2014-05-07 the opportunity in crypto currencies

Crypto-currenciesWhat’s the Opportunity?

2014

Digital Currency Entrepreneurship & Startups

Bitcoin: Which believer are YOU?

Tulip Mania 2.0 Paypal 2.0 Money 2.0

Tulip Mania

2.0

The $0 opportunityOr worse…

- No impact to M0 money supply

!- Vendors will demand end-

currency to be fiat

- Remains a niche use-case for e-commerce; like Silk Road was for drugs

!- Price collapse after all

speculators have exited

- Corners niche or unregulated markets (drugs, gambling, etc.)

Money Supply Adoption Markets


Defining “Tulip Mania 2.0”

“Money … fulfills its function when the

exchange of goods … is carried on … with its help.”

Ludwig von Mises, The Theory of Money and Credit

How crazy was the Tulip Mania of 1637?

#4

Leading export product of the Netherlands

10x

Cost of a bulb relative to skilled labor annual income

99.999%

Annualized price decline


Risk taking, highly educated/technical, leaders, less to lose.

Innovators

Risk-averse, prefers to deal with market leaders, influential to late majority

Early Majority

Tulip Bulbs Fell in Moore’s Chasm

"The consequences of being sales-driven during the chasm period are, to

put it simply, fatal"

Geoffrey Moore, Crossing the Chasm Referring to being “Market driven” vs “Sales driven”

PayPal

2.0

The $billion+ opportunityReplacing some of the M0 money supply

- Replaces some of the fiat money supply (M0 or MB)

!- Product prices are in fiat

and converted to and from BTC during transaction

- Remains a niche use-case for e-commerce; like ACH or Money Orders

!- Limited adoption by brick

and mortar SMBs

- Corners markets hostile to credit card processing

!- Shares processing market

share with alternative solutions (such as PayPal)



Defining “PayPal 2.0”

BitPay

How many transactions happened in November, 2013? Let’s compare.

New ZealandBitPay processed ~50,000

transactions worldwide in the month of November,

2013

New Zealand processed

116M credit card

transactions in the same

period


Is It Still EARLY?

• http://www.stats.govt.nz/browse_for_stats/businesses/business_characteristics/ElectronicCardTransactions_HOTPNov13.aspx • http://www.coindesk.com/bitpay-sales-bitcoin-black-friday/

http://www.stats.govt.nz/browse_for_stats/businesses/business_characteristics/ElectronicCardTransactions_HOTPNov13.aspx

http://www.coindesk.com/bitpay-sales-bitcoin-black-friday/


Overcoming Moore’s Chasm

We are probably around here

1

2

4

5

Choose a target market - (i.e., /r/dogecoin)

Position the product - Dogecoin = Donations

Building a marketing strategy - The “Shibe” Dog

Dominate the segment through word of mouth and buzz - Sponsoring NASCAR races

Leverage leadership position in one market to dominate the next


Conquer a Market The Dogecoin Story

Industries with friction against traditional payments (ex., Square/Paypal customers)

SMBs

Low/No cost of goods reduces damage from double-spend attacks and volatility fluctuations

Digital Goods

Moving and converting money across borders becomes instantaneous and cheap

Forex & Remittence

B2B fund-transfer use-cases for technologies like Ripple

Fund Settlement


Cornering Obvious Markets

1

3

Regulation, such as what is happening in China

• Creating new credit card transaction rules with reduced fee structures, liabilities, and penalties

• More direct-to-consumer solutions such as V.me or MasterPass

Low income, paycheck-to-paycheck consumers who live on/need credit/debit cards


What Keeps Bitcoin DOWN?

$1,276$1,948

$7,692

Replaces

Western U

nion

Merrill Lynch

Some predictions of BTC value

1% of gold

$880

Replaces Paypal

2 Legacy industries innovate and reduce costs; examples:

• http://www.forbes.com/sites/kashmirhill/2013/12/05/bank-of-america-analysts-say-bitcoins-value-is-1300/ • https://bitcorati.com/2013/10/17/bitcoins-worth-10000-dollars-each-heres-why/

http://www.forbes.com/sites/kashmirhill/2013/12/05/bank-of-america-analysts-say-bitcoins-value-is-1300/

https://bitcorati.com/2013/10/17/bitcoins-worth-10000-dollars-each-heres-why/

Money

2.0

The $trillion+ opportunityReplacing most of the M0 money supply

- Replaces most of the fiat money supply (M0 or MB)

!- Product/service prices

are in BTC and not converted to fiat

- Replaces large portion of today’s digital transaction volume

!- Government & Financial

institutions utilize it as primary currency

- Fiercely competes with credit card and fiat payment methods

!- Destroys alternative

payment solutions



Defining “Money 2.0”

This will NOT happen OVERNIGHT


Creating New Markets

Identity Micro-payments Financial Instruments

1 Full government embracement (not just acceptance); taxes, bonds, etc. are all in or are BTC convertible


What needs to HAPPEN?

$330k

Wedbush

Securities

Some more generous predictions of BTC

$98.5k

Replaces V

isa

2 Complete digitization and networking of economy and businesses

$38k

5% of gold

Andressen

Horow

itz

$100k 3 Complete obfuscation of complexity and security management from consumers

Like I said… This will take a while

Bitcoin Innovation

2.0


Institutional Adoption

Gary KremenCrossCoin Ventures

Transparent Security

Ripple is the “untarnished” big-brother of Bitcoin

Approachable Usability

Ryan SingerCryptoCorp

Eliminating single points of failure through HMD

to Bitcoin wallets

Robert DavidMonetsu

Hiding Bitcoin complexity from the average consumer

Talking About The Future

Thanks, Lab Zero (our host)

Michi Kono

Visit our host at http://labzero.com

Visit the Meetup page at http://meetup.com/digital-currency/

Contact the author at [email protected]

http://labzero.com

http://meetup.com/digital-currency/

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2014-05-07 the opportunity in crypto currencies

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