This is my presentation at MaGIC Academy Symposium 2017 on 6 October 2017 covering cryptocurrency trends, challenges & opportunities as at Q3 2017.

1. New Money: Cryptocurrency Trends,
Challenges & Opportunities
Bobby Ong
MaGIC Academy Symposium 2017
6th October 2017

2. About the Speaker
Bobby Ong
● BSc. Economics, University College London (2012)
● Bought first bitcoin (Mid-2013)
● Co-founder, CoinGecko (Apr 2014)
● Co-author of Chapter 5: Handbook of Digital
Currency, 1st Edition (Apr 2015)
● Co-author of Chapter 8 & 9: Handbook of
Blockchain, Digital Finance, and Inclusion,
1st Edition (Sep 2017)

3. www.coingecko.com

4. Who here owns
bitcoin, ether or
other cryptocurrencies?

5. Bitcoin &
Blockchain 101

6. Bitcoin
● First decentralized digital currency
● Invented by Satoshi Nakamoto in 2009
● 21 million bitcoin supply limit
● Reward halved every 4 years
50 BTC → 25 BTC → 12.5 BTC → 6.25 BTC → ... → 0.00000001 BTC
● Current Circulation: 16.6 million BTC (79% of all BTC)

7. Blockchain as the ledger!
Not a spreadsheet, not a regular database.
Account Number Balance
1Ew6znJWou... 5.0
1AMPjUg2ku... 0.8
185HKCyjvh... 12.5
121FUdePko... 8.0
From To Amount
1EMRx910... 1Ew6znJWou... 5.0
1AMPjUg2ku... 185HKCyjvh... 2.5
121FUdePko... 185HKCyjvh... 10.0
121FUdePko... 1AMPjUg2ku... 3.0
...
Transactions
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Account Balance

8. From To Amount
1EMRx910... 1EwDAGu3... 15.0
1E893fjUg2ku... 185yOPE... 9.3
12NgdoPko... 1kiutrvh... 2.0
12NgdoPko... 1grUg2ku... 1.0
...
Pending/New Transactions
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
Transaction
To add new transactions to the blockchain
Must solve a Cryptographic Hash puzzle
Find variable through the hash function that
gives you the result of 000XX...
f( ? + previous_block + tx ) = 000XX...
f( 1 + previous_block + tx ) = 3ab12a...
not 000XX, retry
f( 2 + previous_block + tx ) = 932swp..
not 000XX, retry
Keep trying until solution is found
Mining

9. Bitcoin
Statistics

10. Bitcoin Price History
Feb 2014
MtGox
Closure
Aug 2017
Bitcoin Cash
(BCH) Split
Jan 2015
Bitstamp
Hacked
Jun 2015
NY Releases
BitLicense
May 2017
New York
Agreement
SegWit2x
Sep 2017
China
Bans ICO
Aug 2016
Bitfinex
Hacked
Jan 2016
Mike Hearn
Quits Bitcoin
Source: https://www.coingecko.com/en/price_charts/bitcoin/usd
Additional Reading: https://99bitcoins.com/price-chart-history/
USD

11. Bitcoin Confirmed Transactions Per Day
Source: https://blockchain.info/charts/n-transactions?timespan=all

12. Bitcoin Hashrate Distribution
Source: https://blockchain.info/pools

13. Alternative
Cryptocurrencies

14. Altcoins 101
Source: https://coinmarketcap.com/
● Over 1,128 active cryptocurrencies in the market!
● $137 billion market capitalization
● $3 billion daily volume

15. Early Altcoins
Ripple
- Real Time Gross
Settlement System
& Remittance
Network
- Released in 2012
- Partnership with
dozens of banks
- Consensus
protocol
Namecoin
- First altcoin
- Launched 18 April
2011
- Decentralized
censorship resistant
Domain Name
System (.bit
domains)
- Merged mined with
Bitcoin
Dash
- Anonymous
cryptocurrency
- Previously
Darkcoin / XCoin
- PrivateSend
based on CoinJoin
- Mixing of coins
using 0.01, 0.1, 1, 10
etc DASH
- Launched 18
January 2014
Litecoin
- Created by
Charlie Lee
- 84 million coins
- Scrypt algorithm
- 2.5 minutes block
time
- Block reward
halves every
840,000 blocks
- Launched 7
October 2011

16. Early Altcoin Trends
● Experiment with total supply of coins, distribution of coins
● Experiment with transaction time
● Experiment with hashing algorithm, Proof of Stake
● Experiment with different use cases
● Experiment with different codebases
● National cryptocurrencies
● Anonymous cryptocurrencies
● Fun Experiment - Dogecoin

17. Ethereum
● Bitcoin → peer to peer electronic cash system (payments)
● Ethereum → running code of decentralized application
(smart contracts)
● Smart contracts → computer code that facilitate the exchange of
money, content, property, shares, or anything of value.

