Investing in Blockchain Disruption

1. Digital ValueDigital asset servicing and consultancy
The interface to the decentralised economy
Stephen Daws
Director
sdaws@digitalvalue.io
www.digitalvalue.com.au
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

2. Public Blockchain tech
1500 + Assets, 7000 markets, 50 ICOs live (8/1/2018)
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

3. CryptoCurrency Investment Concerns.
Concerns
The market is in a bubble.
Don't know what to invest in.
Concerned that there is no real substance behind cryptos
Don't know what price to pay.
Unsure about legality.
Concerned about loss or theft of assets.
Complexity of dealing with cryptocurrency exchanges and ICOs
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

4. The Digital Asset Market Bubble
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

5. The Digital Asset Market Bubble
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

6. What are digital Assets
Note:
Eth functions as both a crypto and utility token but is primarily a crypto
NEO platform has both a cryptocurrency (NEM) and Utility token (GAS)
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

7. Building a Digital Asset portfolio
The Power Law (or 80:20 rule)
Core holdings (Bitcoin, Ethereum)
Money segment
Platform segment
Decentralised Applications (Dapps)
ICOs - all of the above with added risk
For most use cases a few cryptos will dominate
Some use cases will simply not be competitive with incumbent tech
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

8. Money Segment
Function Leaders Leading Challengers Legacy Competitors
Store of value Bitcoin, ethereum Bitcoin Cash,
Commodities, Gold, $USD,
central banks (BTC).
Investment banks (Eth)
Payment rails Ripple
Stellar, Lightning network (bitcoin
etc), Raiblocks, Bitcoin Cash, Nem
Credit card networks, swift,
EFTPOS, Paypal, remittance
providers
Medium of exchange
Bitcoin (cryptomarket only),
Monero (black market), IOTA
(IOT)
Tether & Ethereum (cryptomarket
only), LiteCoin, Bitcoin Cash,
NAVCoin & PASCAL (black
market), Raiblocks, Government money,
Unit of Account (stablecoins) none
Maker, Basecoin, Bitshares,
Tether, Government money
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

9. Platform/Virtual Machine segment
Function Leaders Leading Challengers Legacy Competitors
General Smart Contract platform
(ICOs and Dapps) Ethereum
NEO, (this year EOS, Cardano,
Tezos, rootstock) raiblocks ? AWS, AZURE, Google C,
Specialised Smart Contract
platform Stellar
NEM, Bitcoin, Bitshares,
IGNIS,ICON
Remittance providers, SWIFT,
Asset market places, ethereum
Enterprise focused smart contract
platform VeChain
Walton, Wabi, NEM, Stellar.
Stratis, Forks of Ethereum etc IBM , R3 etc
Raw Compute and Storage SIACOIN FileCoin, Maidsafe AWS, AZURE, Google C
Cross chain platforms none
COSMOS, Lightning network,
WANchain, ICON, Komodo,
Bitcoin and Ethereum Ethereum
Social Networking Steemit Yoyow, Synereo Reddit, Yahoo, Medium
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

10. Decentralised Applications segment
Function Leaders Leading Challengers Legacy
Competitors
Decentralised Exchanges Bancor (Ethereum only)
Cross chain platforms. NVO, Dedicated Smart Contract
platform such as Stellar
Crypto exchanges, asset
exchanges
Investment ICONOMI (crypto only) Cross chain platforms. NVO
Low cost brokers, robo
advisors,
Advertising Basic Attention DATA
Google, Facebook, Add
Agencies
KYC CIVIC uPort and Factom, Radium, Digusign Jumio, Trulioo, Facebook
Gambling and Games Krypto Kitties Too many to mention Online casinos
Medical Records Medical Chain None known EHR companies
Consumer Marketplaces Syscoin, Bitboost Ebay, gumtree, Alibaba
Copyright Digital Value Pty Ltd. Contact: sdas@digitalvalue.io

