@jdrive btc deck 7.0

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Bitcoin & The Blockchain

RRE Ventures

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Blockchain: A Public, Synchronized Global Ledger Of All Executed Transactions, Where Records Are Verified And Permanently On Display Copies Of The Entire Blockchain Already Exist On Millions Of Computers

Worldwide. Anyone Can Download A Copy At Any Time

Bitcoin (Capital B): A Protocol, Some Software, And A Broad Community That Define A Peer-To-Peer Digital Payment Network

bitcoin (Lowercase b): A Digital Unit Of Currency Bitcoin’s ‘First App’ Nearly 200 Alternative Currencies Right Now, But bitcoin’s Current

Market Cap {$US 5.1 Billion +/-} Many Times Greater Than All Others Combined

Some Definitions…

Confidential – RRE Ventures

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Who Invented Bitcoin?

Most Trace Bitcoin Protocol To Satoshi Nakamoto’s 2008 White Paper Bitcore Went Live In 2009; First bitcoins Issued Bitcoin As We Know It Today Is Directly Derived From This Work The Identity Of Satoshi Nakamoto Remains A Mystery

Earlier Work On Cryptocurrencies Includes mid-1990’s Companies DigiCash (David Chaum/Nick Szabo), CyberCash (Bill Melton), First Virtual (Lee Stein), E-gold (Doug Jackson), Others

The Network Is Decentralized And Open-Source, Though ‘Curated’ By The Bitcoin Foundation (Gavin Andresen) And Several Others

As With The Internet, Many Thousands Of People Are Building Services And Applications On Top – Growing Very Fast

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Bitcoin Ecosystem

Academics Engineers Entrepreneurs Investors Traders Consumers Merchants Economists Politicians Regulators Writers


Software

Transactions

Economy

Community

Protocol

# of ppl

Everyone

Politicians, Writers,Speculators

Miners, Processors,Wallets, Sec, 2.0, Etc.

Engineers, Academics

Exchanges, Merchants, Consumers, Regulators

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So What Is Bitcoin? In Short: Bitcoin Lets You Send Money Over The Internet

(Almost) Free

A New Currency

More Precisely, A Cryptocurrency {Trust Based On Math, Not People}

Not Physical Coins, But Digital Character Strings Like Your Bank Account #, But Longer

Globally Synchronized Accounting Ledger Cryptographically Secure More Traceable Than Cash, Fraud-Resistant, Anti-Fragile

Anti-Inflationary, Predictable Money Supply 21 Million bitcoin Cap; 13.3 Million Exist Today No Authority Or Group Can ‘Print’ More

Decentralized - No Central Control Or Authority Transfers Financial 'Sovereignty' To The Individual So-Called ‘Separation Of Money & State’ But, Ultimately Will Be Subject To Some Regulation/Oversight

My Bitcoin Address: 1PXr3FCWw5EaddXAk4y

2VHNqyT6yqeEs5z

This…

Not This…


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Useful Features Transactions Are Fast, Borderless, Free Of Middlemen, And

Irreversible No Limits On Amounts, Big Or Small (e.g. Micro-Transactions)

Users Can Transfer Any Amount, Anytime, Anywhere, With Anyone… Via Computer, Cell Phone, QR Code, Paper, Etc.

Consensus-Based Protocol Verifies Ownership (What ‘Miners’ Do)

A Degree Of Anonymity (Really Pseudonymity; Most Transactions Traceable)

Cannot Be Debased. When You Can Print New Money, This Happens:


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So Why Is This Interesting? Because In Today’s World… Commerce Requires Trust

Establishing Trust Has Led To High-Cost, Authorization-Based Economies Around the Globe Rules Out Doing Business In Many Spots Due To Risk – Real Or

Perceived

Fraud, Charge-backs, Mediation, Dispute Resolution… Together Greatly Increase Transaction Costs 5% Or More All-In, Not Just 2-3%

But… What If You Could Replace The Need To Establish ‘Trust’ With Cryptographic Proof {i.e. Math}...

Eliminate The Need For ‘Trusted’ Intermediaries…. (Governments, Banks, Credit Card Companies, Escrow Agencies, Etc.)

Reduce Costs By >10x While Opening Up Global Markets To Much Wider Audiences of Consumers And Businesses? Including The Unbanked, Those Trapped In Deflating Currencies, Etc.Confidential – RRE Ventures

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Forever Intertwined With The Internet Of Information & Entertainment

Experiencing The Rise Of The Internet Of Things Now (IoT)

Bitcoin Is About Building What I Call The Internet of Value (IoV) Like All Massive Network Inflection Points, It Will Be Highly Disruptive

Will Our Grandkids Pay For Everything With Bitcoin? Hard To Imagine Paper Money Dominant In 2030

Digital Currencies And The Blockchain Are Here To Stay—Bitcoin Itself Could Be Eclipsed (Litecoin? Ripple? 2.0 Versions like Ether? Sovereigns?)

