MoneyFarm - Investment Boutique June 2016

1. Cryptocurrencies, Blockchain & Smart Contracts:
The New Wave of Decentralization
Raffaele Mauro
Managing Director
Endeavor Italy
June 2016
MoneyFarm
Investment Boutique

2. 2

3. 3
Technology
Finance &
Venture Capital
Policy
Innovation
Cryptofinance,
Smart Contracts &
Bitcoin

4. 4

5. Digitalization
Decentralization
Smart
Disintermediation
The 3 Ds
5

6. I - Digital Content
III – Financial &
Political Institutions
II - Physical Goods
The 3 Waves
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7. The First Wave: Digital Content
Publishing Music
7

8. The Second Wave: Physical Goods
Transportation Housing
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9. The Third Wave: Financial Institutions
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11. 11
Peer to peer lending Crowdfunding
Disintermediation:
from underground to mainstream

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13. 13
Alt & Virtual Currencies

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2013 peak
2011 “bubble”

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june 2016
Wallets 13 M 3x Since 2014
Transactions / Day 177,000
Transaction volume ($) $ 131,7 M
Market capitalization $ 8,9 Bn
Merchants 100,000 Microsoft, Expedia, PayPal
Hashrate ≈1,500,000,000 Gh/s -12x Since 2014
VC Investments all time $ 1,1 Bn
N° of VC backed startups 138
Open source finance goes big

21. 2014 -> Price drops + institutional
acceptance
Mark Andreessen – Tim Draper – Fred Wilson:
Bitcoin today is like the Internet in 1994
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23. Distributed public ledger
Network of communicating nodes sharing a public transaction database
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24. 24
Cryptography & transactions
• Private key:
– Digital signature
– Allows spending
• Public key:
– Allows signature
verification
– Represents the
wallet address
• Transactions are
published in the
blockchain

25. 25
Blockchain
• Aimed at proving
transactions
• Contains all
transaction history
• Blocks record
recent
transactions +
connected linearly
• Longest chain
enables
verification / trust
• Generates the
“arrow of time =
Solves the
synchronization
problem in
decentralized
networks

26. Effects
• Decentralized, peer to peer trustless system
• Not dependent on central banks/governments/big
corporations
• Full transparency + pseudonomity
• Cryptographically secure
• Resilience to marketplace failures
• Viral growth
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27. Monetary supply
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28. Mining
• Bitcoin released
algorithmically
• Miners solve
complex
computational
problems
• Mining enables
transaction
validation +
block generation
• Fixed amount of
Bitcoins every 10
mins
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29. Limits
• Rigid monetary supply => Volatility
• 51% Attack vulnerability
• Reliance on third parties
• Block-Size / Fork problem
• Path dependence
• Inequality
• Transaction speed
• Non-neutrality / political implications
• Other network vulnerabilities
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30. 30
Gini coefficient > ~0.8

31. Remittances
• Half of the world population is unbanked
• Average remittance commission for African migrants > 12,5%
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32. How to get bitcoins
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33. How to easily trade €/$ with Bitcoins
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Community (Italy)

35. Ecosystem
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36. 36
Example: Coinbase
Raised $106.7 Million in 4 Rounds
Coinbase lets any consumer to create a Bitcoin wallet and start
buying/selling Bitcoin instantly by connecting their bank account
2012
Seed
Round
$ 600 K
2013
Series A
$ 6,1 M
2013
Series B
$ 25 M
2014
Series C
$ 75 M
Investors include New York Stock Exchange, Andreessen Horowitz, Union
Square Ventures, Draper Fisher Jurveston, Y Combinator

37. Accelerator & Investors
Generalist Specialized
Venture & Growth
Early Stage 37

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39. 39
Tech giants

40. 40
2015: Regulatory Activism

41. Financial information
41

42. 42
Attracting brainpower - 1

43. 43
Attracting brainpower - 2

44. 44
Cryptocurrency Courses

45. The first dedicated academic journal
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48. 21: The first Bitcoin computer
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53. 53
The Blockchain / Bitcoin 2.0 wave

