Lecture 2 for the MIT MediaLab Future Commerce course, delivered in Boston, MA on Sept. 20, 2016. In this talk, I discuss the Future of Money and how new technology like digital currencies and P2P finance innovations like bitcoin are going to change the very nature of money. We explore why money exists, the role it plays in our society, and how it shapes the way we interact with marketplace, markets, and financial infrastructure. We then outline opportunities to disrupt money itself with bitcoin and blockchain technology, and how entrepreneurs in the DCG portfolio are slowly changing the Future of Money.

1. SEPT. 20 2016
The Future of Money
An Introduction to Bitcoin and Digital Assets
Meltem Demirors - @Melt_Dem - @DCGco

2. • Introduction
• What is Money
• Overview of Digital Assets and Blockchain Technology
• Key Themes and Trends
AGENDA

3. INTRODUCTION TO DCG
Companies
Strategic InvestorsAcademia Policy
Co-Investors
NETWORKINSIGHTS ACCESS TO CAPITAL
Corporate Partners
• Invested in 70+ companies
• Own 3 subsidiaries
Family Offices & Funds
At DCG, it is our mission to accelerate the development of a better financial
system. We build, buy, and support bitcoin and blockchain companies by
leveraging our insights, network, and access to capital.
3

4. Overview
The past, present, and future of money

5. WHAT IS MONEY?
6
3000 BC - Ancient Egypt
This society had no form of coinage, but this model found in a tomb
shows accountants tallying grain balances
Balances were tracked using a complex system of colored strings
which represented credits and debits
1500 AD – Rai Stones on Yap
Carved stones of varying shapes and sizes were used as a form of
currency. No phsyical movement of the stones required, instead
ownership relied on oral history. In fact, a large stone sank and it was
still kept in “circulation” based on consensus between tribal elders.
Today – The Bristol Pound
A local community currency that was created by the city of Bristol to
incentivize spending with local businesses. Part of a non-profit
enterprise, the City also accepts payment of taxes and fees in Bristol
Pounds.

6. WHAT IS THE ROLE OF MONEY
6
• Global medium of exchange
- Generally acceptable proxy for trust in an exchange – allows easy
exchange and global pricing in common denominations
• Store of value, similar to gold, silver, or other precious metal
- Limited supply, has utility in jewelry / electronics applications, globally
acknowledged as valuable, priced in various markets
• Proxy for power
- Economic power has become synonymous with other forms of
political, social, and cultural power

7. MONEY TODAY
6
• Central governments control money supply – destructive monetary
policies and excessive seignorage leads to rapid devaluation
• Global currency wars enable competition and manipulation of global trade
balances and purchasing parity
• Banks and governments have created massive barriers to entry with
excessive and cumbersome regulation that limits disruptive innovation
and imposes extremely high costs
• Very difficult to transact peer to peer – many intermediaries extract rents
from the process of facilitating the transfer of money
• Centralization makes it far too easy to abuse, like LIBOR fixing, price
rigging, and other harmful or discriminatory practices
Money itself is ready for disruptive innovation

8. RE-IMAGINING MONEY
• Decentralized (peer to peer network, no central party in control)
• Digital (accessible anytime the internet or a local network is accessible)
• Highly divisible (incredibly precise to infinitesimally small amounts)
• Confidential and pseudonymous (ability to transact in opaque ways)
• Frictionless (low costs to move money globally, no barriers to entry)
• Scarce (limited quantity)
• Verifiable (can confirm ownership digitally)
• Irrevocable (can’t take back transactions)
Welcome to Bitcoin

9. Bitcoin and Blockchain Technology
Re-imagining money and markets

10. USE CASES FOR THIS TECHNOLOGY
6
Ledger TechnologyStore of Value Payment Rail

11. STORE OF VALUE
Digital currency can be an electronic store of value, especially in countries
where local currencies are volatile or losing value
Attributes
Limited Supply ü
Easy to Move ü
No Storage Cost ü
Durable ü
Highly Divisible ü
Use Case
7

