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Cryptocon Presentation July 2014
“Bitcoin represents something fundamental and powerful” – Fred Wilson, Union Square Ventures
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The World is changing
Email and Web – 20 years ago – life without it?
Bank fees – we all hate them
Why Crypto currencies will change financial services
Future Capital Bitcoin fund
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My Background
Running technology business since 1993
Launched Australia’s first digital MP3 music website in 1999
Listed first company onto ASX in 2000
Launched Australia’s largest Bitcoin fund ($30m)
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What VCs are saying about Bitcoin
Fred Wilson Union Square Ventures
• “We believe that bitcoin represents something fundamental and powerful, an open and distributed peer to peer protocol for transferring purchasing power. “
Tim Draper Draper Fisher Jurvetson
• “Bitcoin has the potential to transform the world the way the Internet did … All finance / commerce can be transformed by Bitcoin.”
Mark Andressen Andreesen Horowitz
• “Personal computers in 1975, the Internet in 1993, and – I believe – Bitcoin in 2014.”
Chris Dixon Andressen Horowitz
• “Bitcoin is the first plausible proposal for an economic protocol for the Internet.”
Jim Breyer Accel Partners
• “I’m confident you’ll see major worldwide retailers adopting …Bitcoin.”
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…and they are putting their money in…
High profile Bitcoin
investments from past 18
months
$160M: Total VC funding reported in more than 30 Bitcoin deals $50M: Amount invested by Andreessen Horowitz into Bitcoin startups $40M: Investment in Xapo - The largest total investment into a Bitcoin
company $30M: Investment in Bitpay – A Richard Branson backed Bitcoin company $25M: Funding of Coinbase – A Sillicon Valley backed Bitcoin company $15M: Liberty City Ventures own “Digital Currency Fund” $11M: Winklevoss Capital investment directly into Bitcoin $2M: Peter Thiel (Paypal) personal contribution to a Bitcoin fund
60 Number of investors in “BitAngels”, a Bitcoin angel investment network
Bitcoin startups present a high potential investment option
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…and accelerating
$40M Series B July 2014
$30M Series B
March 2014
2014 run rate of US$284m, 3x the 2013 total investment of $87.7m
Q1 $64.5m
2013 Total
$99.5m
Note: *Includes first sequence venture deals but excludes late-stage 1995 internet investments ($257.6m). For additional disclosure on methodology see http://www.coindesk.com/following-money-trends-bitcoin-venture-capital-investment/
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Financial Institutions are watching Type Activity
Investment Bank Report
Investment Bank Report
Investment Bank Report
Investment Bank Report
Ratings Agency Report
Asset Management Investment
Consultancy Report
“We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to
traditional money transfer options.”
David Wood Bank of America/Merrill Lynch
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…and thought leaders are seeing promise
“I’m a big fan of Bitcoin …
Regulation of money supply needs to be
depoliticized”
Al Gore Former US Vice President
“Bitcoin may hold long-term promise”
Ben Bernanke Former US Fed Reserve
Chairman
“Bitcoin is a technological tour
de force”
Bill Gates Microsoft Co-founder
“We have elected to put our money
and faith in a mathematical
framework that is free of politics
and human error”
Tyler Winklevoss Entrepreneur
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Opportunity Areas Bitcoin Aiming to Disrupt $457bn+ Total Market Cap
Payment Processors:
e.g. Visa, Amex,
Mastercard $381BN
Payment Hardware: e.g. NCR,
Micros, Verifone $25BN
Money Transfer /
ATM Outsourcin
g: e.g. Western Union, Money
Gram $14BN
Bank Software: e.g. Fidelity,
Fiserv $37BN
Total $457BN
+
Source: CoinDesk, Wedbush Securities – As at 8 April 2014
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Offering large potential transaction cost savings of $200billion Potential annual net savings with Bitcoin based on 2013 volumes
2013 Market Size ($bn) Retail Ecommerce Remittances
$ volume by market 10,383 609 549
Prevailing average pricing 2.5% 2.9% 8.9%
Bitcoin pricing 1.0% 1.0% 1.0%
Prevailing transaction fees 259.6 17.8 48.9
Bitcoin transaction fees 103.8 6.1 5.5
Potential Savings with Bitcoin ($bn) 155.7 11.8 43.4
Source: Goldman Sachs Global Investment Research
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Opportunity Areas Bitcoin Companies can be grouped into 6 categories
Payment processors
Mining hardware
Financial services
Exchange
Wallets
Universal
Exchange
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As a “currency”, the price has recovered
Source: CoinDesk Bitcoin Price Index daily closing price (taken at 00:00 UTC)
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… opinions vary on where it could be
Sound economic models developed
by senior bank officials…
“Our current view implies a maximum
fair value of bitcoin = US$1,300”
David Wood Bank of America/Merrill Lynch
…To those that are “true believers”
“We believe Bitcoin could reach $US
$10,000”
Tyler Winklevoss High profile Bitcoin advocate/
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While Bitcoin as money is small
2,705
255 8 7
0
500
1,000
1,500
2,000
2,500
3,000
US Australia Guatemala Bitcoin
M1
Mon
ey S
uppl
y (U
S$B
N)
Rank Country Money Supply ($BN)
90 Bitcoin 6.15 91 Afghanistan 5.92 92 Sudan 5.85 93 Macau 5.84 94 Uzbekistan 5.84 95 Serbia 5.79 96 Ghana 5.77 97 Uruguay 5.32 98 Papua New Guinea 5.30 99 Malta 5.27 100 Yemen 5.14
Bitcoin is small compared to US, Australian currencies
… but there are 100 countries that have a smaller currency supply than Bitcoin
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Its use in commerce is growing
Region Businesses
North America 1,563
Europe 1,478
South Asia / Australia 227
South America 167
India 94
Africa 24
Approx. 60,000 merchants accept Bitcoin ... mostly online Physical businesses accepting Bitcoin
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Bitcoin advancing on other networks
Bitcoin Western Discover Paypal Discover Amex Union Pay Master Card Visa Aver
age
Dai
ly T
rans
actio
n Vo
lum
e (U
S$)
(Pulse)
$100M
$1BN
$10BN
$20BN
$41M
$216M $299M $397M $438M
$2.4BN
$7.5BN $9.8BN
$16.5BN
Source: Coinometrics.com, 30 April 2014
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Bitcoin access by merchants and customers is becoming easier
Point of Sale By Internet By Mobile Bitcoin ATMs
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Next Steps Participate in the global Bitcoin phenomenon
Contact: Domenic Carosa
[email protected] +61 411 19 69 79
Holger Arians [email protected]
u +61 439 716 110
www.futurecapital.com.au/bitcoinfund