54. 54Source: Startup Management, William Mougayar

55. 55Source: Venture Radar

56. Use cases
56
• App Development: Proof of ownership of modules in app development
• Digital Content: Proof of ownership for digital content storage and delivery
• Ride-Sharing: Points-based value transfer for ride-sharing
• Digital security trading: Ownership and transfer
• Digitization of documents/contracts: Digitization of documents/contracts and proof of ownership for transfers
• Decentralized storage: Decentralized storage using a network of computers on blockchain
• Company incorporations: Digitizing company incorporations, transfer of equity/ownership and governance
• Decentralized Internet and computing resources: Decentralized Internet and computing resources to cover every
home and business
• Home automation: Platform to link the home network and electrical devices to the cloud
• Digital identity: Provides digital identity that protects consumer privacy
• Escrow/custodian service: Escrow/custodian service for the gaming industry; loan servicing and e-commerce
• IT portal: A smart contract IT portal executing order fulfillment in ecommerce/manufacturing
• Patient records: Decentralized patient records management
• Digitizing assets: Improves anti-counterfeit measures
• Reputation management: Helps users engage, share reputation and collect feedback
• Prediction platform: Decentralized prediction platform for the share markets, elections, etc.
• Authenticity of a review: Enables authenticity of a review through trustworthy endorsements for employee peer
reviews
• Marketplace for sales and purchases of digital assets: Proof of ownership and a marketplace for sales and
purchases of digital assets
Source: Let’s Talk Payments

57. 57Source: Tim Swanson

58. On the top of the blockchain
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59. Independent blockchains
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Hyperledger

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R3

66. 66Source: Richard Gendal Brown

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Smart contracts
Decentralized
Applications
Decentralized
Autonomous
Organizations

68. 68
Government, Democracy, Law

69. 69
Decentralized “E-bay”

70. 70
Decentralized Financial Networks

71. 71
Decentralized Web Services

72. 72
Decentralized “DropBox”

73. 73
Decentralized Supercomputer

74. 74
Decentralized Messaging

75. 75
Decentralized Prediction Market

76. 76
Decentralized “Uber”

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Decentralized Collaboration

78. 78
Research & Open Applications

79. Platform for executing user-generated smart contracts
and decentralized applications
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Decentralized Programming Language
and Universal Platform

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Scenarios for cryptofinance &
decentralized technology
Basic:
- Cryptofinance as sub-industry of Fintech innovation
Optimistic:
- Blockchain as the new payment layer of the Internet, like SMTP for
email
- Internet of Things powered by blockchain technologies
Pessimistic:
- Bubble & crash in cryptoasset (second mega-bubble)
- Bubble & crash in VC in vestments in Bitcoin startups
Utopian / Dystopian:
- Decentralized technology radically disrupts governments, organizations
and financial institutions

81. Thank you !
rmauro@post.harvard.edu

82. Profile
Raffaele Mauro, Ph.D.
Raffaele Mauro is passionate about technology, policy and global finance.
Now Managing Director at Endeavor Italy, he is focused on high-impact entrepreneurship
and venture capital, providing companies access to smart capital, talent and markets.
Previously he was Head of Finance for Innovation & Entrepreneurship at Intesa Sanpaolo
and worked at venture capital funds such as P101 Ventures, Annapurna Ventures and
OltreVenture. Raffaele holds an MPA from Harvard University, a Ph.D. from Bocconi and is
alumnus of the Singularity University Graduate Studies Program at NASA Ames.
He is also Junior Fellow at the Aspen Institute, member of the “Young European Leaders –
40 under 40” cohort of 2011, member of the scientific committee at Blockchainlab.it and
member of the executive committee at the Global Shapers Hub - Milano, a World Economic
Forum community.
Twitter: @rafr
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