i3 - November/December 2017 - 24

Nearly 50 percent of the
companies surveyed said
they were now using or
plan to implement blockchain technology."

digital tokens. A couple weeks later it stopped all bitcoin trading, including
peer-to-peer connections. Analysts suggested Chinese authorities were concerned virtual currencies could become a potential threat to the yuan.
In Australia and Japan, as in the U.S., the focus is on prevention of moneylaundering and other undetectable fund transfers to evade taxes, support
terrorism and other illicit purposes. The Australian plan is to bring digital
currency exchange providers under the same regulations as conventional
marketplaces. Japan, which was the first national government to require
that "altcoin" exchanges came under regulatory supervision (in its case the
Japan Financial Services Agency), cryptocurrency exchanges may face
annual audits. At the same time, by regulating cryptocurrency, the
government gave it official recognition as a legal payment method, a move that
helped drive up bitcoin market price, according to analysts.
Moreover, crypto industry leaders have welcomed the government oversight.
"It signifies the growing recognition of bitcoin and other cryptocurrencies
as influential value transfer protocols by governments," Aurélien Menant,
founder/CEO of Gatecoin, a digital currency exchange based in Hong Kong,
told CNBC. Government actions help the cryptocurrency economy mature,
he said, and also encourage wider acceptance of digital currencies. It will
also "weed out the crooks and ensure that only serious bitcoin businesses
are able to serve the market."
Yet, the worldwide regulatory outlook remains fuzzy. U.S. Senator Thomas
Carper (D-DE) said three years ago, "Virtual currencies, perhaps most notably
bitcoin, have captured the imagination of some, struck fear among others, and
confused the heck out of the rest of us." His comments came during hearings
by the Senate Homeland Security Committee, which he chaired at the time.

best practices, network architecture, environmentally-friendly mining, latency and
throughput. Princeton and the Massachusetts
Institute of Technology already have blockchain projects underway, as do dozens of other
institutions worldwide.
Amid all this activity, companies in every
industry are trying to figure out when to enter
the cybercurrency fray. A Deloitte study found
that executives in the technology, media and
telecommunications sectors were the most
aggressive about blockchain deployment. Nearly
50 percent of the companies surveyed said
they were now using or plan to implement
blockchain technology, far ahead of financial
services companies. The consumer products
and manufacturing sector was slightly behind
on current usage but farther ahead on blockchain plans than the tech/media companies.
With all this action, it's hard to believe that
only three to six million customers worldwide
are active users of cryptocurrency today, according to the University of Cambridge's Global
Cryptocurrency Benchmarking Study early
this year. Clearly, a lot of processes remain to be
clarified. The volatility in cryptocurrency values
poses a significant risk for merchants. For
example, if a bitcoin payment is received but
not processed until a day or two later, and the
bitcoin value changes after the sale (up or
down), the merchant might receive more or less
than expected from the sale. Some retailers may
not take that gamble.

HIDDEN TREASURES; WINNERS/LOSERS

Cryptocurrency is producing unexpected results. For example, graphics
processing units (GPUs), the specialized electronic circuits that accelerate
the creation of images in computers, were a beneficiary of bitcoin
adoption. NVIDIA, the largest GPU maker, saw a 56 percent sales increase
this year versus 2016 and competitor AMD had an 18 percent bump. In
both cases, the increases were traced to use by bitcoin miners. Subsequent
technology has quelled that GPU appetite, with bitcoin now mostly mined
using application-specific integrated circuits (ASIC). But other users are
still accessing cryptocurrencies with off-the-shelf graphics cards,
although there is a move toward hardware independent security.
To keep track of the fast developments in the industry, academic centers
are being established. For example, Arizona State University's engineering
school, set up a "Blockchain Research Lab" this year to focus on scalability,

WHO USES BITCOIN?
Since bitcoin is the most widely
used cryptocurrency, its customer profile is a good
indication of current market demographics.

AGE OF
BITCOIN USERS

3.8%

0-18

16.5

39.4

21.9

11.2

4.9

19-24

25-34

35-44

45-54

55-64

SOURCE: Coindesk https://www.coindesk.com/
24

NOVEMBER/DECEMBER 2017

2.3

65+

6.4%

$200,000
or more

HOUSEHOLD INCOME
OF BITCOIN USERS

15.8

29.9

21.9

21.3

10.7

$100,000
to $199,999

$50,000
to $99,999

$25,000
to $49,999

Less than
$25,000

Prefer not
to disclose

I T I S I N N O VAT I O N

https://www.coindesk.com/

i3 - November/December 2017

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