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T H E C O N S E Q U E N C E S O F T H I S B R E A K T H R O U G H A R E H A R D T O O V E R S T A T E .

Cryptocurrencies: What Every CFO Should Know

Key Questions:

•  What are cryptocurrencies, and where did they come from?

•  How does cryptocurrency technology work?

•  Why have cryptocurrencies become so popular, so quickly?

•  How are companies and financial institutions protecting themselves against risk?

•  What opportunities are being created for Canadian businesses?

•  How could cryptocurrency technologies change the world?

ManieEagar

What is a cryptocurrency? •  A type of digital token that relies on cryptography for

chaining together digital signatures of token transfers, peer-to-peer networking and decentralization.

•  There are currently over 850 types of cryptocurrencies. More than 100 of them have a market capitalization of over $10 million each.

•  The overall cryptocurrency market cap has passed $120bn.

ManieEagar

The first cryptocurrency

•  The first blockchain was conceptualised by Satoshi Nakamoto in 2008 and implemented the following year as a core component of the digital currency bitcoin, where it serves as the public ledger for all transactions.

•  The invention of the blockchain for bitcoin made it the first digital currency to solve the double spending problem, without the use of a trusted authority or central server.

•  The bitcoin design has been the inspiration for many other applications.

The Original Blockchain The bitcoin blockchain is: •  A distributed, secure, transparent, public ledger that establishes

ownership and allows for the efficient exchange of ownership. •  Available to anyone for download on the Internet (decentralized) • Does not depend on trust (controlled by no one – monitored by

everyone). •  Backed by strong cryptography secured by the world’s most powerful

network of computers. • Miners provide security and are rewarded with new cryptocurrency.

hLps://bitcoin.org/en/ ManieEagar

How powerful? •  Currently 20,507,779 petaFLOPS. •  #1 supercomputer is Sunway Taihu Light

at 93 PetaFLOPS. •  Sum of top 500 is only 593 petaFLOPS •  Blockchain uses specialized hardware

and floating point operations are not needed.

•  Cost of the network power is about $2 billion.

hLp://bitcoincharts.com/bitcoin/hLp://www.top500.org/hLps://www.top500.org/staBsBcs/perfdevel/(20zeLaFLOPS) ManieEagar

ChandlerGuo,biggestbitcoinminingfarmerinChina

Bitcoin puts Vancouver in the crypto money

The world’s first bitcoin ATM helps Vancouver make financial history. The machine, which went into operation Tuesday inside Waves Coffee House at Howe and Smithe streets, converts bitcoins into dollars and dollars into bitcoins, an anonymous digital currency that is distributed online, peer-to-peer without any central authority and can be used at a growing number of Vancouver retailers and online merchants around the globe. http://www.vancourier.com/news/bitcoin-puts-vancouver-in-the-virtual-money-1.678225#sthash.tAhFjDRa.dpuf

VancouverCourier,October30,2013

Digital Currency Canada Bank of Canada •  Project Jasper PoC (with

Payments Canada) •  Discussion Paper: Central Bank

Digital Currencies: A Framework for Assessing Why and How

Senate Banking study •  Digital Currency – You Can’t Flip

This Coin

ManieEagar

Bank of Canada Digital Currency Study • Privately held digital currencies are a threat to the Canadian economy and that government intervention will be a requirement for both privately-issued and government-issued digital currencies.

• “…well designed and managed private digital currencies could circulate widely but only with appropriate government regulation to ensure their safety, soundness, and uniformity.”

"CanadianBankNotesandDominionNotes:LessonsforDigitalCurrencies”BankofCanadaworkingpaper,Feb2017

Global ‘CoinLaws’ Canada Virtual currencies are not legal tender in Canada and reportedly, virtual currency exchanges are not subject to money laundering regulations. Virtual currencies, however, are subject to goods and services and capital gains taxes, and money laundering and terrorist financing laws.

The Cryptocurrency ecosystem e.g. Bitcoin & Ethereum

•  Crypto assets: Digital products and services •  Crypto currencies: Bitcoin, altcurrencies, digital currencies, virtual

currencies •  Crypto transactions: mining, transaction verification, clearing and

settlements •  Crypto exchanges: Digital asset value exchanges; interexchanges •  Crypto funding/finance: P2P lending, ICO/TGE, token based

shares and investments, loyalty and rewards (redeemable?)

ManieEagar

“GlobalCryptocurrencyBenchmarkingStudy”Cambridge,2017

The state of the cryptocurrency ecosystem

•  There are up to 6 million individual active users of cryptocurrency. • Up to12 million wallets “active” today with - 52% of wallets are

integrated with currency exchanges. •  80% of cryptocurrency payments linked to banking institutions and

payment networks. • National-to-cryptocurrency payments 2/3 of payment transaction

volume. •  Europe, Japan, Denmark - bitcoin tax free. •  IRS, Revenue Canada – bitcoin taxed. • More money raised through ICOs than traditional VCs.

ManieEagar

Should I Invest in Bitcoin? •  Billionaire investor Mike Novogratz says he has 10% of his money in Bitcoin and Ether

(a former hedge fund manager at Fortress Investment Group and a Goldman Sachs partner who made the Forbes billionaire list in 2008).

•  Private and institutional investors are adding crypto assets and currencies to their portfolios.

•  Cryptocurrency funds are a small but growing share (5-10%) of a $24B asset class. –  Public buy and hold funds like GBTC (Grayscale's Bitcoin Investment Trust) are

the largest and best known. –  Private buy-and-hold funds –  Hedge funds.

•  This market is predicted to grow exponentially over the next 3 years.

hLps://seekingalpha.com/arBcle/4052276-cryptocurrency-funds-arrived-bringing-wall-street-money ManieEagar

Cryptocurrency will Fuel the Digital Economy

•  Reaching the financially underserved 2,5bn people on the planet.

•  Forex & Remittances. •  Trading & settlement. •  Micropayments. •  ICOs/TGEs overtaking VC funding.

ManieEagar

Canadian FinTech & Blockchain Ecosystem (First Canadian Blockchain & Fintech study in BC)

Securities Settlements Digital Asset Management

& Value exchange

Wealth Management

Personal finance Loyalty

Payment Processing &

Transfers

Predictive Analytics Big Data

Digital (crypto)

currencies

Accounting Auditing Financial

Management Compliance

Digital Identity

Verification Security

Crowd funding

Investments Venture Capital

Foreign Exchange

Remittances

Digital banking Mobile

payments

P2P Lending

Blockchain Shared ledger

technology

FinTech +

Blockchain

Blockchain+ Convergence Enterprise ready?

Regulatory & Governance Ecosystem

Traders Exchanges Investors

Platform Community

Business Partners

Developers Managers

Issuers Transaction Processing

User Groups

RegulatorsLegislatorsJurisdicBons

Standards Authorities

Market Sectors Industry Players

Governing Bodies

Society Citizens

Consumers

PublicProtectorsInterestGroups

Cryptocurrencies

Manie Eagar manie@digitalfutures.co

+1 (416) 887-1472

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Blockchain User-centric Innovation & Leadership Development