XAnge university presentation on cryptocurrencies

1. Are cryptocurrencies the new venture
capital?
July 2017

2. Are cryptocurrencies the new venture capital?
2
Problem Solution =
Blockchains
Bitcoin
Ethereum Dapps
Utility
Funding = ICOs Threat to VC?

3. Introduction: what’s the problem with money?
3
• Traditional money (fiat) created by
central banks:
o Corruptible
o Politically biased
o Opaque
… while they manipulate the
economy

4. Blockchain 101: a decentralized database (1/2)
4
• A blockchain = a database which is:
o Distributed and public With no central authority
o Containing all the transactions Secured by design
1 2
3 4
Source: Matt Milligan
Source: Ghazali M. Hali

5. Blockchain 101: the process of a transaction (2/2)
5
Source: Louis Coppey (Point Nine Capital)

6. Transparency and network value: the advantages of
decentralization
6
• No single point of failure and no corruption
• Empowered users: in control of all their information
• Durable and reliable data
• Process integrity
• Ecosystem simplification: 1 single public ledger
• Faster transactions
• Lower transaction costs
Source: Coindesk

7. Short history of the main blockchain protocols…
7
1991 2008
Several
documents in 1
block
Double spending
problem solved w/o
central authority
Document
timestamping
Digital currency
Tech
break
through
Use
case
2013-14
Interorganizational
cooperation : Copyrights
and royalties collection ;
clearing ; etc.
Smart contracts: a
computerized
transaction protocol that
executes the terms of a
contract
Value
Layers Protocol Protocol
+ digital currency (BTC)
Protocol
+ token (ETH)
+ smart contracts
2017
Proof-of-stake: skin-in-
the-game validation
Removal of 51% attack risk
Reduction of energy waste
Protocol
+ token (ETH)
+ smart contracts
+ endogeneous governance (Tezos)
?

8. … which accelerated recently
8
Price Chart (USD)
BTC
ETH
Google Trends
BTC
ETH
Blockchain

9. And it’s not a small thing…
9
Source: Coinmarketcap
Source:
Boursier.com
06/07/17

10. … nor is it a small ecosystem
10

11. Rebuilding the internet in a decentralized era (1/2)
11
Source: Melanie Swan, Blockchain Studies
TCP / IP
SMTP
Gmail
The Bitcoin blockchain
(cryptographic ledger)
Bitcoin protocol (for
transferring the
cryptocurrency)
BTC (the digital currency)
General Protocol
Layer
Application
Protocol Layer
Application Layer

12. Rebuilding the internet in a decentralized era (2/2)
12
data
data
Dapps
Source: Joel Monegro, USV blog

13. Dapps are tomorrow’s apps
13
• Dapp (Decentralized application) = app which interacts with the Ethereum
Blockchain
• Platform for prediction markets (D-Betfair)
• Decentralized cloud storage (D-Dropbox)
• Decentralized ride-sharing app (D-Uber)
• Decentralized peer-to-peer marketplace (D-Craigslist)
• Decentralized crowdfunding platform (D-Kickstarter)
• Decentralized trusted dental treatment reviews
• Developed not by a company but a group of open source developers

14. … with inherently interesting characteristics
14
• No middle man
• Stable and predictable rules
• Tokens
o Medium of exchange for the service
o Bootstrapping of a community of adopters
o … and funding ! via ICOs

15. ICOs: a new way of financing projects?
15
• ICOs (Initial Coin Offerings):
o Sell a fraction of total tokens
o Generally pre-launch
o In exchange for other tokens
o With fundraising terms

16. ICOs: a new way PROFITABLE of financing projects?
16
• First big ICO: Ethereum Foundation – July 2014 – $14m in BTC
• Price at ICO: $0.3 / ETH => c. $270 on 5-Jul-17
900x in 2y or 2900% IRR

17. ICOs: a new way DOMINANT of financing projects?
17
150
53
35
63
152
103
80
32
182
209
mai-16 mai-17 mai-17 juin-17 juin-17 juin-17 juin-17 juin-17 juil.-17 juil.-17
The DAO MobileGo Basic
Attention
Token
æternity Bancor
protocol
Status TenX Polybius EOS
(Block.one)
Tezos
Amount raised by biggest ICOs to date ($m)

18. ICOs: a threat for the VC model? (1/2)
18
• Advantages over VC money:
o Shorter roadshow
o No board member / governance
o No liquidation pref, no liquidity clause,
no reps & warranties, ...
o No power law excuse
o Bootstraps an early-adopting incentivized community
o For investors: Venture-like returns, Financial markets-like liquidity
No VC
hassle
Triggers
the initial
adoption
Drives
money to
that asset
class

19. ICOs: a threat for the VC model? (2/2)
19
• VC struggle to take advantage of it:
o LPs and fund policy
o Unclear legal structure
o Most people excited by cryptos in established VCs are junior => less weight
o Taxi companies syndrome

20. ICOs have still a long way to go
20
• Still, ICOs are far from being a perfect financing medium:
o False promise of real crowdfunding
o Not regulated… yet
o Little support from the crowd when the going gets tough
o “Not every company can do an ICO. Contrary to the hype machine working
on ICOs right now, they are not simply a funding mechanism. They are about
an entirely different business model. The token that you sell in your ICO is the
atomic unit of your business model. You are selling some of it to raise capital
but the main purpose of the token is to monetize your product or service.”
Fred Wilson, USV
1 => 24%
5 => 50%
130 => 100%

21. The funding model of the D-economy is still to be found
21
• Cooperation > competition:
o The best VCs bring more than just money and get invited either in pre-sales
of tokens or regular equity funding:
• New asset class
in the making
• The industry is totally nascent, like the internet in the 90s of the smartphone 10y
ago
ICO
LP Investment
LPs

22. 22
Thank you!
Any questions?
@bartjjj
If you want to store safely your
coins, get a Ledger Nano S ☺

23. Are cryptocurrencies the new venture capital?
23
Intro. What’s the problem with money?
1. Blockchain 101: a decentralized database with embedded trust
2. Transparency and network value: the advantages of decentralization
3. History and state of blockchain protocols
4. Dapps: rebuilding the Internet in a decentralized era
5. ICOs: a new way of financing projects?
6. ICOs: a threat for VC funding?

24. Overview of the Blockchain ecosystem
24

25. No use case?
25