11. Decentralised Applications Segment
Function Leaders Leading Challengers Legacy Competitors
Fractionalised real estate Blocksquare
Cross chain platforms. NVO, Specialised
Smart Contract platform such as Stellar Realestate Trusts
Consumer Financing Salt Cross chain platforms. NVO Finance companies
Electricity Marketplaces Powerledger None known Google, Facebook, Agencies
Invoice Financing
Populous
None known Banks, Finance companies
Online gaming currency WAX None known New market
Chat Kit Telegram Facebook, Weechat
Provenance/Supply Chain Ambrosous Provenance Many
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

12. Emerging Tech (ICOs, ICO tokens, airdrops)
Presales
● Invite only.
● Large investment usually required.
Initial Coin Offerings (ICOs)
● Require Ethereum, Bitcoin or other ICO platform native currency (Stellar, Waver, NEO) to invest.
● Issue either a token on the ICO platform or a paper private/public key.
Exchange tradable ICO tokens
● The token issued from an ICO is often tradeable (EOS, Cardano and 1000s more)
Airdrops
● Existing Bitcoin and ethereum holders are often given new digital assetts for free.
ICO info sites : tokenmarket.net icostats.com icotracker.net/
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

13. Screening cryptos.
1st Pass 2nd pass 3rd pass
Visit the website. If team is
anonymous or the site uses lots of
buzzwords like web 4.0, stay away.
Check via blockchain and/or white paper what the
distribution is to the founders/early investors is.
Check the Blockchain explorer and see if the big
accounts are holding or selling.
Check the total market for the industry that the coin
is supposedly targeting and comparing it to the
market cap of the coin. Include total supply.
Read the Whitepaper. - If you do
not understand it stay away. Checkout the team on Linkedin. Can they do this ?
If your a finance person - Metcalfs law, NVT,
Quantity Theory of Money to build an equivalent of
a DCF analysis - example
https://docs.google.com/spreadsheets/d/1FvYGe0T
A-rZR00iAV2PDI-B9zba6GpEG1FodECWJDys/edit
Check Reddit - look for sceptical
takes and understand the use
cases. Does it make sense ?
Understand how the token provides value to the
holder. - Will price appreciation kill the value prop ?
Can I buy it and securely hold it ?
Github repos - does it exist and is
there activity ?
What is the problem or inefficiency that the
platform is solving, what is the potential market
size? What are the risks ?
Is there a current product ?
Great site to see social sentiment : https://solume.io
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

14. Managing price volatility
Be patient, avoid FOMO
If it's going vertical for no compelling reason, stay
away.
Set you $ investment amount and period to get in. $
cost averaging works on the way up and in choppy
markets.
Split your orders up and start limit orders near the
last support level (circa 20% corrections are very
common)
Use stop losses (on exchanges)
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

15. Choosing Exchanges
International USD to CryptoLocal AUD to crypto
Buy bitcoin with AUD
Low liquidity (Price slippage)
Price is sometime misaligned with int market (10%)
Cryptos are priced in bitcoin (sometimes eth)
Buy bitcoin with USD
High liquidity (No Price slippage), low fees
KYC and AML challenges
Incur FOREX charges (4%)
High Volume crypto to crypto Emerging crypto to crypto
Low spreads, fees and high liquidity (ASX size) and usually cheaper
Advanced features (shorting, debt markets)
Completely unregulated
Low fees, lots of coins including New digital Assets
Completely unregulated
Use coinmarketcap.com to check prices and volumes and listings
BTC BTCCrypto
Wallets
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

