2014-05-07 The opportunity in crypto currencies

Crypto-currencies
What’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
opportunity
Or
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+
opportunity
Replacing
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/

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
WesternUnion
MerrillLynch
Some predictions of
BTC value
1%ofgold
$880
ReplacesPaypal
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/

Money
2.0
The
$trillion+
opportunity
Replacing
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
SecuritiesSome more generous
predictions of BTC
$98.5k
ReplacesVisa 2 Complete digitization and networking of economy
and businesses
$38k
5%ofgold
Andressen
Horowitz
$100k 3 Complete obfuscation of complexity and security
management from consumers
Like I said…
This will take a while

Institutional
Adoption
Gary Kremen 
CrossCoin Ventures
Transparent
Security
Ripple is the
“untarnished” big-
brother of Bitcoin
Approachable
Usability
Ryan Singer 
CryptoCorp
Eliminating single points
of failure through HMD
to Bitcoin wallets
Robert David 
Monetsu
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 michi.kono@coinposit.com

2014-05-07 The opportunity in crypto currencies

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2014-05-07 The opportunity in crypto currencies