CoinDesk Research’s 2017 State of Blockchain report summarizes key trends, data and events in the public and enterprise blockchain sectors in 2016.

This article previews six of the key takeaways as identified by our research team. To download the full report, visit CoinDesk Research.

2016 signified a strong shift in several areas of the blockchain industry.

Announced today, CoinDesk’s State of Blockchain 2017 report provides a 100-slide analysis of that shift – covering developments in the bitcoin, public blockchain and enterprise distributed ledger technology (DLT) sectors.

Our full report dives into these takeaways, as well as overall data and trends in the public blockchain space.

Here, we highlight six of the most significant trends that defined both Q4 and over the last 12 months.

1. Bitcoin’s ‘true volume’ revealed

Bitcoin’s 2016 exchange data tells a complicated story.

Looking back, for example, the three largest China-based exchanges (OKCoin, Huobi and BTCC) at first appear to account for 94% of the global annual volume. Using simply reported volumes, 459 million bitcoins were traded in Q4 2016, more than a three-fold increase from Q4 2015.

But, since China has historically offered no-fee bitcoin trading, these numbers, however record-breaking, had always seemed inflated.

Prior to China instituting a fixed flat rate charge of 0.2% on all bitcoin trades, cryptocurrency enthusiasts had tried to estimate a ‘true volume’ – a more realistic trading volume for Chinese exchanges that may indicate the region’s actual dominance in the market.

Now State of Blockchain 2017 can finally reveal data that sheds light on the matter.

China’s major exchanges introduced trading fees amidst regulatory pressure from the People’s Bank of China earlier this year, and CoinDesk Research delved deeper into the new post-fee market shares to gain a more realistic outlook on bitcoin exchange traded volume.

In post-fee world, the former ‘Big 3’ have seen a startling drop in exchange traded volume. Re-interpreting their market share, it appears the true aggregate volume of OKCoin, Huobi and BTCChina is closer to 35% of the global bitcoin market.

Integrating the new implied market share into 2016 trading volume gives us a more realistic interpretation of the year’s volume than recorded data seemed to show.

At 35% market share, Chinese exchange volume steps down to $103m of bitcoin traded daily, down from the apparent $1.6bn-worth traded daily before the implementation of fees.

Amid the shifting regulatory landscape it seems that some traders have decided to stick with these Chinese exchanges.

Coindesk Research will continue to track exchange volume closely to see how the story unfolds throughout 2017.

2. Enterprise incumbents move on blockchain

To date, the enterprise blockchain market has had two main participating groups – incumbent banks and financial firms, and startups. It was perhaps the former group that gained the most ground in 2016.

Rather than simply testing proofs-of-concept, incumbent firms began to take more dedicated steps toward making their vision of blockchain’s impact apparent over the course of the year.

For instance, PwC’s Vulcan blockchain is more of a technology that seeks to create interoperable digital assets that trade alongside established cryptocurrencies like bitcoin. Built in conjunction with Bloq, Netki and Libra, the Vulcan platform is PwC’s effort to deploy enterprise grade blockchain-based applications.

Likewise, Microsoft’s business development director Marley Gray describes Project Bletchley as the company’s effort to deliver an open and flexible blockchain-as-a-service (BaaS) offering.

At the end of Q3 2016, Microsoft released a white paper outlining Bletchley as way to construct permissioned consortium blockchains.

JP Morgan ended 2016 with two blockchain offerings, Juno and Quorum. The joint effort by the bank and Ethlab, Quorum appears to be an enterprise-ready distributed ledger mainly targeting long and costly settlement times. Juno is run on a different consensus model entirely, inspired by a variant of Raft consensus. Current versions of JP Morgan’s Juno blockchain can handle up to 500 transactions per second.

Accenture separated itself from other blockchain incumbents through its ‘editable blockchain‘. Accenture capital markets lead David Treat suggested that, in the long-term, blockchain solutions will need to compensate for real-world emergencies or even mistakes where information will need to be redacted or modified.

IBM has a standalone blockchain separate from its work with Hyperledger, however, its core product offering runs on the same code. VP of blockchain tech Jerry Cuomo sees IBM’s blockchain as a way to leverage smart contracts, automating business processes for supply chain management, trade finance and IoT among other industries.

Eric Piscini, a Principal at Deloitte, sees Deloitte’s Rubix software platform as a way to accelerate the auditing process of transactions that occur on the blockchain. Rubix piloted test use cases across the pharmaceutical supply chain including drug safety, drug channels and any end-consumer issues with pharmaceutical drugs.

In the scope of enterprise blockchain, R3’s associate director sees 2017 as the “year of the DLT pilot“. This year may see newer enterprise blockchains push hard against industry standouts like R3CEV and Chain.

3. Token sales challenge traditional VC investment

While 2016 traditional blockchain venture capital investment reached $496m (near-stagnant growth when compared with 2015’s figures), a new method of raising money is challenging old norms.

Over the year, blockchain token sales, colloquially known as ‘initial coin offerings’ or ICOs, quickly became an alternative to traditional venture capital.