12. OTHER DIGITAL CURRENCIES
Over 600 digital currencies and many different types of blockchain technologies
have been created for specific reasons
Currency Key Use Cases
• Store of value
• Payment network
• Distributed ledger
• Smart contracts
• Programmable transactions
• Distributed applications
• Real time settlement
• Cross currency transactions
• Shared, private database
Key Features
• Supply fixed at 21 million bitcoin
• In existence since 2009
• Public – anyone can access
• Supply not fixed, 1-2% inflation
• In existence since 2014
• Public – anyone can access
• Supply fixed at 21 million bitcoin
• In existence since 2013
• Private – must be “trusted” party
We believe in a future where many digital currencies and assets will serve
many different purposes
6

13. PAYMENT RAIL
Digital currencies can be used as a global payment rail, without exposing
either the sender or receiver to the underlying asset
• Fast transaction times – 10 min
• Low network fees
• No banks or intermediaries needed
Example: Sending money via the bitcoin network today
Wallet
Bank Account
Bill Pay or Credits
P2P FX Teller
Payment Network
Agent
8
Payout Options

14. ON AND OFF RAMPS ARE CRITICAL
Build a robust, integrated exchange ecosystem to
create a frictionless, highly efficient open financial
network using BITCOIN
9

15. 10
MONEY TRANSFER
Money transfer companies will require strategic partners to facilitate both
cash in and cash out across the globe
• Simplified international
payments for SMBs
• Lowest cost routing
• Digital, P2P payment wallet
on mobile phones
• Fund by using bank account
or P2P network “teller”
• Send and collect business
payments across Africa
• Leverages existing mobile
money networks

16. DISTRIBUTED LEDGER
The “blockchain” is a database or a ledger that maintains a continuously growing
list of data records or transactions, with a few special features:
Shared by
Parties
Distributed Secure Trusted Immutable
Provenance
Tracking
Reputation Platforms Digital Identity
Blockchain
Use Cases Anti-Counterfeit
Measures
Digital Assets and
SecuritiesData Storage and
Record Management
11

17. Key Themes and Trends
Where we’re seeing opportunity

18. ADOPTION TRENDS
13
Ledger
Technology
Store of Value
Payment Rail
Clients can “sell” bitcoin and
deposit fiat currency in
PayPal accounts
Enabling frictionless, instant
peer to peer payments using
bitcoin as (invisible) rail
Corporation Startup Details
Some of the world’s largest financial institutions are using bitcoin and
blockchain technology to serve their customers
Using blockchain to digitize
& issue private company
shares to investors

19. THE DCG PERSPECTIVE – OUR PORTFOLIO
12
Digital Asset Trading & Tools
Digital Asset Core Infrastructure
Enterprise Blockchain
Blockchain RegistryIdentity & Compliance Smart Contracts
Payments 2.0

20. WHO IS INVESTING IN IT?
Banks and Financial Institutions
Venture Capital
Corporate Venture
Non-Financial Corporations
Stakeholders
12
May
2013
July
2014
June
2015
October
2015
January
2016
Bitcoin
Opportunity
Corp
$95M $362M $620M $130M YTD

21. REGULATORY OVERVIEW
New York BitLicense
California developing
regulation
• Many agencies involved in bitcoin
and blockchain regulation
• “Wait and see” is prevalent
9
US Most Developed Europe Growing
• UK FCA working with
companies, but Brexit?
• Other EU member states
not actively regulating
Asia Uncertain
• Little guidance or action
from central banks or
regulators
• Large mandates to support
tech development
Russia, Africa Cautious
NC Bill

22. Get Involved!
Opportunities

23. READ ALL THE TIME
I probably read 3 to 4 hours a day. Hands down, the best way to learn.
• Reddit – r/bitcoin and the many permutations thereof
• If you like books – The Innovator’s Dilemma (Christensen), Crossing the
Chasm (Geoffrey Moore), The Master Switch (Tim Wu), The Ascent of Money
(Niall Ferguson)
• Industry publications like CoinDesk, CoinTelegraph, Bitcoin Magazine
• Stay up to date on bitcoin dev forums / bitcoin community slack chats
• Attend meetups, conferences, and events and read the white papers!
Engaging with new technology requires discipline - it’s not enough to approach
this as an academic study. There are real opportunities in your everyday life
where you can experiment and find amazing use cases for these technologies.

24. WE’RE ALWAYS HIRING!
We have the largest network and are constantly hiring!
• AngelList: Digital Currency Group
• Send your resume to meltem@dcg.co or careers@dcg.co
• Connect with us on Twitter - @Melt_Dem and @DCGCo
• Let us know how we can be helpful!