furthermore, unlike traditional capital raising, anyone with cryptocurrency such as Bitcoin or Ethereum can participate in an ICO. The rapid growth in ICOs and token offerings is already creating a network effect similar to that created by large tech companies such as eBay, Facebook and Google, driving a wider audience to take part in the coin offerings.

The valuations for cryptocurrencies and crypto tokens are highly co-related. We expect to see a high volatility in the token valuations in the secondary market over the next couple of years as governments work to develop better ways to evaluate token based fund raising. The SEC is deciding whether to classify tokens as utility tokens or security tokens. Both Blockchain experts and investors believe token companies will either shut down or reissue their digital assets as security tokens to meet regulations.

Over 680 crypto tokens currently populate the global marketplace with a total value exceeding $46 billion. Most of these tokens were built over the Ethereum smart contract platform. The top 100 tokens seen below represent 85 percent of the overall token market cap. The price range for tokens in the secondary market ranges from $829 for Maker token to $0.0002 for the Kin token.

Exhibit 11: Top 100 cryptocurrency Tokens together have a Market Cap of > $39 billion

Source: SharesPost Research; Coinmarketcap.com as of Apr 13 2018 ; the top 100 tokens are chosen based on market cap and arranged alphabetically

Top 100 Crypto Tokens - sorted alphabetically

1 0x 26 DigixDAO 51 Loom Network 76 RChain

2 aelf 27 Dragonchain 52 Loopring 77 Request Network

3 Aeternity 28 Dropil 53 MaidSafeCoin 78 Revain

4 Aion 29 Dynamic Trading Rights 54 Maker 79 Ruff

5 Aragon 30 Enigma 55 Matrix AI Network 80 SALT

6 Arcblock 31 Enjin Coin 56 Metal 81 Santiment Network Token

7 Augur 32 EOS 57 Mithril 82 SingularityNET

8 Bancor 33 Ethos 58 Mixin 83 SIRIN LABS Token

9 Basic Attention Token 34 FunFair 59 Monaco 84 SmartMesh

10 Binance Coin 35 Fusion 60 Nebulas 85 Status

11 BLOCKv 36 Gas 61 Nucleus Vision 86 Storj

12 Bluzelle 37 Genaro Network 62 Nuls 87 Storm

13 Bytom 38 Genesis Vision 63 OmiseGO 88 Streamr DATAcoin

14 Centrality 39 Gifto 64 Ontology 89 Substratum

15 ChainLink 40 Gnosis 65 OST 90 TenX

16 Cindicator 41 Golem 66 Paypex 91 Tether

17 Civic 42 High Performance Blockchain 67 PayPie 92 THEKEY

18 Credits 43 ICON 68 Pillar 93 Theta Token

19 Cube 44 Iconomi 69 Po.et 94 Time New Bank

20 CyberMiles 45 iExec RLC 70 Polymath 95 TRON

21 DATA 46 Ignis 71 Populous 96 VeChain

22 Decentraland 47 IOStoken 72 Power Ledger 97 Veritaseum

23 DeepBrain Chain 48 Kin 73 QASH 98 Waltonchain

24 Dent 49 KuCoin Shares 74 Quantstamp 99 WAX

25 Dentacoin 50 Kyber Network 75 Raiden Network Token 100 Zilliqa



The market cap for crypto tokens exponentially declines after the top few tokens. Exhibit 3 shows the top 20 crypto tokens accounting for over two-thirds of the overall market cap. The range of market caps broadly ranges from > $7 billion for the EOS token to $73 million for the AirSwap token. Most token startups conducted their ICOs outside the United States, which employs stricter regulations. Experts believe regulators will consider most of the ICOs conducted in America as illegal.

Exhibit 12: Top 3 Tokens account for > $12 billion in Market Cap


As with market caps, the trading volumes drop significantly after the first few tokens. Lack of awareness and appropriate use cases contributes to the low trading volumes of lesser known tokens. Until there are a few successful Blockchain applications that are widely accepted, we expect most of these tokens to continue to trade at low prices. The top 20 account for over 93 percent of the overall daily volume across all exchanges. Tether token boasts the highest daily trading volume of over $3 billion while 20th ranked Metal token stands at just $23 million.

$337

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$442

$490

$598

$1,027

$1,034

$1,118

$1,377

$1,566

$1,795

$2,286

$2,667

$7,123

Aion

Loopring

0x

Golem

RChain

Zilliqa

Aeternity

Status

Maker

DigixDAO

Populous

Bytom

ICON

Ontology

OmiseGO

Binance Coin

VeChain

Tether

TRON

EOS

Market Cap ($ in millions)



Exhibit 13: Tether and EOS tokens account for over $4 billion in a 24 hour trading volume


$23

$34

$37

$48

$61

$62

$64

$68

$80

$90

$91

$114

$124

$136

$297

$345

$362

$509

$982

$3,181

Metal

Zilliqa

Po.et

Nucleus Vision

IOStoken

Arcblock

Storm

ICON

aelf

VeChain

Status

Bytom

Ontology

Binance Coin

Mithril

Golem

OmiseGO

TRON

EOS

Tether

Trading Volume ($ in millions)



Invest In Blockchain Private Growth Companies Accredited investors can access Blockchain startups through the venture capital funds backing the companies or through the secondary market. Investments into Blockchain companies have grown significantly over the past 18 months. Blockchain startups have promised to disrupt everything from payments and social media to insurance and real estate. The first wave of companies focused primarily on Blockchain infrastructure and payments. Companies such as Coinbase and Bitpay help investors to buy, sell, storage and transfer digital assets. Ripple and Circle targeted the payments industry, a business rife with inefficiencies, high costs and long times to process payments.