Many Previously Not Possible Uses For The Blockchain Beyond Money:

Smart Contracts Digital Media / CopyrightsPatents Ownership TitlesTrading Reporting / Audit

Passing Fad, Or Important Breakthrough?


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How Big Can This Get?$514 Billion Annual Remittance Market $4.5 Trillion Cash Market$1 Trillion Annual E-Commerce Market $7 Trillion Gold Market$2 Trillion Annual Electronic Payments $16.7 Trillion Offshore Deposit Market$2.3 Trillion Hedge Fund Market $? Others

Bitcoin’s Value Could Also Go To Zero If It Does, The Cryptographic Rails Of Bitcoin Will Still Completely

Disrupt The Settlement, Clearance, Custody, Processing, Banking And Other Businesses Constraining Value Exchange Today

What The Internet Has Brought To Publishers, Media, Advertising & Many Others, Digital Currency Will Bring To All Things Financial Confidential – RRE Ventures

Source: Tuur Demeester

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By Definition It Is Not A Ponzi Scheme. Bitcoin’s Value Not Dependent On Adoption By An Ever-increasing Number Of New Investors It Is True The Value Of The Network Increases Exponentially w/ Increased Participation

Bitcoin’s Value May Be Considered A Bubble, But That Is Neither Inherently Bad Nor Illegal. Also Not Atypical For New Stores Of Value

Bad Actors Will Do Things They Shouldn’t. As With The Internet, Television, Physical Currencies, Credit Cards, Bank Loans And Everything Else. A Minority Will Always Use Tech For Nefarious Ends

Your Money Can Be Lost Or Stolen. Increasingly Unlikely, And Also True With Cash, Credit Cards, Gold, Diamonds – Any Store Of Value Bitcoin Has The Benefit Of Being Traceable To A Higher Degree Private Insurance (A Few Basis Points) Beginning To Mitigate Loss Risk

Concerns, Both Real And Imagined


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Bitcoin Does Rely On Remembering Passwords Not Misplacing Their Wallet If Offline (Like $) Can Keep Online Wallet, But Potentially Exposed (Mt.Gox) Who Holds Your Crypto-Keys? Multi-Sig?

Chargebacks vs Consumer Rights

Not Government-Backed (Private-Sector Insurance)

But… Merchants Do Not Need Most Personal Data Removes Target Problem; Much Less Identify Theft / Fraud

The Blockchain Provides Transaction Certainty & Permanent Records

Is It Safe?


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Mining Is The Process In Which New Transactions (Additions To The Public Ledger) Are Verified, And New bitcoins Are Introduced Into The System

Miners Compete And Are Paid In New-Issue bitcoins By Solving Difficult Computational Problems

First Miner To Solve Adds A Block To The Chain, Earns bitcoins “Proof Of Work” Solves Double-Spending Problem (Equivalent To

The Byzantine General’s Problem) Miners Are Rapidly Becoming Large Organizations, Deploying

Millions $ In Hardware And Software

Mining = Vet Transactions, Blockchain Integrity


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Miners Combine Code Used to Describe New Transactions, Information About Past Transactions, Data About Their Own Identity, And A Random Number, And Run It Through The SHA-256 Hash Function This Produces A 64-Digit Hexadecimal Number (e.g.:

22123fe3423336672d698bb19592e1fbdaa58971899c160f9f554f0d19aaebd1)

Goal Is To Try Random Numbers Until Output Has The Correct Number Of Leading Zeros (e.g.:

00000000000077ab111b814716097abfd05f83a207b47eb4529bbd4f54e111e0)

The Math Problem


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So How Did We Get Here?

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What Is Money?

Money Is Conventionally Defined As Three Things:1. Medium Of Exchange – An Intermediary Instrument Accepted In Lieu Of Barter2. Unit Of Account – A Measurement For Defining, Recording And Comparing

Value3. Store Of Value – Allows {Predictable} Transfer Of Value From The Present To

The Future

It Also Helps If It Is Durable, Fungible and Divisible bitcoin Is All Of The Above, Though At Present Not Very Good As A SoV (Price

Volatility) Of The 83+ Currencies Around Today, Many Are Price Unstable (e.g.

Argentinian Peso)


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2000 Years Money

Ancient Times: Grain, Cattle, Sheep, Salt, Shells, Etc. (Barter)

Middle Ages: Metal Coins In West; Chinese Paper Notes (IOU’s)

1661 – Sweden: Banknotes Appear

1694 - Bank Of England (Private): Fractional Banking; Fiat Money

Then, Two Banks Created In The US To Pay War Debts….

