Blockchain for Executives, Entrepreneurs and Investors
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A brief summary of key issues that executives, entrepreneurs and investors across all industries should be aware of when considering blockchain. First presented 8 June 2018 at the Longhash Incubator in Singapore.
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Blockchain for Executives, Entrepreneurs and Investors
- 1. Blockchain for Executives, Entrepreneurs & Investors June 8, 2018 x
- 2. Introduction Remington Ong • Partner, Fenbushi Capital / Advisor, BlockAsset • Sr. analyst, Merrill Lynch / Sr. Consultant, L.E.K. Consulting • Experienced entrepreneur with startups funded by global VCs • INSEAD MBA 2010J / UCLA B.S. Electrical Engineering • First Asian VC focused on blockchain, founded in 2015 • Build world class companies leveraging blockchain technology to change the world • Fund supports 50+ blockchain startups globally • Diversified portfolio across industries incl. finance, healthcare, supply chain, consumer goods
- 5. Why does it matter to me?EXECUTIVES
- 6. Financial institutions marching into blockchainEXECUTIVES Source: CB Insights, Jun. 2017
- 7. It’s not just financial institutions Source: Microsoft Azure, Nov. 2017 EXECUTIVES
- 8. 1/3 of them are already in production in 2018 74% of large companies across multiple industries see a compelling business case for blockchain technology 34% of large companies already have some sort form of blockchain system in production Source: Deloitte survey in April 2018 of 1,000 respondents from companies with annual sales of >US$500 million in the U.S., China, Mexico, U.K., France, Germany, Canada EXECUTIVES
- 9. Potential applications are endless Payments • P2P payments • Cross border remittances • Microtransactions • Interbank monetary accounts • Securities & commodities • Claims management • Fraud detection • P2P insurance Settlement & clearing Supply Chain Insurance Media • Digital rights management • IP attribution • Authenticity verification • Farm-to-fork tracking • Machine-to- machine communications, payments • Autonomous car / drone management Consumer goods Healthcare Internet of Things Government • Voting • Military / weapons security • Public records management • Audit trail for company processes • Self-enforcing smart contracts • Record management • Decentralized storage • Decentralized DNS • Distributed computing Legal / Audit Identity Computing Real estate Energy … and so much more … • Trade finance • Logistics tracking • Authenticity verification • Title ownership & transfer • Mortgage-backed loans • Shared ownership • Zero carbon verification • Carbon credits tracking/trading • P2P grid distribution • Health record management • Prescription tracking • Pharmaceutical supply chain • Know Your Customer (KYC) and Anti-Money Laundering (AML) • Identity Verification EXECUTIVES
- 11. Consultants need to be aware tooEXECUTIVES
- 12. Is a blockchain right for my company? • Redundancy • Consensus • Data sharing • Automation • Disintermediation EXECUTIVES
- 13. Is a blockchain right for my company? • Redundancy • Consensus • Data sharing • Automation • Disintermediation EXECUTIVES Accountability
- 14. Why a company should not deploy a blockchain • Performance • Security • Cost reduction • Cutting edge EXECUTIVES
- 15. Blockchain may only be part of the solutionEXECUTIVES 4g wireless Smartphones GPS Big data Analytics Internet Internet of Things Cryptography Machine Learning Artificial Intelligence Blockchain Blockchain killer app?
