On Oct 27, 2017, Digital Currency Group hosted its third annual Tech Summit - three days of private events focused on bringing together our network of digital currency and blockchain tech focused founders, investors, and corporate strategics. These are the opening remarks presented by DCG's founder and CEO, Barry Silbert, regarding the progress the bitcoin and blockchain ecosystem over the last year, and what DCG is excited about looking forward. DCG's Investment Associate, Travis Scher, shares his outlook on ICOs and token sales. DCG's Director of Development, Meltem Demirors, highlights growth metrics across the digital currency and blockchain startup ecosystem and shares insights on the evolution of business models and ongoing challenges to startups in the space.

1. OCTOBER 27, 2017
Digital Currency Group
3rd Annual Tech Summit

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WELCOME
At Digital Currency Group, we believe we are uniquely
positioned to provide a platform to support the industry’s
growth and evolution.
An important part of this is building a robust ecosystem of
investors, corporations, institutions, and other stakeholders who
can be advocates, investors, and customers for companies.

3. OCTOBER 27, 2017
DCG Tech Summit
Year in Review
Barry Silbert, Founder & CEO

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We believe that digital currencies and blockchain technology
are going to transform our financial markets and drive positive
global economic and social change
OUR MISSION
It is our mission to accelerate the development of a
better financial system
We do this by building and supporting digital currency
and blockchain companies and leveraging our insights,
network, and access to capital

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DCG TODAY
SUBSIDIARIES INVESTMENT PORTFOLIO DIGITAL CURRENCIES
110 companies across 28 countries;
50% IRR
$200+ million in value
$40 million annualized revenue;
130% growth year-over-year

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• C-Corp structure provides us with:
• Flexibility
• Opportunity to build a new investing/operating model
• Permanent capital
• Ability to raise money from strategic investors
• Potential to take DCG public
WE ARE NOT A VC FUND

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OUR INVESTORS

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• Target 2-5% ownership at seed stage (invest up to $200k)
• Focus on strategic life cycle investments (invest up to $500k in
Series A, $1 mm in Series B)
• Join syndicates with other professional investors
• Back the very best teams in our target markets
• Minimize conflicts of interest; no board seats
• Opportunistically invest in tokens (up to $5 mm)
OUR INVESTING STRATEGY

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• DCG portfolio has been the industry’s early VC pipeline
• Continued success à continuing to build symbiotic
relationship with professional investors
DCG PORTFOLIO ANALYSIS
Announced Deals (equity) $1.9 billion
Mining Operators $160 million
Consortia $107 million
Non-Mining Deals $1.64 billion
DCG Companies $1.14 billion
DCG companies raised
~70%
of industry funding to date
DCG INVESTING SUCCESS
Source: CoinDesk Venture Tracker data as of Oct. 26, 2017

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DCG PORTFOLIO
CORE INFRASTRUCTURE
IDENTITY REGISTRY ENTERPRISE BLOCKCHAIN
TRADING & TOOLS PAYMENTS 2.0
OTHER

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1. Core Infrastructure
2. Trading & Tools
3. Payments 2.0
4. Identity & Compliance
5. Blockchain Registry
6. Enterprise Blockchain
7. Other - Emerging Themes
KEY INVESTMENT AREAS

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2017 PORTFOLIO ADDITIONS
Core
Infrastructure
Trading &
Tools
Payments
2.0
Identity &
Compliance
Blockchain
Registry
Enterprise
Blockchain
Other
Blockchain Coinjar POSaBIT norbloc Blokur Cobalt Nivaura
Basecoin* SFOX Provenance OB1
Ledger
Livepeer*
Parity
Stratumn

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• Trading infrastructure (“picks and shovels”)
• Vaulting, custody, and compliance solutions
• Cross border payment infrastructure
• Digital currency as a speculative investment
WE ARE EXCITED ABOUT

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CROSS BORDER PAYMENTS - ON/OFF RAMPS