Since investor money was returned in the collapse of the DAO via ethereum’s hard fork, some analysts who report on the space have chosen not to include The DAO in yearly investment figures.

While CoinDesk Research understands why investors still retaining their funds may preclude some from including The DAO in yearly ICO investment, we felt that excluding the figures obscures the impact that ICOs have had.

Accounting for The DAO, ICOs raised $236m in 2016. This amount represents nearly half (48%) of all the money raised through traditional VC and angel investment.

The average size of a completed ICO for the year was $7.3m, slightly below the average traditional blockchain investment of $9m.

Our recent ICO spotlight study goes into more detail on market sentiment regarding the impact of blockchain token sales on venture capital.

4. Consortia gain steam

While incumbent financial institutions released notable standalone projects, blockchain consortia were hard at work courting new business as well.

Banking consortium startup R3CEV freely released the code for its Corda platform in tandem with its submission to the Hyperledger project.

After conducting a successful KYC-based registry using the Corda blockchain, R3’s Associate Director Clemens Wan discussed Corda’s unique features, “CorDApp development” and the future of R3.

Drawing an analogy between the Corda platform and the Xbox gaming system, Wan went on to describe it as the “ecosystem” and “connectivity” needed in order for developers to build financial-grade distributed applications.

In other consortia news for the year, with the introduction of four China-based companies, Hyperledger has officially passed 100 members. As Hyperledger continues to grow and Chinese company membership hits 25%, the project has made a commitment to the region with the Technical Working Group China proposal.

Still, there were those who offered a counter-example to this model.

Blockchain startup Chain has so far bucked the idea that it needs to be a part of Hyperledger (or other consortia) debuting its new tech at Construct 2017 months after open-sourcing the Chain Protocol.

Chain product architect Oleg Andreev showcased a new method to implement privacy inside of the cryptographic protocol.

With what it calls ‘Confidential Assets’, transaction amounts and account identities on the Chain Protocol are kept private. The Confidential Asset scheme adds ‘noise’, or inconsequential data, to hide asset IDs and values. A key is then required to obtain and subtract the noise values in order to arrive at the original data.

Andreev went on to compare Confidential Assets with other blockchain networks like zcash and monero that are leading the push towards privacy, ultimately citing scalability issues with zcash in certain enterprise instances.

Also at Construct, Chain’s Chief Product Officer Devon Gundry noted the company is working to develop Confidential Assets as an enterprise product offering within the Chain Protocol.

5. The push for privacy continues

Privacy has become an important consideration in blockchain protocols and old and new networks alike are establishing themselves at the forefront of the field.

While some may have sidelined monero as a legacy cryptocurrency, enthusiastic developers like Riccardo Spagni remain evangelistic toward monero and continue to champion its potential, 2016 metrics and current market cap standing in 2017.

Monero now has the sixth largest market cap in the cryptocurrency space, one position above ethereum classic and $20m away from eclipsing litecoin. Developers like Spagni continue to emphasize the sizable increases in monero’s transactional growth over its price, which peaked around $14 in early Q3 2016.

The presumptive explanation for renewed interest in monero is arguably the cultural shift towards privacy on the blockchain, a foundational element of the monero protocol.

Monero’s uniqueness comes from its implementation of a cryptographic tool known as ‘ring signatures’ that allow users to send and receive funds without the transaction details being revealed on the blockchain.

The extraordinary volatility zcash experienced through Q4 2016 also signals the industry interest in privacy protocols. Zcash’s Zero-Knowledge Succinct Non-interactive Argument of Knowledge technology, more conveniently referred to as zk-SNARKs, sought to be the all-encompassing solution for confidentiality on the blockchain with enhanced privacy features.

As the price of zcash crashed to $28 towards the end of Q4 from $4,800 at launch, some enterprise blockchains have cited potential scaling issues in the underlying technology of zcash as a reason to look elsewhere for privacy solutions.

These concerns, compounded by reports that hardly anyone is using optional privacy features on zcash, signal an uphill road for the cryptocurrency in 2017 in order to regain its position in the industry push to privacy.

6. Bitcoin volatility continues

The last year saw developments in the long-standing debate over whether bitcoin can truly provide the basis for a payments system, or if it is better considered as a novel asset class.

While Q3 2016 signaled slight evidence of bitcoin prices stabilizing and reaching something of a ‘safe haven‘ status, Q4 2016 disrupted this notion with a level of volatility the industry had not seen for a few months.

In what may come to be historically known as the ‘Trump bump’, the price of bitcoin soared post-election, as did volatility, which approached 62% for Q4.

Although Q4 volatility was not necessarily a year high for bitcoin, looking at the swings from quarter to quarter provides a decent counter argument to analysts and firms that see bitcoin approaching the status of an off-risk asset and safe store of value.

With bitcoin now at record highs and the Trump Administration still figuring out public policy amidst geopolitical uncertainty, analysts are scratching their heads with regard to near-term bitcoin price predictions.

If 2016 is any indication, we may be in for another wild ride.

To download the full State of Blockchain 2017 report, visit CoinDesk Research.