- 16. HR considerations • Hiring blockchain developers is difficult • Future job descriptions may be redefined EXECUTIVES
- 17. Should I plan to interact with public blockchains?EXECUTIVES
- 18. Key takeaways for executives • Blockchain isn’t a solution to everything • Blockchain may only be part of the solution, so even if it doesn’t impact me today, it may tomorrow • Blockchain may impact my vendors/customers, or even jobs in my company • If the decentralized public blockchain is here to stay, how will my organization need to interact with it? EXECUTIVES
- 20. Should I do an ICO?ENTREPRENEURS
- 21. It’s a lot of money!ENTREPRENEURS
- 22. Easier and more money than traditional VC 2017 ICOs Seed/Angel Total capital raised (US$bn) 5.6 8.5 Number of deals 435 13,753 Average deal size (US$m) 12.7 1.0 Median deal size (US$m) 4.5 0.5 Source: State of the Token Market (2017) Report, Crunchbase Q42017 Global Report ENTREPRENEURS
- 23. But it won’t always be this easyENTREPRENEURS Source: CB insights (April 2018)
- 24. Which type of token fits your startup? Crypto- currency Utility Token Access Token Security Token Asset-Backed Token Bitcoin Ethereum Binance Tzero Digix Gold • Singular purpose – medium of exchange / store of value • Irrelevant for most startups unless you have innovative new features (e.g. stablecoin, privacy, scalability, etc.) • Token is central to platform’s utility – e.g. securing network, purchasing computing power • Very few tokens are true “utility tokens” • Token economic model/ governance is critical • Token allows access or discount to service – discounted fees on Binance • Technically unnecessary – can pay with other currencies • Most “utility tokens” fall under here • Token is similar to equity – trade it like a stock • Evolution of equity crowdfunding – small businesses can “get listed” • Not just for blockchain startups • Be sure to follow regulations • Can tokenize everything from gold, real estate, commodities • Increase accessibility to range of investments for retail investors • May impact business processes (e.g. supply hedging) ENTREPRENEURS
- 25. Not every blockchain startup needs an ICO Crypto trading app Bank consortium Enterprise software Supply chain Financial settlement Supply chain provenance Internet of things Consumer crypto apps Tax / accounting compliance Supply chain finance Smart securities Remittances ENTREPRENEURS
- 26. Why are you doing an ICO? • Should not be the motivation • Not as easy as 2017 • Aftermarket headaches Easy money? • Having a token ≠ network effect • ICOs are not a shortcut to marketing • Most investors are speculators Access to users? • Utility - Does my product really need a specialized token? • Access – How will this complement my GTM strategy? • Security – Will my customer base benefit from having an ownership stake in my company? Type of token? ENTREPRENEURS
- 29. …yet crypto-assets still only account for a tiny portion of the global financial market Tremendous growth, but still tiny Global Derivatives $630T Global Debt $217T Global M2 Supply $90T Global Equity Markets $71T US M2 Supply $13.7T Global Gold Supply $8T Apple MarketCap $870B All Crypto-Assets $346B The market cap of all crypto assets has already grown 2035% from $17B on 1/1/2017 to $346B on 6/8/2018… Comparison of global asset classes (2017) Market Cap of All Crypt0-assets (2017=2018YTD) Source: Coinmarketcap, CIA Factbook, Federal Reserve, Google Finance, World Gold Council, World Federation of Exchanges, Bank for International Settlements INVESTORS
- 30. VolatilityINVESTORS Source:s S&P Global, Citi Private Bank, Bitcoincharts
- 31. Investment strategiesINVESTORS Traditional Correlated assets Short term Trade on volatility Leveraged Margin trading • Suppliers – e.g. NVDA, AMD, supply GPUs that mine crypto • Public Funds – e.g. GBTC, ETHFUND, funds that track crypto prices • Private funds – Accredited investors can invest in private funds that invest in blockchain/crypto • Liquidity – be aware of existing supply/ demand or be the market maker • Timing – Crypto is a 24/7 market, so be aware of key trading sessions • Arbitrage – Crypto is easily migrated between exchanges & liquidity pools, so be aware of opportunities Long term Buy & HODL • Due diligence – like any early stage startup, team matters • Diversify – If you’re long term macro, it’s too early to tell which will win • Support – dapps rely on community to grow, so evangelize and use the product • Extremely high risk – experienced traders can explore platforms like Bitmex for margin trading
- 32. Warnings • Any level of crypto investment is a high risk investment • Like any investment, do your own research • Invest only as much as you’re willing to lose INVESTORS