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CROSS BORDERS PAYMENTS VIA BITCOIN
Cumulative Volume
Source: Data provided by BitPesa, Bitso, Bitwala, and Wyre
$0
$250
$500
Aug-15 Feb-16 Aug-16 Feb-17 Aug-17
Millions

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• Bitcoin Investment Trust
holds ~1% of all bitcoin
• Ethereum Classic
Investment Trust holds
~3.5% of all ETC
• Launching Zcash
Investment Trust
DIGITAL CURRENCY AS ASSET CLASS
Grayscale Assets Under Management (AUM), $M
Source: Grayscale data as of Oct. 26, 2017
$0
$600
$1,200
Dec-16 Mar-17 Jun-17 Sep-17
BIT AUM ETC Trust AUM

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• ICOs
• 99% of the digital assets currently being traded
• Decentralized token exchanges
• Crypto funds
WE ARE NOT EXCITED ABOUT…YET

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• China crackdown on bitcoin (yes, again) and ICOs
• Scaling debate rages on
• Everybody is making money -> everybody is a trading/investing genius
• Over 100 crypto funds in the market raising capital
• ICO overload – greed and reckless investing permeates the space
• Huge disconnect in valuations between ICOs and seed/Series A financings
• First Unicorns built – Coinbase & Ripple
• “Experts” weigh in and declare bitcoin is [pick one: fraud/Enron/ponzi/bubble/tulip]
• Massive transaction volume growth in South Korea, Japan, Mexico
• Futures and derivatives markets opening up
• Institutional investors starting to dig in, but not investing yet
INDUSTRY STATE OF AFFAIRS

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REVIEWING 2017 PREDICTIONS
1. Bitcoin as a store of value re-emerges as key theme ü
2. Bitcoin becomes more accessible to retail and institutional investors via ETF(s) û
3. Cross border payments/remittance using bitcoin hits a $1 billion run rate û
4. Exponential bitcoin transactional growth in India, Japan & Middle East ü
5. Explosion of blockchain POCs focusing on supply chain ü
6. Identity solution competition heats up…but no leader emerges ü
7. SEC comes down hard on ICOs û
8. First >$50 mm M&A transaction ü
9. Micropayment models materialize ü
10. Bitcoin price on 12/31/17 = higher ü

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TOP TEN PREDICTIONS FOR 2018
1. Crypto funds raise over $1 billion
2. First IPO on a major global exchange
3. No ETFs get approved in the U.S.
4. First U.S. brokerage firm offers bitcoin access to customers
5. Large number of ICO tokens deemed to be securities by regulators -> rescission rights
triggered
6. Regulators go after certain crypto exchanges for trading token “securities”
7. ICO market collapses (number of issuances, valuations)
8. Corporates start to abandon “blockchain” projects
9. Aggregate market value of digital currencies/assets exceeds $250 billion
10. Jamie Dimon capitulates and walks back his “bitcoin is a fraud” comment

21. OCTOBER 27, 2017
DCG Tech Summit
ICOs and Token Sales
Travis Scher, Investment Associate

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WHAT IS AN ICO/TOKEN SALE?

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WHAT IS AN ICO/TOKEN SALE?
The sale, typically a crowdsale, of a blockchain-native digital
asset (a “token”), which confers the right to participate in a
network or use a product or service
Tokens typically do not represent equity in a business or
explicitly provide any legal rights to the holder (though a
token may still be deemed a “security” by regulators)

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BLOCKCHAIN VC V. TOKEN SALES
$0
$700,000
$1,400,000
2016 2017 Q1 2017 Q2 2017 Q3
Thousands
Blockchain VC Token Sales
• The amount raised in token
sales have blown past the
amount raised by blockchain
companies in traditional VC
• In Q3, ~$1.25bn was invested
in token sales compared to
$155mm in blockchain
venture deals

