investing in a new asset class: cryptocurrency...platform based payment token currency function...
TRANSCRIPT
![Page 1: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/1.jpg)
Investing in a new asset class:CryptocurrencySanto Domingo, República Dominicana
July 2018
© 2018 LUGNA www.lugna.pt
![Page 2: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/2.jpg)
What is covered?
• Blockchain basics
• Traditional World & FinTech – Where does blockchain fit in?
• Cryptocurrencies 101 – Coins Vs Tokens
• Acquiring, holding and selling cryptocurrencies
• A new asset class for investment – The Token in the ICO
• Traditional regulations vs new technologies
2
www.lugna.pt© 2018 LUGNA
![Page 4: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/4.jpg)
The origin of Bitcoin - 2009
• “Satoshi Nakamoto” whitepaper
• Bitcoin: A Peer-to-Peer Electronic Cash System
• Unknown identity
• Bitcoin (BTC) was a by-product of a propose decentralized payment system.
4
www.lugna.pt© 2018 LUGNA
Wikipedia print screen
![Page 5: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/5.jpg)
Distributed Ledger Technology
• Technology based on:• Constant duplication and validation• Security by decentralization• Publicity for control, transparency
• List of records – “blocks” linked and secured through cryptography.
• Records are managed by a network of inter-validating nodes using the same protocol.
• The ledger is public – all transactions are validated chronologically.
5
www.lugna.pt© 2018 LUGNA
![Page 6: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/6.jpg)
Distributed Ledger Technology
• Any information in any given block cannot be altered retroactively without the alteration of all subsequent blocks –the chain of blocks.
• Decentralization avoids collusion of the network.
• Consensus is required.
6
www.lugna.pt© 2018 LUGNA
![Page 7: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/7.jpg)
Issues
• Lack of regulation + Uncertainty
• Establishment is (usually) against it
• Full transparency can be an issue
• Crime and Money Laundering
7
www.lugna.pt© 2018 LUGNA
![Page 8: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/8.jpg)
In the traditional world
• Secure ledgers for digital transactions
• Rapidly accelerates the pace of transaction
• Crowd funding – The ICO
• Elections and transparency
8
www.lugna.pt© 2018 LUGNA
• File storage & Data Management
• Contracts and Land/Commercial Registries
• Identity Management
![Page 10: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/10.jpg)
Concept
• Encrypted digital currency
• Limited entries in a database, which cannot be changed except by fulfilling specific conditions
• In this regard, the concept does not differ much from a bank deposit
• Key aspects - accounts, balances and transactions
10
www.lugna.pt© 2018 LUGNA
![Page 11: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/11.jpg)
Traits of cryptocurrencies
• Transactional properties
• Irreversible
• Pseudonymous
• Fast and global
• Secure
• Permissionless 11
www.lugna.pt© 2018 LUGNA
• Monetary properties
• Controlled supply
• No debt but bearer
![Page 12: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/12.jpg)
Tokens• Secondary assets
• Part of an ecosystem
• Market value + Function
• Representation of a
particular asset or utility
• Usually resides on top of
another blockchain.
Coins• Protocols
• BTC/ETH/NEO
• Exhibit the same properties
as Bitcoin
• Altcoins
Coins & Tokens
12
www.lugna.pt© 2018 LUGNA
![Page 13: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/13.jpg)
13
www.lugna.pt© 2018 LUGNA
![Page 14: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/14.jpg)
Coins by Market capitalization
© 2018 LUGNA
Bitcoin (BTC)• 1st coin
• P2P payments
Ethereum (EHT)• Smart contracts• Tokenization
formula
Ripple (XRP)• Instant payments• Banking uses
Bitcoin Cash (BCC)
• Fork of BitcoinLitecoin (LTC)• Fork of Bitcoin• Faster
Cardano (ADA)• Resource
efficient
![Page 16: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/16.jpg)
Smart contract
16
www.lugna.pt© 2018 LUGNA
• Custom-build
• Enforces a relationship with cryptographic code
• No third parties
• No risk of downtime, censorship, fraud or third-party interference
• Creation of markets, store registries, transactions, redemptions, liquidation of tokens, triggering of other smart contracts
• Tokens
![Page 17: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/17.jpg)
Tokens to watch
© 2018 LUGNA
UTRUST (UTK)• Payment platform• Buyer & Seller
protection
TRON (TRX)• Decentralized
entertainment applications
EOS (EOS)• Easy deployment
of decentralized applications
GOLEM (GNT)• Decentralized
supercomputer
Tether (USDT)• Not ETH based• Pegged to USD
Ontology (ONT)• Trust ecosystem• NEO based
![Page 19: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/19.jpg)
Types of tokens
19
www.lugna.pt© 2018 LUGNA
Utility Token
