Bitcoin Business
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Transcript of Bitcoin Business
Bitcoin market cap rose from $55 million on the
first of January 2013 to $143 million by the first
of February 2013. By March the market cap
surpassed $403 million and by mid March
bitcoins surpassed $500 million.
A few days later Laiki Bank announced it would
freeze the deposits of all account holders in
Cyprus as a way to secure assets to maintain
liquidity for the bank. Within hours every
Parliament and Congress of every major
economic power in the world said that nothing
stood in the way of other banks doing this
throughout the world, though most reassured
their people this would not be needed for them.
Banks followed suit saying they were not like
Cyprus yet reiterated that they did have the
r ight to seize deposits under certain
circumstances. No legal consultation was
made of the world!s legal establishment
throughout all this. JP Morgan had a glitch that
day as well zeroing out the balances of all its
depositors. The glitch was fixed by mid
afternoon and that became the focus of most
news reports in New York and Washington.
By the 20th of March the market cap for bitcoin
surpassed $1 billion. During the first week of
April 2013 New York!s Federal District Court
ruled that banks could not be prosecuted under
relevant laws for LIBOR rate rigging and other
wrong-doing. Top cop, Attorney General Eric
Holder re-iterated that due to the systemically
important nature of modern banks it is
impossible to prosecute them for significant
breaches of the law, including bid rigging,
money laundering or outright theft, since doing
so would have severe societal costs.
Today, on April 10, 2013 the value of all
bitcoins surpasses $2.8 billion.
As the rule of law crumbles, many people are
seeking ways to preserve their property by
removing it from the care of trusted third
parties. Modern electronic commerce relies
upon trusted third parties to take place. Thus a
need exists for a transaction system that
operates independently of trusted third parties.
The bitcoin system of exchange relies on
cryptology to remove the need for trusted third
parties to conduct business electronically.
Thus, bitcoin is an ideal alternative to
traditional legacy systems of finance, despite
the difficulties faced in making bitcoin easy to
use and adapting its unique features to meet
the needs of the electronic marketplace.
copyright (c) 2013 William H. Mook! ! ! ! ! ! 1
LIB
OR
CA
SE
CY
PR
US
2.25% per day
4.50% per day
I am concerned that the size of some of these
institutions becomes so large that it does
become difficult for us to prosecute them when
we are hit with indications that if we do
prosecute — if we do bring a criminal charge
— it will have a negative impact on the
national economy, perhaps even the world
economy. I think that is a function of the fact
that some of these institutions have become too
large.
6.75% per day
BITCOIN HISTORY 2013
Collapse of TrustEric Holder
U.S. Attorney General
BITCOIN VALUE
In cryptography we trust
Bitcoin values are growing rapidly and that
growth is accelerating. It is important to realize
that despite this rapid and accelerating growth,
most people (around 72%) are buying bitcoins
to store value, not realize trading profits. This
value is likely to rise since the number of
bitcoins is limited whilst the number of dollars
in circulation is constantly increasing.
Bitcoin numbers are limited today to 11.08
million and are limited for all time to less than
21.00 million not by convention, but by the
nature of numbers themselves.
Bitcoins are freely traded on a 87 exchanges at
present which determines their value day to
day minute by minute. Bitcoins offer secure,
reliable, fast and private transfer of value
between parties using a peer to peer
communication of encrypted digital money.
They offer intrinsic digital value.
How can digital bitcoins have intrinsic value?
Just as precious metals give coins an intrinsic
values so too do precious numbers give
bitcoins intrinsic value.
Just as precious metals are mined from a sea
of rock and dirt, so too are precious numbers
mined from a sea of lesser numbers.
Using double SHA 256 encryption we know
that there are 2.1 quadrillion numbers that are
possible to use as the base of a blockchain
that is used to build an infinite series of
transaction sequences. Today through the
effort of hundreds of thousands of miners, we
know 1.1 quadrillion of these numbers. Over
time we will know 2.1 quadrillion of these
numbers.
The numbers possessing a unit of value called
the Satoshi is the smallest unit of a bitcoin. It
takes 100 million Satoshis to make a group
that forms a bitcoin. This allows nearly infinite
divisibility.
These numbers are traded among users
securely without any possibility of counterfeit.
With these numbers we create transactions
that share all the features we associate with
gold and silver in the real world. We have in
essence the digital equivalent of gold. We
have precious numbers.
WHY VCs LOVE BTC
Surpassing $1B per month!
VC interest is never ideological, its always
mercenary. Bitcoin has the opportunity to
disrupt multi-trillion dollar markets and in doing
so create truly astronomical markets. There
are four key steps in realizing these
opportunities.
copyright (c) 2013 William H. Mook! ! ! ! ! ! 2
BITCOIN WALLET
A place to put your stuff
Just as you need a web browser to surf the
internet, you need an electronic wallet to trade
bitcoins. Wallets are free, but the technology is
difficult to use and harder to understand.
Comparing the situation with bitcoin wallets to
the development of web browsers, if Satoshi
Nakamoto is bitcoin!s Tim Berners Lee (creator
of the hyper text transfer protocol (http:)), we
have yet to see the emergence of Mark
Andreesen. Once we do, we have the basis of
a multi-trillion dollar business.
Two factors are of paramount importance, (1)
Ease of Use and (2) Security. Instawallet was
a failed effort at a client wallet that lost clients
money and has yet to recover it at the time of
this writing. Stand alone software downloaded
from MIT, compiled and synchronized, not only
takes 18 hours or more, but also is extremely
complex. The only real solution? Hardware!
EXCHANGE
Show me the money!
Bitcoin has a lot to recommend it as the perfect
digital currency. However, it is not legal tender
in any country. As a result, there is a demand
for exchanging between Bitcoin and fiat
currency.
Consumer level exchanges charge between 50
and 100 basis points for each trade. Large
trades pay 10 basis points. Assuming 35 basis
points as an average and $5 billion in trades
this year current revenues are $17.5 million per
year. Volumes are expected to rise 100 fold
this year increasing the value of this revenue
stream to $2 billion per year. If this seems
surprisingly large consider that volumes have
increased 50 fold already this year.
PAYMENTS
The Buck Stops Here!
The key dr iver of both Bi tcoin pr ice
appreciation and exchange volume has to be
payments volume. People using bitcoins to
pay merchants for transactions provides a real
economic driver for both price and exchange
volume to rise simultaneously.
How do we get there? There are two
additional drivers prior to reaching critical
mass; (1) bitcoins perceived as a store of value
and (2) bitcoin pricing driven by speculation.
These have provided the dramatic rises of
recent months and will drive us to the point of
merchant acceptance.
copyright (c) 2013 William H. Mook! ! ! ! ! ! 3
PROVEN EXPERIENCE
Working with world class talent!
Computer based payment systems were
invented by William Mook in the 1980s and the
first patent for a point of sale computer was
issued to William in 1990. William!s leadership
continues to this day and he is a sought after
speaker on the subject of payment automation.
Increasingly intrusive regulatory environment,
the result of regulatory capture by "too big to
fail! institutions have created a situation where
faith and trust in these institutions and even the
law have begun to falter across the Eurozone,
North America and parts of Asia. At risk is over
$150 trillion of deposits held by individuals who
have between $100,000 and $5,000,000 in
deposits. These individuals can benefit greatly
by transferring a portion of their wealth into
bitcoins. An innovative transfer program has
been developed in the wake of Cyprus that
transfers funds even when threatened by
adverse bank action.
copyright (c) 2013 William H. Mook! ! ! ! ! ! 4
WHERE THE MONEY IS
Offering security and privacy