This talk was presented on June 29th, 2017 to discuss the emergence of digital currencies, initial coin offerings (ICOs), and their associated tokens as an asset class.

1. JUNE 2017
AN INTRODUCTION TO
Digital Currencies and
Tokens
Meltem Demirors
Director, Digital Currency Group

2. 2
BITCOIN: THE FIRST TOKEN
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
Jul-10 Mar-11 Nov-11 Aug-12 Apr-13 Dec-13 Aug-14 May-15 Jan-16 Sep-16 May-17
1. In 2009, first exchange rate
is $1 = 1,309 BTC
2. Trading starts July 2010 at
$0.08, doubles by EOY
3. Increased media attention,
VC investment create price
spike, rapid crash
4. From 2014 – 2016, price
stabilizes, bitcoin
infrastructure matures
5. More institutions begin
engaging, global market
maker entry drives growth1
3
4
Bitcoin helped raise investor awareness of digital currencies as an asset class
Exponential Growth in Bitcoin Investors learned
Source: CoinDesk BPI
@Melt_Dem / @DCGCo
2
5

3. 3
Infrastructure (Protocols, Mining, Exchanges, Wallets, Processors)
Security, Trading, Institutional Tools
Identity & Compliance
2009 20152012 2013 2014
Early Experimentation
Payments 2.0
Asset Registry
Smart Contracts
Blockchain Application Ecosystem
WHAT MADE BITCOIN VALUABLE?
Digital Currencies
2016 2017
800+
The development of a usable bitcoin network took over 7 years to materialize
@Melt_Dem / @DCGCo

4. 4
WHAT’S HAPPENING NOW?
$0
$40,000
$80,000
$120,000
BTC Other Tokens
• Ethereum ($ETH)
- Aug 2015 | $80M
- Jan 2017 | $720M
- Jun 2017 | $24B
• Ripple ($XRP)
- May 2013 | $60M
- Jan 2017 | $230M
- June 2017 | $10B
• Litecoin ($LTC)
- Dec 2013 | $70M
- Jan 2017 | $220M
- June 2017 | $2B
Bitcoin was dominant until 2017 Astronomic Growth
Tokens are fueling an investor frenzy for a speculative new asset class
MarketCap,MUSD
Source: Coinmarketcap.com Analysis
@Melt_Dem / @DCGCo

5. 5
A NEW BOOM
Web 3.0 Startup Boom
Cloud computing
drastically lowers cost of
building web companies
Digital Currency 2.0 Boom
Existing platforms like the
ERC20 token standard lower
cost of creating tokens
Social collaboration
platforms enable developers
and early users to connect
Social media networks
enable companies to
bootstrap user networks
Growth of operator-led
micro VC firms to invest
in early companies
Growth of token funds by
early investors who are
wealthy from BTC/ETH
Unlike the Web 3.0 startup boom, these new digital currency projects have
massive capital reserves and no real timeline or pressure to deliver product
92% fail within 3 years
Failure tied to inability to raise funding or
build user traction
Failure rate unknown
Founders and their projects have a large
pile of cash and stash of tokens to sell
@Melt_Dem / @DCGCo

6. 6
LONG TERM PICTURE
1
DIGITAL CURRENCIES AND TOKENS ARE A NEW ASSET CLASS
Investors chasing high returns don’t want to miss out on a potential boom,
FOMO from missing out on $BTC, $ETH, and want in. Many new hedge funds
and investment structures are emerging…
2
BUSINESS MODELS ARE NOT YET DEFINED… (NOR NEEDED)
Some tokens have been traded for nearly 24 months without a product or
service existing, but cash is not a problem
3
A LARGE PROPORTION OF THESE PROJECTS WILL FAIL
Many projects will never come to fruition or launch a product, and it’s unclear
who will be left holding the bag (of tokens) in these cases
4
THE REGULATORS ARE COMING
Whether this year or in five, regulators are certainly going to take note of this
new fundraising mechanism and issue guidance / punishment
@Melt_Dem / @DCGCo

7. 7
GET IN TOUCH
@Melt_Dem / @DCGCo
Doing an ICO? Send us your ideas:
info@dcg.co
Want to chat about ICOs, tokens, new biz
models, VC, or blockchain in general?
meltem@dcg.co or @Melt_Dem