Cryptocurrency, ICO & Blockchain Technology · •Token sale marketing: Announce and develop a...

Cryptocurrency, ICO &

Blockchain Technology

By Topp Jirayut Srupsrisopa

Topp Jirayut Srupsrisopa

● Investment/Central Banker & Financial Consultant

turned Group CEO and Co-Founder of Bitkub

Capital Group Holdings Co., Ltd (BCGH)

● Previously co-founded coins.co.th

● Thailand’s Leading Bitcoin and Open Blockchain

Expert

● Board of Director at Thai Fintech Association

● Mphil in Economics at Oxford University, UK

Cars

Electricity

Bitcoin

What is Bitcoin?

Why is Bitcoin so

Disruptive?

Remittance

Micro-payments

Unbanked

Payments

Content

Monetisation

Email Spam

Donation

Blockchain

Technology

Disruptive Technologies

1975Personal

Computers

1990Internet

TCP/IP

2009

Blockchain

TCP/IP

• First layer of the internet

•Allows Instant information

transfers

• Internet of information

Blockchain

• Second layer of the internet

• Allows Instant value transfers

• Internet of Value

Internet of Information

PDF Photo Voice Email Video PPT

Internet of Value

Ctrl + C Ctrl + V

Solved Double Spent Problem!

How Blockchain Works?

Decentralized money (analogy)

Decentralized money (analogy)

Decentralized money (analogy)

Decentralized money (analogy)

Decentralised Mining

Decentralized mining

(analogy)

Decentralised Transactions

Decentralized transactions

(analogy)

Decentralized transactions

(analogy)

Decentralized transactions

(analogy)

Decentralized transactions

(analogy)

Decentralised Ledgers

Decentralised Ledgers

Decentralised Ledgers

Decentralised Ledgers

Decentralised Ledgers

Decentralised Ledgers

Decentralised Ledgers

Limitations of the Blockchain•Scalability

• Segwit VS blocksize (Sharding, plasma etc..)

•Token Distribution

• Blockchain Governance

4 Development Stages

• Solve pain points in remittance, finance

• Bitcoin, Zcash, Litecoin, Monero

Internet of money

VS

FACTOM

•

• Honduras country - History of land rights abuse/corruption on property rights

Push blockchain beyond finance. (land, condos, gold etc..) - Register anything of

value!

• Permanent record of important things. More efficiency in storying and sharing data.

Internet of Assets = Value Registry

• Painting,

• Diamonds (Everledger)

• Food traceability (Alibaba),

• E-KYC - Identity (Government of

Estonia)

• Health care record

Internet of Assets

• Bond registry

• Stock registry

• Insurance industry

• Gambling

• Trade finance (Wave)

• VR

• Blockchain infrastructure that is as generalised as possible

• A platform easy to set up your own Blockchain

• Users can interact with other people’s infrastructures sitting next to each other

•Facebook is a platform for you to set up your own group to market your

products (You can also interact with other groups on the same Facebook

platform)

• Amazon - platform that allows you to set up shopeasily

• Wordpress - platform that allows you to set up website easily

• Ethereum - platform that allows you to make your own blockchain easily

Internet of entities = Value Ecosystem

ICOInitial Coins Offering

Evolution of

Fund Raising

ICO Compared to IPO

Difference ICO IPO

Investors pay with: Cryptocurrency or cash Cash

Investors receive: Cryptocurrency tokens Equity shares

Distribution method: Blockchain/public ledger Investment bank

Investor access: Everyone Limited

Regulatory oversight: Minimal Comprehensive (SEC, banks)

Typical company growth stage: Early, pre-revenue Post-revenue

Typical company life-span: Less than 5 years More than 5 years

Typical fundraising campaign: 3-6 months 6-12 months

Counterparty risk: Yes No

Steps in

launching an ICO

Private and Confidential

ICO Preparation Checklist

• Concept of idea/project: Like any traditional startup, everything starts from an idea tosolve a problem.

• Assembling core team: The founder/s assembles the core team members that will drivethe project forward.

• Product planning: With a team of diverse skilled members - important decisions such asthe technology to be used (which blockchain/wallets), the product functionality, the token/ICO characteristics, (utility VS asset VS security token) etc. are decided.

• Getting advisors: Fulfilling the shortcomings of your team with experienced individualsthat can provide advice, mentorship, and connections.

Private and Confidential

ICO Preparation Checklist• Product/Community marketing: Start building an engaged community and introducing the project to the

space. Create a communication plan to introduce the product and the vision for the project.

