A new way to bank - Grant's Interest Rate Observer · Divisible . Portable . Durable. Recognizable...
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A new way to bank
Transcript of A new way to bank - Grant's Interest Rate Observer · Divisible . Portable . Durable. Recognizable...
A new way to bank
@wences @wences
When the Genius points at the Moon
Chinese proverb
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When the Genius points at the Moon, the Fool looks at the Finger
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@wences
regulation
security
legal
real
trend
malleability
money
value ? ?
?
?
?
Bitcoin discussion
When the Genius points at the Moon, the Fool looks at the Finger
@wences
@wences @wences
When the Genius points at the Moon,
regulation
security
legal
real
trend
malleability
money
value bitcoin
Bitcoin discussion The best form
of money civilization has
ever seen
The best form of money
civilization has ever seen
... doing to money what TCP/IP did to information
the Fool looks at the Finger
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The history of money 100,000 years ago
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The history of money
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Qualities of sound money
Scarce Divisible Portable Durable Fungible Recognizable
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Functions of sound money
Scarce Divisible Portable Durable Fungible Recognizable Scarce
Store of Value Payment Mechanism
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The history of money
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The history of money
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1450 1530 1640 1720 1815 1920
The history of money
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Three myths about money
1
it is born out of it is transferable
by an asset
2
it is just a
exists because it is
3
it exists because of a
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Qualities of sound money
Scarce Divisible Portable Durable Fungible Recognizable
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WHAT MAKES BITCOIN SPECIAL
SCARCE NO ONE
21 MILLION
BITCOIN THE BEST FORM OF MONEY
CONTROLS IT
+ 100,000 servers
FREELY TRANSFERABLE
BITCOIN WE HAVE EVER SEEN
Presenter
Presentation Notes
Like the Internet itself, no person, company or government controls Bitcoin. It is an open source protocol that runs on hundreds of thousands os servers all around the world �No one can change that. It is perfectly scarce and each bitcoin is made of 1 million bits; it is very easy to divide. ��You can send bitcoins to anyone in the world, in real time and for free without asking anyone for permission. Without intermediaries These 3 qualities may make Bitcoin the best form of money we have ever seen
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2 FUNCTIONS OF MONEY
STORE OF VALUE PAYMENT MECHANISM
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STORE OF VALUE
SAVINGS
GOLD
FOR 5,000 YEARS
BITCOIN
BEST STORE OF VALUE EVER: SCARCITY (21M)
NOW
Presenter
Presentation Notes
Until now the best form of money to store value has been gold exclusively due to its scarcity. For the last 5,000 no other form of money has been able to store value as safle as gold has kept value. The US dollar, the swiss franc and the yen have all lost more than 90% of their value in the last 100 years. If you won a lottery that your descendants could only cash 300 years from know and you need to leave it in one asset the only rational options is Gold. Gold has proven to be a great store of value because of its scarcity, but it has no intrinsic value just like all good forms of money do not have any intrinsic value. Bitcoin is the best store of value we have ever seen because it is perfectly scarce: there will never be more than 21 million bitcoins.
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PAYMENT MECHANISM
BANK PAYPAL
CREDIT CARDS
OTHERS
Presenter
Presentation Notes
The most accepted form of payment right now are dollar bills; billions of people around the world accept them. There are only 30 million merchants who accept credit cards, and 170 million people who use Paypal, but billions of people will accept dollar bills. But it needs to be a transaction that happens in person, the moment we want to transact with dollars not in person we need an intermediary: a credit card company, a bank, Paypal, etc.
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PAYMENT MECHANISM
REAL TIME
FREE
ANYWHERE
Presenter
Presentation Notes
Bitcoin represent the first time ever in which you can send a payment to anyone, anywhere in the world, in real time and for free. It is the best form of payment we have ever seen.
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BITCOIN NETWORK EFFECTS
50% 50%
2014
All other cryptocurrencies Bitcoin vs.
Presenter
Presentation Notes
Protocols have strong network effects, for example email: it would be easy to come up with a better email protocol but it would be hard to get people to switch and use it instead of email. Money also has strong network effects; to get people to develop a social consensus around a new form of money, which does not have any intrinsic value, and attach value to it takes time and it is very hard to create artificially. It tooks thousands of years to develop that network effect around gold and around national curriencies. Bitcoin already has 12 million users when all other cryptcurrencies have a combined user base of 50,000 users. Bitcoin is adding 100,000 users a week, which is more than all the other crytopcurrencies combined ever added. One year ago Bitcoin was 50% of all cryptocurrencies volume and 90 other currencies where the other 50%,
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BITCOIN NETWORK EFFECTS
50% 50%
2014 2015
All other cryptocurrencies Bitcoin vs. Bitcoin vs.
4% 96%
Presenter
Presentation Notes
Today Bitcoin is 96% of all cryptocurrencies volume and 220 other cryptocurrencies represent the other 4%. It will take one or two decades for Bitcoin to reach billions of people, like it took the Internet decades to reach billions of people, but it will happen and it will be Bitcoin.
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2015
BITCOIN NETWORK EFFECTS
In five years…
Presenter
Presentation Notes
Today Bitcoin is 96% of all cryptocurrencies volume and 220 other cryptocurrencies represent the other 4%. It will take one or two decades for Bitcoin to reach billions of people, like it took the Internet decades to reach billions of people, but it will happen and it will be Bitcoin.
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THE GLOBAL NATIVE DIGITAL CURRENCY OF THE INTERNET
META-CURRENCY
Presenter
Presentation Notes
When Bitcoin succeeds it will not replace any national currency, the US Dollar, the Euro, the Japanese Yen and most other currencies will remain but Bitcoin will become the Native Digital Currency of the Internet and, as such, it will be a global meta-currency that sits on top of all other currencies and acts as a backbone for all other currencies.
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1 BITCOIN =
$10 $100 $1K
50,000 500,000 5 MILLION
$ 1 MILLION $ 1 MILLION
Presenter
Presentation Notes
Bitcoin has significant chances of failing and being worth zero. But when there were only 50,000 who owned bitcoins its maximum value was $10 per bitcoin, when there was 500,000 people who owned any bitcoins its maximum value was $100, when there was 5,000,000 people who owned any bitcoins its maximum value was $1,000 in the future when we reach 50,000,000 people owning bitcoin it will reach $10,000 per bitcoin, when there are 500,000,000 people owning bitcoin it will reach $100,000 per bitcoin and when there are 5 billion people owning bitcoin it will reach $1 million per bitcoin.
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1% INVESTMENT FOR X4000 RETURN
1%
x40 your entire portfolio
Presenter
Presentation Notes
Bitcoin is an experiment and, as such, there are significant chances that it fails and it is worth zero. Therefore it would be irresponsible to invest any amount in bitcoins that you cannot afford to loose. But it makes sense to invest up to 1% of one's savings or porfolio in bitcoins: if it fails the loss is limited to 1% of the portfolio but if it succeeds that 1% can be worth up to 40 times your entire savings or portfolio. It is a very asymetrical bet that is worth doing.
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Landline phones
vs.
Mobile phones
1.3 BILLION PEOPLE 6.3 BILLION
PEOPLE
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1.3 billion people ever had a telephone landline. 6.3 billion people have a mobile phone today.
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1.3 BILLION PEOPLE
Landline phones
vs.
Credit Cards Mobile phones
6.3 BILLION PEOPLE
Transacting Bitcoins
Presenter
Presentation Notes
1.3 billion people ever had a telephone landline. 6.3 billion people have a mobile phone today.
A new way to bank