Access products and servicesPlatform based
Payment Token
Currency function
Security Token
Represents asset, stake or equityAppreciation
• Regulatory concerns differ
• Payment – KYC/AML + Banking
• Security – Securities Law
![Page 21: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/21.jpg)
Investment alternatives
• Mining – DIY
• Trading – Direct/Exchanges
• Initial Coin Offerings21
www.lugna.pt© 2018 LUGNA
![Page 22: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/22.jpg)
Mining
• Investment – no lucky trades
• Dual purpose• Creating coins• Confirming transactions
• Hardware vs Cloud Mining
• Electricity price vs market price
• Proof of work vs Proof of stake
22
www.lugna.pt© 2018 LUGNA
![Page 25: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/25.jpg)
Exchanges - Crypto/Fiat frontier
• Online Marketplace
• Trading Platforms
• Direct Trading
• Brokers
25
www.lugna.pt© 2018 LUGNA
![Page 26: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/26.jpg)
Exchange Policies
• Reputation + Regulatory compliance
• Fees & Payment methods
• Verification (KYC/AML) requirements
• Geographic restrictions
• Exchange rates and Market cap
26
www.lugna.pt© 2018 LUGNA
![Page 27: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/27.jpg)
Acquisition, sale and conversion
27
www.lugna.pt© 2018 LUGNA
Exchange
Merchants
![Page 29: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/29.jpg)
A new fundraising model
• Token sale, token generating event or initial token offering
• Facilitated by smart contracts
• Idea or Product + Marketing + Whitepaper
• Usually project oriented
29
www.lugna.pt© 2018 LUGNA
![Page 30: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/30.jpg)
The issuer
• Blockchain-based start-ups
• Tech companies
• Venture Capital funds or Crypto Funds
• Traditional Finance & Real Estate
30
www.lugna.pt© 2018 LUGNA
![Page 31: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/31.jpg)
Benefits
Issuer
• Financing
• Community creation
• Positive network effect
• Non-discrimination
• Global marketing
• Speed
• Settlements over the blockchain
31
www.lugna.pt© 2018 LUGNA
Participant
• Quick gains
• Liquidity
• Easily transferable
• The network effect of value creation
• Democratizing investment
![Page 32: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/32.jpg)
32
www.lugna.pt© 2018 LUGNA
Private SaleBigger investorsInsidersSeed capitalDiscounts apply
ICOContributions are collected
KYC / AMLAllocation
Pre-saleReduced % of tokens to sellDiscounts apply
Contributions ofCrypto / FIAT
Allocation of Tokens
![Page 33: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/33.jpg)
33
www.lugna.pt© 2018 LUGNA
Project is viableBTC ETH NEOUSD EURO
Platform is created /
Investment
Token Listed?
Use of the token
Financing of the project
![Page 34: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/34.jpg)
34
www.lugna.pt© 2018 LUGNA
ICO
Early Stage
Tokens
Developing regulatory framework
Underlying rights vary
Liquidity may be restricted
Whitepaper & Token sale agreements
IPO
Late stage
Equity
Security Commisions supervison
Ownership – Right to Dividends
Liquidity is higher
Plethora of filings and disclosures
![Page 36: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/36.jpg)
Investment cycle
• Price volatility
• Market manipulation – Whales & Pump and dump
• Sales attributed to ICO cash outs36
www.lugna.pt© 2018 LUGNA
![Page 37: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/37.jpg)
Risks of contributing
• Lack of due diligence – No formal process of auditing
• Poorly designed smart contracts
• Lack of education and familiarity with tech
• Phishing scams
• Regulation on security offerings
37
www.lugna.pt© 2018 LUGNA
![Page 38: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/38.jpg)
Evaluating the ICO
• Does the team have a track record in business and crypto?
• Is the project feasible?
• Is the company incorporated? Is it regulated?
• Is a token necessary?
• Is the pricing accurate?
38
www.lugna.pt© 2018 LUGNA
![Page 42: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/42.jpg)
Be aware…
• Traditional world strategies for investment need to be adapted
• Take time to educated yourself
• Volatility issues
• Evaluate ICOs carefully – Team, Corporate & Purpose
• Regulation is increasing
• Consider an advisor when investing large sums in crypto
42
www.lugna.pt© 2018 LUGNA
![Page 44: Investing in a new asset class: Cryptocurrency...Platform based Payment Token Currency function Security Token Represents asset, stake or equity Appreciation •Regulatory concerns](https://reader033.vdocument.in/reader033/viewer/2022043010/5f9f57b4c1425026a80f4da2/html5/thumbnails/44.jpg)
Lisbon OfficeRua Rodrigo da Fonseca nº 9 – 3º B
1250-189 Lisboa
Portugal
Tel.: +351 21 131 04 08
Fax.: +351 21 131 04 08
Tel.: +1 (917) 675 33 09
E-mail: [email protected]
Web: www.lugna.pt
© 2018 LUGNA