1791 - 1st Bank Of US (Private): De Facto Fed; Issued Paper Notes(High Inflation, Speculation, Dozens Of New Bank Charters, Credit

Boom)

1817 – 2nd Bank of US: A New Fed, Money & Credit Expansion, Followed

By The Panic Of 1819 (Overextension-Led Depression)

1836 – 1900 State Banks Issue 30k Varieties of Notes (Alt-Notes )


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2000 Years Cont'd… 1913 – To Reduce Various Boom/Bust Panics (e.g. 1893; 1907), Federal

Reserve Act: 12 Feds Print Money & Set Rates

1933 – Executive Order 6102: Forbade “Hoarding of Gold”. Outlawed Possession Of Gold Money So The Fed Could Exceed 40% Reserve Requirement

1944 – Bretton Woods: Required 44 Nations Peg Currency Exchange Rates To The US Dollar (Which Was Itself Pegged To Gold)

1950 – Diner’s Club Creates First Charge Card, Competing With Store Cards. Revolving (Credit) Cards Come From BofA In 1958

1971 – Nixon Shock: US Terminates Gold Standard; Dollar Value Plunges By One-Third Over Following Decade


Excellent Article On Origins Of Money Here {By Nick

Szabo}:http://bit.ly/1vlrccp

http://bit.ly/1vlrccp

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Historical World Reserve Currency Status

Is US Hegemony As Reserve Currency A Forever Thing?(The average fiat currency lasts 27 years; he average global reserve lasts

100 years)

What Is The Next Reserve Currency? Is It Digital?


You Are Here

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That’s The Past -------

Here’s The Present

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Overstock.com: $10 Million In Transactions To Date Major Processors (e.g. BitPay, Coinbase, Others) Serve

Over 90k Merchants; Growing Rapidly

You Can Also Make Political Contributions, Donate To Charities, Tip People, Gamble, Etc.

Retailers Starting To Accept Bitcoin


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Where Are The VC’s?

Conglomerates 18% Wallets 17% Exchanges 17% Financial Services 16% Payment Processing 15% Mining 13% Other 4%

About $270 Million Invested Thus Far in 2014; Six Major Areas Triple Amount In 2013, But Still Small Given The Stakes; Could Triple Again Globally Maybe A Dozen Firms Make Up Half Or More


Source: Coindesk/jdrive

21E6

Plutus

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Regulatory Environment

Under Evaluation In The US, Most Notably By NYS DFS Superintendent Ben Lawsky. Comment Period Ends 10/14 Current Draft Unworkable; Steps On Other Agency Toes (e.g. FINCEN, FBI) Texas Greenlighted. Florida & Georgia Similar. California Leaning Fav. Others

Watching

Europe A Mixed Bag. England Favorable, Isle Of Man, Jersey And Others Quite Favorable. Norway, Some Others Less So. LatAm Mixed

China Has Banned Bank Participation Within It’s Borders (HK Exceptions). Singapore & Japan Advanced And Favorable


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Total bitcoin In Circulation: 13.3 Million Current Market Cap: $5.1 BillionValue Of 1 bitcoin: $380Avg. Transactions Per Day: 67,000 +/-Number Of Wallets: 5.8 MillionTransaction Confirmation Time: 7 Minutes

Current Snapshot


X

X

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Many Reasons Why Price Decline Continues Mining Costs Approaching $350/Coin; Miner Economics Tough; Selling Chinese Trade RMB For bitcoin Fee Free On Chinese Exchanges, Dump As

US$ To Get Around Currency Controls & Diversify (> Half Of Daily BTC Activity)

Many (Most?) Large Blocks Trade Off-Chain Lot’s Of Hodlers; Few Spenders Overhang Of Unsettled Political And Regulatory Debates Commodities In General Hammered Margin Calls Have Not Helped General Public Still Looking For Visceral Use Case Still Too Hard To Obtain, Manage

Price


Despite Merchant Acceptance Accelerating Major Brands Across Retail & Financial Services Engaging (Dell, Paypal, FDC,

Soon xxx) Consumer Awareness Growing, Attitudes Turning From Negative To Neutral Neither ApplePay Or Alibaba Mattered, And Long-Term Both Are Positive For

Bitcoin Government/Regulatory Activity Has Generally Legitimized Bitcoin To Date

Note: FINCEN Poised To Announce Action Against A Major Soon) Banks Beginning To Warm Up (e.g. Fidor, CBW, Cross River) Non-US Currencies Falling (i.e. $ Dollar Strengthening) A Positive For Bitcoin Went 10x Twice in 2013; Still Up Substantially

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Q

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Appendix

Economy & Finance

@jdrive btc deck 7.0