• Developing a whitepaper: Authoring a white paper to introduce the problem, the solution, the product and its technology, the token and the ICO, team, business, etc.

• Releasing a roadmap: Present a feasible plan of action with commitments for development and milestones to keep the team accountable to the community and supporters.

• Seeking legal council: Define jurisdiction and get legal council to operate under the corresponding legislation including corporate structure, taxes, securities, AML and KYC laws, etc.

ICO Preparation Checklist

• Token sale marketing: Announce and develop a communication strategy to informpeople about the token sale, the specifics of the token, its distribution, sale terms,etc.

• Releasing code and audits: Share your smart contracts code for revision and ideallyhave a specific auditing service do a revision.

• Token Sale (optional pre-sale): Run the actual crowdsale or a pre-sale (public orprivate) to collect some “seed” money for development.

• Proceeds conversion: Teams liquidate some of the received money to secure cashand pay to build out the team, technology, and business.

Private and Confidential

Private and Confidential

ICO Preparation Checklist

• Releasing prototype: The sooner a prototype is presented the better.If it is before the ICO even better.

• Transparency reports and post sale: After an ICO is completed thereal work and responsibility to your community begins. Beingtransparent, showing progress, and keeping constant updates isessential.

Private and Confidential

Team

• Showing faces and experience go a long way to building trust

• Technical experience

• Business development capacity

• Knowledge of the blockchain space (both technical and industry related).

• Open-source collaborations is always a plus in the space (Partnership)

Private and Confidential

Advisory board

• Any shortcomings from your core team should be filled in with your advisors.

• This can be for technical knowledge (it is hard to find experienced blockchain developers, so advisors are incredibly useful),

• Inside knowledge about the industry you are building

Whitepaper

• Position paper and yellow paper are a plus

• Having a whitepaper that explains in depth how your project will work isessential.

• The most serious investors and the people that are interested in your platformfor reasons other than speculation will want to read a whitepaper beforeinvesting.

• Designing `cryptoeconomics` to work at play

Private and Confidential

Private and Confidential

Code and prototype

• Showing a good code repository (Github), or even better, a workingprototype is one of the hardest aspects to fulfill, but also the one thatcan make the biggest difference

• Currently, most ICOs raise funds based on the promise of the product.Developing a working prototype can deliver a huge advantage.

Private and Confidential

Roadmap

• You should present the plan for the next years in the project and share the most relevant milestones.

• Running an ICO is a long journey of several months (at a minimum), that will include a lot of ups and downs.

Private and Confidential

Token sale terms• In addition to the platform and the utility of the token, investors will want to know the terms of your token sales - any

vesting or cliff periods?

• How much is being distributed and how much will be kept, the duration of the sale, Exchange Rates, Supply rate, Token minting etc..

• Any soft or hard caps and other mechanisms will impact their interest (Dutch style Auction, dynamic ceiling, hard cap, soft cap, uncapped with fixed rate etc..)

• Product usage: Payment to access and use a system.

• Equity/right: May offer a stake in a specific start-up and equity-like benefits, such as profit sharing and voting.

• Currency: used as a payment or transaction unit (between participants or to the network)

• Work: Enable contribution of work to a system in exchange of revenue

• Asset ownership: Tokens that are backed by a specific asset, either digital or real life

Private and Confidential

Legal

•Separate the operating entity from the token issuer company — to separating legal liability

•For example, foundations and trusts are commonly used entities to run ICOs but are not the best option to operate a

business.

•One advantage of such a separated structure is that the two entities may be located in different jurisdictions.

•Your operating entity could be located in almost any jurisdiction without any risk as long as you abide by the current legislation.

•But for your token issuer company, you might want to choose the jurisdiction with more friendly or flexible legislation.

•Some ICOs target only non-US investors.

•KYC/AML: Collect a government-issued ID + a utility bill

Private and Confidential

Taxation planning

• 35% income tax if cashed out in Thailand

• Sales tax, VAT, capital gains, etc….

• Singapore as a cashout point: leave for 1 year before remunerate

Private and Confidential

Advertising of tokens

• The language you use to refer to your token may have an impact on whether your token is deemed a security.

• Every promotional material you use for your ICO can and will get examined, so it’s crucial that no language misrepresents your offering.

• Jargon and technical language won’t protect you. Everything you write can be scrutinized. (Including, social media, Reddit, messaging apps, etc.).