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TOKEN SALES V. GLOBAL SEED FUNDING
$0
$700,000
$1,400,000
$2,100,000
$2,800,000
$3,500,000
$4,200,000
$4,900,000
$5,600,000
$6,300,000
$7,000,000
$7,700,000
$8,400,000
2016 2017 Q1 2017 Q2 2017 Q3
Thousands
Token Sales Global Seed Funding
• Token sales are approaching
global angel/seed funding
levels
• In Q1-Q3, token sales have
raised ~$2bn versus ~$6bn
for angel/seed funding
• That’s in 165 sales versus
nearly 11,000 angel/seed
round

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10 BIGGEST BLOCKCHAIN VC ROUNDS
Position Company Total Raised Year Age
1 21 Inc. $116mm 2015 2
2 R3 $107mm 2017 3
3 Coinbase $100mm 2017 5
4 Coinbase $75mm 2015 3
5 DAH $60mm 2016 2
6 Circle $60mm 2016 3
7 Ripple $55mm 2016 4
8 Blockstream $55mm 2016 2
9 Circle $50mm 2015 2
10 Blockchain $40mm 2017 6
Total = $718mm

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10 BIGGEST TOKEN SALES
Position Project Total Raised Year Age
1 Filecoin $257mm 2017 3
2 Tezos $232mm 2017 3
3 EOS $185mm 2017 <1
4 Bancor $153mm 2017 <1
5 The DAO $150mm 2016 <1
6 Kin $97mm 2017 <1
7 Status $90mm 2017 <1
8 TenX $64mm 2017 <1
9 MobileGo $53mm 2017 <1
10 Kyber $48mm 2017 <1
Total = $1,329mm

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WOW
• The ten largest token sales have raised $1.33 billion, almost twice as much
as the ten largest blockchain venture rounds
• Eight of ten of the largest token sales were under development for less
than one year at the time of the ICO (compared to 3.2 years for the venture
rounds)
• These eight raised an average of $105 million – more than 3x the median
US growth equity round!

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DCG PORTCO TOKEN SALES - COMPLETED
• 5 DCG portfolio companies (5.6% of active portfolio) have completed token
sales
• Collectively, those companies previously raised just $18mm in VC funding
• Each raised at least $25mm, and together a total of $395mm

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DCG PORTCO TOKEN SALES – IN PROCESS
• 12 more DCG portfolio companies are in the midst of or planning to do a
token sale (13.5% of active portfolio)
• These 17 companies (19.1% of active portfolio) are spread across 7 countries
and 4 continents – it’s a global phenomena

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WHY IS THIS HAPPENING?
• It’s cheaper and easier to create tokens using Ethereum and the ERC20
standard
• Bitcoin and Ethereum have gained $100bn+ in market cap, and people are
re-investing profits
• Political trends around decentralization, privacy, and autonomy
• Macro environment with lack of other attractive asset classes

32. Also: Hype, Mania, Herd Mentality, and Madness!

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IMPLICATIONS FOR VC’S
• Displacement/Disruption/Loss of Opportunity?
• Should you invest in tokens?
• Should you invest in a crypto fund?
• Should your portfolio company do an ICO?
• What happens if your portfolio company ICOs?

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DCG’S PERSPECTIVE
• We’re witnessing the emergence of a new asset class, but…
o Huge amount of regulatory risk
o No adoption of DApps, yet
o Most projects are raising way too much
o Governance structures are weak
o Valuations/prices are insane!

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DCG’S PERSPECTIVE
• We’re witnessing the emergence of a new asset class, but…
o Huge amount of regulatory risk
o No adoption of DApps, yet
o Most projects are raising way too much
o Governance structures are weak
o Valuations/prices are insane!
Conclusion: we’re cautiously optimistic, constantly
learning, and investing very selectively

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TYPES OF PROJECTS
• Global Currency/Store of Value (e.g., Bitcoin, Zcash)
• Smart Contract Platforms (e.g., ETH, ETC, Tezos)
• Decentralized Compute Resources (e.g., Filecoin, Livepeer)
• Decentralized Exchange/Parachains (e.g., 0x, Cosmos, Polkadot)
• Currency for Internal Commerce or Access (e.g., Decentraland, OAX)

