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(Almost) Everything You Want to Know About Bitcoin, in One Report

The year in bitcoin, before Mt. Gox imploded.

Alfonso de Tomas/Shutterstock
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

Twelve months from now, this report could end up in a trash heap of great tech ideas gone bust, thanks to the recent implosion of bitcoin exchange Mt. Gox. But for now, the “State of Bitcoin 2014” report, published yesterday by bitcoin trade publication CoinDesk, is a reminder that while Gox was a major player in the rise of bitcoin, the digital currency ecosystem does not depend on it.

The 91-slide report, embedded below, “is not intended to be another guide answering the question ‘what is bitcoin?’” CoinDesk wrote yesterday in a post introducing the report. “Instead, the main aim is to provide an overview of key cryptocurrency trends, challenges, and opportunities, while also highlighting the most important developments over the last year.”

Here are the highlights:

1. Venture capitalists and angel investors have invested more than $100 million into bitcoin companies and another $200 million into companies that make the hardware for bitcoin mining. (These mining rigs are essentially specialized computer systems designed specifically to power the software necessary to complete the mathematical problems that unlock blocks of bitcoin.) Right now, these numbers are a drop in the bucket compared to the entire VC market, but talk to just about any investor following the digital currency industry and you’ll hear that these numbers are going to rise significantly.

2. Nearly three-quarters of VC-backed bitcoin companies are located outside of San Francisco and Silicon Valley, but the majority of investment is going to companies located in the Bay Area. That’s going to change, investors tell me. It is likely that there will be a bunch of companies outside the Valley that will begin to attract funding.

3. The report touts the growth of the number of companies that accept bitcoin, from about 1,000 to more than 3,000 in a span of months. Sure, that’s great growth, percentage-wise, but the base is tiny and there’s reason to believe the Gox implosion could erode trust among merchants.

4. The report states that only 13 percent of the countries that have come out with some sort of bitcoin regulatory rules have issued guidance that could be characterized as negative. That sounds like good news until seeing one of the countries issuing negative guidance is China, home to one of the top three biggest exchanges, BTC China. If that guidance turns even more hostile, it could have a dramatic impact on BTC China, and the entire ecosystem at large.

One thing we didn’t find much of was any discussion of the Mt. Gox implosion, since the report was created before this week’s news and the publication first wants to see how the rest of the Mt. Gox story plays out before including it in subsequent reports.

For bitcoin enthusiasts, the report is worth a look. It’s embedded below.

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