• To protect yourself, be sure to set specific guidelines on how to refer to your token from the beginning and make sure that your team members follow diligently.

• It is always a good idea to seek the counsel of a lawyer to review all of your promotional documents, your website, token terms, and any other material.

• Medium, Telegram, Twitter, Rocket Chat

Private and Confidential

Leading jurisdictions for blockchain projects and ICOs are:

• Switzerland

• Singapore

• Hong Kong

• British Virgin Islands

• Cayman Islands

• Isle of Man

Private and Confidential

Telegram

Private and Confidential

ICO Drop

Interoperable Ledgers = Value Web

• Internet of money (cryptocurrencies) - Phase 1

• Internet of assets (Value registry) - Phase 2

• Internet of Entities (Value ecosystem) - Phase 3

• Value web = Interoperable blockchains 1 + 2 + 3

• Value can be transferred between different types of blockchains.

• Devs are now working on the interoperable ledgers.

• Kyber Network, 0x, Airswap, OmiseGo, ICON, Wanchain etc..

Value Web

3 types of Blockchain

• Validator/Nodes are public

• Users/Participants are public

• Bitcoin blockchain - The biggest blockchain

• Internet of value

• NASDAQ (coloured coins - Private market)

Public Blockchain

• Private Market (NASDAQ)

• Bitcoin Blockchain (Public Blockchain)

• Coloured coin innovation built by blockchain startup -

chain.com (2015)

• Issue shares in the form of coloured coins - essentially a

micro transaction (a hundred-millionth of a bitcoin)

Each transaction would only move a tiny fraction of

bitcoin encoded with the number of shares

A currency custodian’s wallet tasked to hold shares

• Validator are private - preselected (trusted groups)

• Users/Participants are private - preselected (trusted groups)

• Intranet of value (Industry level systems of record)

• R3CEV Groups (25 biggest banks, JP morgan, HSBC, Citi)

• No tokens needed to incentivise other actors to keep the system secured.

• Benefits

Cheaper/free transaction costs

Greater privacy/security (more than one single point of failure)

Faster validation processEnhance Intra-bank infrastructure - reduce operating expenses

Private Blockchain

Central Banks UsecaseE.g. BAHTNET

• Inter-bank payment/clearing are resource-intensive steps between banks, clearing houses, and the central bank

•The next day transfer as a result of processing cycle, not executed at a

constant basis.

•Cryptoeuro - blockchain solution where central bank issues allowing for real-time settlement between banks

•1:1 cryptocurrency to thai baht representative (cash ledger) - control money flows

• Bank of England puts 10 million pounds into cryptocurrency research

Real time settlements between banks

Evolution of

Monetary History

• Validator/nodes/miners are preselected trusted groups

• Users/participants are public

• Extranet of value

• e.g. NASDAQ - LINQ

Consortium Blockchain

Capital Markets

•Asset ledger - Securities custodian:

Licensed to create a certain asset (private)

•Cash ledger - Currencies custodian (1:1

ratio - safe liquidity provider) (Private)

•Trade - data available to the people

(Public), transparency

•NASDAQ - LINQ (2016 - Consortium

blockchain)

Towards the

Digital Economy

Exchange

Order-book Exchange

Dashboard

Buying Crypto

Selling Crypto

Coins Available

Order-Book Exchange

KYC

Add Bank Account

Deposit Cash

Deposit Cash

Deposit Crypto

Deposit Crypto

Withdraw Cash

Withdraw Cash

Withdraw Crypto

Withdraw Crypto

Wallet

Crypto Wallet

Crypto Wallet

Cash In

Cash Out

KYC

Receiving Crypto

Sending Crypto

Hot vs Cold

Storage

Paper Wallet

Hardware Wallet

Hot/Mobile wallet

Software wallet

Blockchain

Transactions

Blockchain Transactions

Cryptocurrency

Market

Blockchain Wallet Users

Law &

Regulations

NegativesPositives

• Thailand

• U.S

• Europe

• Japan

• Singapore

• Hong Kong

• China

• South Korea

ICOExchanges & Wallets

• Exchange License

• Dealer License

• Broker License

• Wallet License

• 15% Capital Gain Tax

• ICO Portal License

Cryptocurrency

Investment

vs

Traditional

Investment

Thank you!topp@toppjirayut.com

https://www.facebook.com/toppjirayutsrupsrisopa/

“The Electric light did not come from the continuous improvements of Candles”