16. Avoiding Horror stories
Exchanges regularly get hacked
● Keep the assets you can not afford to lose in a secure place off the exchange.
● Use Dual Factor auth on all sensitive accounts, including your email, recovery email and exchange accounts.
● 2FA - SMS is ok, Google Auth is much better, FIDO keys are best and cheap - use strong unique pwds!
● Consider a root recovery Gmail/Gdrive account that has Google Advanced Protection enabled.
● Use encrypted email to authorise Exchange withdraws and policy changes. (PGP is free)
Stories of people losing cryptos are a regular occurrence.
● HSMs such as the Ledger Nano S are your friend ! - Your private keys are never exposed, they support most of the
major cryptoes and ERC20 tokens (ICOs).
● Backup everything (seeds, pwds, priv keys, usid, instructions) on an AES256 encrypted file and store a copy offsite.
● Give one or more people that you trust instructions, the files, and the password(s) - split amongst non colluding
people if your concerned.
● Check out Google inactive account manager. You can set it to send instructions, pwds and files to nominated
people after x period of time.
PCs and Phones can be hacked or are under admin control of someone else.
● Consider TAILs OS for trading and creating cold store files (paper wallets/seed words etc). Alternatively make sure
your PCs AV & FW etc are up todate and use a VM or TAILS for accessing dodgy stuff.
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

17. Exchanges (Rebalances and new purchases)
...
Tier 1
Storage
Temporary
Tier 2
Crypto
Wallets
Tier 4
Cold Storage
Encrypted
File (multisig)
Hardware Modules
Backup
Digital Asset Custodian
Tier 3
HSM Crypto
Wallets (multisig)
Non Custodian Wallets on secure device
Non HSM
Seed
Words
Seed Words & passwords
Paper Wallet for non HSM
compatible assets
Seed
Words
OffSite copy of dual encrypted
ColdStore and instructions on GAP !
Username
Passwords
Export
Paper
Wallet
Priv keys
Sign Transactions
Regular
backups
Trusted 3rd parties
(Multisig)
Recover
Transactions
Sign
Transactions
Password Password
admin
2FA
usid/pwd
Encrypted emails
2FA
Long Term
Holdings
Transaction
Holdings
Disaster
Recovery
recovery
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

18. Headwinds
Public blockchains bypass and threaten the existence of many
major institutions.
Current System Permissioned System Permissionless System
Public blockchain techTrusted third party required Private blockchain tech
Increased regulatory control and outright bans in some countries.
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

19. Headwinds
Scams and scandals
● Tether/Bitfinex - another MT GOX ?
● ICOs, - most are poor, some are outright fraudulent.
● ICOs most are illegal - avoiding ASIC/SEC regulations.
● Bitcoin sellers avoiding Austrac (April 2018)
Price volatility is going to scare many away.
● Current crash
● Potential ICO destruction - when real valuations are considered.
Technology Problems
● Scalability
● Net neutrality
● Fragmentation
● Other Tech (raiblocks)
● UIs are poor
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

20. 2018 Themes
Lightning Network (Raiden on Ethereum)
● Negligible cost, better privacy, instant, infinitely scalable and enables cross chain
transactions/decentralised exchanges (Bitcoin, LTC, Stellar and many others eventually).
Regulatory compliance or censorship resistance
● NEO, Stellar and others that play well with regulators and institutions.
● Decentralised Exchanges which bypass regulations. (initially on chain)
● Airdrops which bypass regulations.
● Tendermint/COSMOS chain of chain tech.
● Privacy focused protocols such as AEON and Pascal
● Privacy tech on ethereum(zk-snakrsk) and bitcoin (NAVcoin and Bitcoin satellites).
Copyright Digital Value Pty Ltd. Contact:
sdaws@digitalvalue.io

21. 2018 Some major themes
Competition for Ethereum
● Lower cost, faster, more secure and regulatory supportive ICOs platforms (Stellar, NEO)
● Lower cost, faster, more secure and more feature rich platforms (EOS, Cardanao, Tezos)
● Regulated crowdfunding platforms.
● Cross chain platforms such as COSMOS, and RSK that use Ethereum Virtual Machine
POS
● We don’t really need multiple POW cryptocurrencies. Proof of Stake enables faster
transactions/scalable and is much more cost effective.
Copyright Digital Value Pty Ltd. Contact: sdaws@digitalvalue.io

22. Digitalvalue.com.au
Questions ?
Copyright Digital Value Pty Ltd. Contact:
sdaws@digitalvalue.io