18. Blockchain Ecosystem
Source: https://media.coindesk.com/uploads/2017/09/State-of-Blockchain-Q2-2017-.pdf

19. Blockchain Ecosystem
Source: https://media.coindesk.com/uploads/2017/09/State-of-Blockchain-Q2-2017-.pdf

20. Cryptocurrency Market Cap Increased
Is this a bubble waiting to pop?

21. Cryptocurrency Market Cap Increased

22. Bitcoin Dominance Reduced in 2017

23. Initial Coin Offering

24. Initial Coin Offering (ICO)
● Unregulated method of financing very similar to
Initial Public Offerings (IPO)
● Cryptocurrency projects create new tokens and sell a
percentage of newly created tokens in exchange for
ETH / BTC etc. Tokens are then listed on
cryptocurrency exchanges and freely tradable
● Most ICOs create tokens on top of Ethereum platform
using the ERC20 standard
● Blockchain token sales > crypto VC deals

25. Initial Coin Offering (ICO)
Source: https://www.coingecko.com/ico

26. Initial Coin Offering (ICO)
Source: https://www.coindesk.com/ico-tracker/

27. ● YTD Sept 2017 ICOs have raised US$1,484 million
● Some notable ICO:
Tezos (2017) - US$232 million
Bancor (2017) - US$153 million
The DAO (2016) - US$152 million
Status (2017) - US$95 million
TenX (2017) - US$83 million
Ethereum (2014) - US$18 million
● Many ICOs are illegal-fundraising of securities disguised as tokens.
● SEC (US) use Howey Test to determine if an ICO is a security
● There are many ICO scams. Be careful!
Source:
https://www.coingecko.com/ico
https://www.coindesk.com/ico-tracker/
https://bitcoinmagazine.com/guides/what-ico/
Initial Coin Offering (ICO)

28. ICO Unicorns
● ICO tokens are
starting to have
market capitalization
/ valuation of above
$1 billion
● OmiseGo - Thailand
based payment
company. Raised
$25m in ICO. Tokens
from $0.27 to $11
● QTUM - Ethereum of
China. Raised $15.6m
in ICO. Tokens from
$0.30 to $17
Source: https://techcrunch.com/2017/08/31/the-first-ico-unicorns-are-here/

29. Scalability Issues

30. Bitcoin Scalability Issue
1 MB hard cap
reached

31. Scalability Issue
● Bitcoin has a scalability issue - 7 transactions/second
● Hard cap in block size of 1 MB → Limit is reached
● How do we scale?
Segregated Witness? Lightning Network? Increase in blocksize?
● [23 May 2017] New York Agreement
Digital Currency Group brokered an agreement to implement SegWit
and increase block size to 2MB known as “SegWit2x”
● [21 July 2017] Bitcoin miners agree to upgrade software to support
Segregated Witness
● [1 August 2017] Bitcoin Cash born - no SegWit and block size increase
to 8MB
● [November 2017] 2MB increase to Bitcoin as per NYA.
Another Bitcoin Split...

32. Chain Splits

33. At this split,
Any amount of Bitcoin you
own will be duplicated into
Bitcoin Cash
Bitcoin Cash inherits all
history of Bitcoin up until this
point
Chain Split!
New consensus rules
New software
Group of miners mine a new
blockchain
Blockchain Split

34. Blockchain Split
Why a Split?
No consensus on how to scale Bitcoin for
almost 2 years
Difficult to make changes without support
Only solution is to part ways
Bigger Blocks as a way
to scale more
transactions to be written
into the blockchain ledger
Rearrange how data is
stored within the Block.
Pack more transactions.

35. (A) May 2016
DAO Token was launched
on top of Ethereum
Crowdfunding successfully
raised $168 million
Largest crowdfunding ever
14% of all Ethereum
(B) June 2016
Vulnerability of the DAO Token
contract was exploited
Perpetrator transferred funds from
the contracts into his account
worth $60 million (at that time)
Balance recided in the Ethereum
ledger

36. Due to the systemic risk to the
platform & lost of confidence
Ethereum core developers decided
to change the rules of the blockchain
By issuing a fix to the contract,
permitting refunds to the victims
As though the hack did not happen

37. At this split,
Any amount of Ethereum you
own will be duplicated into
Ethereum Classic
Ethereum Classic inherits all
history of Ethereum including
the DAO Token hack
Blockchain Split
Chain Split!
Ethereum Classic stays true
to the original ledger where
the hacking incident occurred
with the original rules

38. Regulations

39. Regulations

40. Opportunities

41. Value Transfer
Decentralization
Storage
Identity
Enterprise (Private)
Platform

42. Opportunities
● Get involved in the blockchain space
● Learn, Learn & Learn
● Trade the many cryptocurrencies
● Build apps for the blockchain space -
Join us to build block explorers anyone?
● Research and write articles/journals
● Contribute to the community by weeding out scams

43. Thank You
bobby@coingecko.com
@bobbyong