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Opportunities in cryto-currencies
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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
Digital Currency Entrepreneurship & Startups
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
Digital Currency Entrepreneurship & Startups
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”
Digital Currency Entrepreneurship & Startups
Bitcoin: Which believer are YOU?
Tulip Mania 2.0 Paypal 2.0 Money 2.0
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)
Money Supply Adoption Markets
Digital Currency Entrepreneurship & Startups
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
Digital Currency Entrepreneurship & Startups
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/
Digital Currency Entrepreneurship & Startups
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
Digital Currency Entrepreneurship & Startups
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
Digital Currency Entrepreneurship & Startups
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
Digital Currency Entrepreneurship & Startups
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/
Digital Currency Entrepreneurship & Startups
Bitcoin: Which believer are YOU?
Tulip Mania 2.0 Paypal 2.0 Money 2.0
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
Money Supply Adoption Markets
Digital Currency Entrepreneurship & Startups
Defining “Money 2.0”
This will NOT happen OVERNIGHT
Digital Currency Entrepreneurship & Startups
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
Digital Currency Entrepreneurship & Startups
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
Digital Currency Entrepreneurship & Startups
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]