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DCG’S TOKEN INVESTMENT FRAMEWORK
• Mission-driven, high-integrity team
• Benefits from being decentralization/being on a blockchain
• Strong case for new token
• Token distribution done compliantly
• No uncapped notes, reasonable “implied market cap”

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TEN THINGS TO WATCH IN 2018
1. Real use cases – what will be first widely DApp/Appcoin?
2. Infrastructure development – decentralized exchange, custody, PoS, scaling
3. Stablecoin that works?
4. Valuation methodologies – any progress?
5. Projects that raised “endowment fund” – can they deliver on expectations?
6. Projects that stall – can they pivot? What happens to $$ if they give up?
7. User/partner/developer growth pools – do they work?
8. Enterprise adoption – will they touch tokens?
9. Security tokens – any benefit besides calling it an “ICO”?
10. Regulation – will the SEC pull the punch bowl?

39. OCTOBER 27, 2017
DCG Tech Summit
Portfolio Growth & Development
Meltem Demirors, Director of Development

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BUILDING THE DCG NETWORK
CORPORATES
ACADEMIA
INVESTORS
REGULATORS
INSTITUTIONS
BLOCKCHAIN SERVICE
PROVIDERS
Invested in 100+ companies that
have revenue, traction, and
institutional investors
Co-invested alongside over 800
investors, pipeline for early
company deal flow
Engaged with over 150 corporates
around the world to provide
insights and exposure
Collaborated with the world’s
leading academic institutions to
support research and development
Worked with institutions to
educate, advocate, and drive
adoption for social good
Consulted by regulators, policy
think tanks, and trade associations

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THE DEVELOPMENT FUNCTION
NETWORK INSIGHTS ACCESS TO CAPITAL
• Identify and engage
critical stakeholders
• Proactively build a
network of allies and
partners around DCG
• Financial capital, driven
via our network of co-
investors
• Human capital
• Social capital
• Aggregate and
disseminate insights
across portfolio
• Use our perspective to
create competitive
advantage for our
network

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OVERVIEW
• Data from across the DCG Portfolio
• Insights on evolving digital currency and blockchain
business models
• What we’ve done and what’s next

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A GLOBAL PORTFOLIO
• The DCG Portfolio represents
businesses in 28 countries
• Portfolio operations span over 40
countries and continue to spread as
companies open subs
• US-based companies represent
over 50% of the portfolio, but % has
been declining over time
• 9 of 15 new investments in 2017
were outside of US
Africa
3%
South America
7%
North
America
54%
Europe
21% MENA
2%
Asia
13%
Geographic Distribution Interesting Facts

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STILL EARLY STAGE
0
20
40
Pre-Seed Seed Series A Series B Series C Series D
• Portfolio 65% seed-stage last year,
now less than 45%
• More than 50% of the portfolio has
raised follow-on capital
• Increasing number of late stage
deals – many based in US, but a
handful in Asia and Europe
• Majority of late stage companies
are bitcoin focused – only 1 pure
blockchain co past Series A
Portfolio by Stage Interesting Facts

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A LOT OF HUMAN CAPITAL
0
25
50
<15 15 - 50 50 - 150 150 +
Portfolio Employee Distribution Interesting Facts
• 2,475 employees in portfolio– over
2,500 including DCG + subs
• 50% of portfolio is still under 15
employees – lean and mean teams!
• Only 9 companies with more than
50 employees – mix of later stage
(Series B and beyond) B2B and B2C
companies
• Very few sole founders – strong
affinity for founding teams

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GENERATING FINANCIAL CAPITAL
0
16
32
Pre-product Pre-revenue Revenue Breakeven Profit
Portfolio Performance Interesting Facts
• 68% of companies are making
money, but relatively new trend
• Most companies were not profitable
9 months ago – high correlation
between profit and digital currency
market cap
• Companies that are not yet making
money are mostly private
blockchain / non digital currency
companies

