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© The Z/Yen Group 2014
Z/Yen Group LimitedGeneva/Switzerland BranchRue De-Beaumont 81206 GenevaSwitzerlandtel: +41 (22) 347-2768www.zyen.com
“Zest for Enlightenment”
Bitcoin & other cryptocurrencies: monetary and economic aspects
Geneva, 13 June 2014
© The Z/Yen Group 2014
♦ Background ♦ Bitcoin overview♦ Bitcoin as a medium of exchange, store of
value and unit of account♦ Other applications for blockchain technology
and cryptocurrencies
Outline
© The Z/Yen Group 2014
London Accord
Financial Centre Futures
Meta-Commerce
Eternal Coin
About‘When would we know our
financial system is working?’
Objectives: Expand Frontiers Change Systems Deliver Services Build Communities
© The Z/Yen Group 2014
Self-referential system upon which all our analysis is based:
♦ What does GDP mean?♦ Are competing
currencies good or bad?♦ Should money be a long
term store of value?
The Eternal Coin
[Source: http://illusionsetc.blogspot.com/2005/08/moving-mobius-strip.html]
© The Z/Yen Group 2014
♦ Nearly 13 million Bitcoins (BTC) in circulation ♦ Limited supply - 21 million BTC by 2140♦ Bitcoin ‘issued’ as a reward for payment
processing work (mining)25 BTC per block c. every 10’ until mid 2016Then, 12.5 BTC per block mid 2016 to 2020Then, halving continues until 2110-2140
♦ Market capitalisation - circa 8 billions USD, albeit fluctuating
Bitcoins - an overview
© The Z/Yen Group 2014
♦ Up to 10 Jan 2014, based on John Ratcliff’s work279,535 blocks30,720,691 transactions25,397,303 unique public key addresses (UPKA)
22,982,911 UPKA with a 0 BTC balanceLeaves 2,414,392 UPKA with a >0 BTC balance, of which
– 157,632 UKPA w. BTC balance between 1 to 10
– 88,328 UKPA w. BTC balance between 10 to 100
– 11,576 UKPA w. BTC balance between 100 to 1,000
– 1,344 UKPA w. BTC balance between 1,000 and 10,000
– 97 UKPA w. BTC balance >10,000 but <100,000
– 2 UKPA w. BTC balance >100,000 BTCs
How many people own Bitcoins?
[Source: http://codesuppository.blogspot.co.uk/2014/01/a-command-line-interface-for-blockchain.html]
© The Z/Yen Group 2014
Bitcoin Price (USD)
[Source: blockchain.info]
© The Z/Yen Group 2014
Bitcoin price volatility
© The Z/Yen Group 2014
♦ AttractiveLower transaction costs
No third party to financial transactionsLower transaction fees to users incl. businesses
Alternative to cashPublic ledger of transactions (history)Secure and transparentNo chance of counterfeiting
Fixed BTC supply should limit inflation Potential for e-commerce and money transfer
♦ But high price volatility hinders acceptance♦ And… lack of consumer/user protection
Bitcoin as a medium of exchange
© The Z/Yen Group 2014
♦ In theory feasible BTC modeled after gold - no interest, limited supplyBTC’s negative correlation with risk sensitive assets
♦ But Reputation? Uncertainty around long-term value
High price volatilitySpeculative marketPoor liquidityUnstable returns
Bitcoin as a store of value
© The Z/Yen Group 2014
How does Bitcoin compare
© The Z/Yen Group 2014
Look beneath the coins
© The Z/Yen Group 2014
♦ Registries – ships, aircraft, artworks, tax, …
♦ Trade reporting
♦ Consolidated tapes
♦ Personal insurance blockchains and smart insurance contracts
♦ Corporate voting
♦ Identity blockchains for anti-fraud protection or anti-money laundering
♦ Accounting registries
♦ Multi-entity contracting and virtual contract companies
Other blockchain technology applications in Finance ?
© The Z/Yen Group 2014
♦ BTC has most potential as a medium of exchange
♦ BTC value depends on people’s perception of its worth
♦ Governments may want to control BTCRegulating use and tax classification ‘Seigniorage’ issue if BTC grows big and competes
with fiat currencies
♦ Blockchain technology is innovative and could be applied to other sectors
Conclusion
© The Z/Yen Group 2014
♦ More information on Long Finance - www.longfinance.net
♦ Further reading on cryptocurrencies “Building Bit: What’s A Poor Government To Do
About AltCoins?”, Banking Technology, April 2014
♦ Any questions? chiara_vongunten@zyen.com
Thank you!
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