Among Blockchain startups in the United States, Circle and Coinbase have raised the most money followed by Ripple, Bitpay and Chain.com. Both traditional and corporate VCs have opened their pocketbooks. The top 5 Blockchain companies raised over half a billion dollars from major investors like Union Square Ventures, Blockchain Capital, Goldman Sachs, Digital Currency Group, Andressen Horowitz and Google Ventures.

Exhibit 14: Top 5 US-based Blockchain companies raised > $500 million in the last 7 years

Source: SharesPost Research; PitchBook; LinkedIn for Employee count ; valuation based on media sources

Financial services, security and infrastructure sectors have attracted entrepreneurs not only in the United States but across the globe. Ledger, a digital wallet company in France, BitFury, a Bitcoin mining company in Netherlands, and Xapo, a security company in Switzerland, are just a few startups that won large investments given their long term growth potential. Bitmain, a Bitcoin mining company from China, dominates the Blockchain infrastructure space.

Company Name

Year Founded

HQ CityNumber of Employees

Business Model

Last Financing

Date

Total Raised

($ in millions)

Last Financing Valuation

($ in millions)

Key Investors

Coinbase* 2012San Francisco

400+Digital Currency Exchange

Aug 2017 225.31 8,000.00

IDG Ventures, Union Square Ventures, Andreessen Horowitz, IVP, NYSE, Blockchain Capital, Initialized Capital Management, Balyasny, Draper Associates, Battery Ventures

Circle 2013 Boston 600+Social P2P Payments

May 2018 246.00 3,000.00

Goldman Sachs, Blockchain Capital, Breyer Capital, IDG Capital Partners, Accel Partners, General Catalyst Partners, Oak Investment Partners, Pantera Capital, Digital Currency Group, Accel Partners

Ripple 2012San Francisco

250+Global Payments Network

Sep 2016 93.50 410.00

Andreessen Horowitz, Founders Fund, Lightspeed Venture Partners, CME Ventures, Google Ventures, SBI Holdnings, Core Innovation Capital, Pantera Capital, Venture 51, Camp One Ventures, IDG Capital Partners

BitPay 2011 Atlanta 60+Digital Currency Wallet

Apr 2018 72.80 315.00

Founders Fund, Digital Currency Group, Indx Ventures, Felicis Ventures, Bitcoin Capital, Aquiline Capital Partners, Menlo Ventures

Chain 2014San Francisco

50+

Digital Financial Asset Mgmt.

Sep 2015 43.90 130.00

Khosla Ventures, RRE Ventures, VISA Ventures, Citi Ventures, Blockchain Capital, Pantera Capital, Homebrew, SV Angel, Fiserv, Nasdaq, Orange



Exhibit 15: Other notable VC-backed companies in the Blockchain space

Source: SharesPost Research; PitchBook; LinkedIn for Employee count

Company Name

HQ Country HQ CityYear

FoundedNumber of Employees

Business Model

Last Financing

Date

Total Raised ($

in millions)Description

Digital AssetHoldings

United States

New York 2014 100+Distributed Ledger processing

Oct 2017 $107Developer of security products for cryptocurrencies and blockchains.

UpholdUnited States

Columbia 2014 50+Digital Currency Wallet

Jan 2018 $86Provider of a peer to peer payment system and digital currency to its clients.

Ledger France Paris 2014 80+Blockchain security products

Jan 2018 $86Operator of a bitcoin exchange marketplace designed to trade digital currencies.

BlockstreamUnited States

San Francisco 2014 50+Digital cus-tody and escrow

Nov 2017 $77Provider of an electronic global currency exchange platform designed to off er trading services.

BitPayUnited States

Atlanta 2011 70+Blockchain Payments

Apr 2018 $73

Provider of blockchain payments technology platform designed for secure bitcoin payment acceptance, savings and spending.

BitFury Amsterdam Netherlands 2011 200+

Bitcoin mining infrastruc-ture

Jun 2015 $60

Developer of distributed ledger technology intended to build distributed, encrypted straight through processing tools.

BitGoUnited States

Palo Alto 2013 40+Digital Wallet for B2B

Dec 2017 $57Provider of a digital money platform that off ers to hold bitcoin in fi at currency

Xapo Switzerland Zurich 2013 100+

Bitcoin security & digital wallet

Jun 2014 $40Developer of a blockchain technologies for commercial privacy within blockchain infrastructures.

AbraUnited States

Mountain View

2014 30+Online Money Transfer

Oct 2017 $37

Provider of blockchain payments technology platform designed for secure bitcoin payment acceptance, savings and spending.

VeemUnited States

San Francisco 2014 150+B2B Pay-ments & Custody

Mar 2017 $36

Developer of a multi-signature secure digital wallet created to make digital currencies usable for businesses in a regulated economy.

bitFlyer Japan Tokyo 2014 50+Digital Currency Exchange

Jan 2017 $36

Developer of an application that leverages block-chain technology to merge money transfer and payments via a digital cash wallet

itBit Singapore Singapore 2013 50+Digital Currency Exchange

Dec 2015 $31Provider of business to business payments platform that sends and receives payments in local currency

EximchainUnited States

Sunnyvale 2015 20+Global trade fi nancing

Mar 2018 $20Provider of a blockchain-based platform that off ers smart contracts to automate trade funding.

LedgerXUnited States

New York 2013 20+Institutional trading and clearing

May 2017 $28Developer of an institutional trading and clearing platform designed to trade and clear options on bitcoin.



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