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GENERATING FINANCIAL CAPITAL
Number of Employees
<15 15 - 50 50 - 150 150 +
Pre-product 7 1
Pre-revenue 11 7
Revenue 15 16
Breakeven 5 1
Profit 4 7 5 4
Portfolio Performance by Company Size Interesting Facts
• Doesn’t take a lot of people or
capital to be profitable right now
• All companies over 50 employees
are profitable, and directly interact
with digital currencies
• Most pre-revenue and pre-product
companies focused on enterprise
blockchain where sales cycles last
18 – 24 months

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BUSINESS MODELS
CORE INFRASTRUCTURE
IDENTITY REGISTRY ENTERPRISE BLOCKCHAIN
TRADING & TOOLS PAYMENTS 2.0
OTHER
Business Model
Key Metrics
Build broadly adopted software networks and software tools,
become the standard for networking or services
Number of users or nodes, market penetration or adoption,
developer ecosystem, applications, git pulls, token distribution

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BUSINESS MODELS
CORE INFRASTRUCTURE
IDENTITY REGISTRY ENTERPRISE BLOCKCHAIN
TRADING & TOOLS PAYMENTS 2.0
OTHER
Business Model
Key Metrics
Charge a fee to provide a product or service, typically volume
based or service level driven
Number of customers, trading volume, trading revenue, trading
profit, margin on traded volume

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BUSINESS MODELS
CORE INFRASTRUCTURE
IDENTITY REGISTRY ENTERPRISE BLOCKCHAIN
TRADING & TOOLS PAYMENTS 2.0
OTHER
Business Model
Key Metrics
Charge a fee to provide a payment product or payment service,
typically volume based or service level driven
Number of customers / transactions, retention, payment volume,
payment revenue, profit margin

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BUSINESS MODELS
CORE INFRASTRUCTURE
IDENTITY REGISTRY ENTERPRISE BLOCKCHAIN
TRADING & TOOLS PAYMENTS 2.0
OTHER
Business Model
Key Metrics
Charge a fee to maintain and manage a data registry and read,
write, or verify data, typically volume based or service level driven
Number of records, customers, implementation or licensing fees,
verifications or investigations completed, contract revenue, pay as
you go revenue

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BUSINESS MODELS
CORE INFRASTRUCTURE
IDENTITY REGISTRY ENTERPRISE BLOCKCHAIN
TRADING & TOOLS PAYMENTS 2.0
OTHER
Business Model
Key Metrics
Uncertain – often resembles enterprise SaaS but with higher
degree of up front consultation, design, and integration work
Project-based revenues, implementation costs, licensing fees,
volume based fees

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CONSISTENT TRENDS
• Companies starting to find a useable business model and
growing and scaling this model
• Revenue across business models is growing 5-20% MoM,
but reliance on key partners can set back progress
• Most companies heavily focused on building and scaling
customer acquisition strategies
• Converting enterprise sales pipeline into revenue is an
expensive and slow process

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BIGGEST CHALLENGES FOR COMPANIES
• Banking partnerships
• Regulation and compliance
• Making long term strategic decisions in an environment
with a high degree of noise
• Converting sales pipeline into ARR
• Hiring at all levels of the organization
• Changing the narrative around the industry / companies

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KEY EFFORTS IN 2017
• Scaled portfolio management process from 70 companies to
now over 100, including companies raising ICO funds
• Conducted multiple events with banks, regulators, and
companies focused on driving collaboration
• Grew enterprise partnership strategy, especially with IBM,
AWS, and key corporate partners to accelerate sales cycles

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KEY GOALS FOR 2018
• Begin building ecosystems around protocols and their
associated tokens leveraging broader DCG network
• Focus on building banking alliance to help portfolio
companies find, engage, and maintain banking relationships
at scale
• Further expand the DCG platform to maximize human,
social, and financial capital accessible to our network