CRYPTOCURRENCIES Big Profits, Big Risks, Big Impact May 2018 Monty Guild, Rudi von Abele, and Tim Shirata BOOTH 225
Guild Investment Management is a registered investment advisor with more than four decades of experience helping its clients manage their wealth. One of the ways we serve our clients is by closely monitoring critical developments in global social, economic, political, and technological trends. Members of the Guild team have had a personal interest in cryptocurrencies since 2009, and Guild has been covering cryptocurrencies in print and presentations since 2013. 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 2
INTRODUCTION Monty Guild Chief Investment Officer, Guild Investment Management, Inc. 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 3
Survival of the fittest during an evolutionary shift: like • dot-com stocks, most cryptos will not survive. Governments will ultimately be leaders in creating • cryptos, to facilitate tax collection and data harvesting. Cryptos will experience major shifts due to rapid • innovation in distributed ledger technology, and eventually due to quantum computing. 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 4
WHAT ARE CRYPTOCURRENCIES, AND HOW DO THEY WORK? Rudi von Abele Senior Analyst, Guild Investment Management, Inc. 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 5
What They Are • Cryptocurrencies: A New Asset Class • Technological Origins: Internet, P2P, and Encryption • Social and Cultural Origins: Hackers, Libertarians, and Criminals 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 6
• Cryptocurrencies As Fintech (Financial Technology) • Cryptocurrencies and Government • Cryptocurrencies as Medium of Exchange and Store of Value 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 7
How They Work • A distributed ledger of actions/transactions • A system for arriving at “trustless consensus” • Associated marketable “coins” or “tokens,” some with uses within the network 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 8
Challenges and Risks • Euphoria and Irrational Exuberance • Separating the Wheat From the Chaff (Coins With Real Use-Cases vs. Sh*tcoins) • Decentralization vs . “Organic” Centralization 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 9
• Scalability • Energy Consumption (For Proof-of-Work Algorithms) • Game Theoretic Problems • Over- engineering: “The iron will of unstoppable code ” 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 10
• Over- engineering: “The iron will of unstoppable code” • Regulatory Landscape and Crackdowns 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 11
CRYPTOCURRENCIES: The Current Environment and What Comes Next Tim Shirata Executive Vice President, Guild Investment Management, Inc. 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 12
Exchanges 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 13
Exchanges 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 14
Exchange Risks Hacking Technical Maintenance Overwhelming Customer Requests Terms and Conditions Insider Trading / Employees of Exchanges 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 15
Alternative Storage Methods Online Wallets Mobile Wallets Desktop Wallets Hardware Wallets Paper Wallets 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 16
What is an ICO? Initial Coin Offering Brief History 2014 7 projects total raise $30 million (Ethereum $18M) 2016 43 projects $256 million (DAO $150M (Hack $60M)) Today Total Market Cap for Crypto $438 Billion (coinmarketcap.com) 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 17
What is an ICO? Benefits Innovation in capital fund raising Settlements over the blockchain Liquidity Democratizing investment 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 18
What is an ICO? Risks Uncertain regulation Easily manipulated Lack of due diligence Overstated token valuations No guarantee projects will be developed 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 19
What is an ICO? 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 20
Security Tokens The U.S. Securities and Exchange Commission (SEC) has stated that security tokens are subject to the same federal legislation that regulates traditional securities. Nevertheless, a small percentage of the currently available ICO startups boast the resources needed to issue security tokens that can comply with SEC’s securities regulations. Failure to comply with these federal regulations could lead to legal punishment of the startup’s founders, and could even result in termination of the whole project. On the other hand, compliance with the regulatory obligations opens the door to a multitude of applications for security tokens, especially the possibility to represent a company’s shares, or stock, via cryptographic blockchain based tokens. 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 21
Security Tokens The Howey Test 1 - Does the token offer its holders an opportunity to contribute to the startup’s capital and to have a share in its profits? 2 - Does the ICO’s fundraising procedure involve investment in a project whose profits are solely generated from the efforts of individuals other than the creators or founders of the project? 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 22
Security Tokens If the answer to either question is “yes,” then the token can be definitely categorized as a security token that is subject to SEC’s securities regulations and other forms of Federal laws regulating securities. 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 23
Regulation of Cryptos What is decided today, may change tomorrow. This is a evolving asset class and we can only see more regulation coming in the coming months and years. Regulation is NOT BAD. 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 24
Identifying Industries That Can Implement Blockchain In Valuable Use-Cases Financial Industry Gaming Entertainment Transportation Education Legal 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 25
Summary Cryptocurrency will face some challenges from a technological standpoint and the regulatory environment will evolve. New cryptocurrencies may created to address those pain points, and new protocols are being developed to try to address those pain points for existing cryptocurrencies. (It will take time.) 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 26
Summary Regulation of cryptocurrency is good for the asset class. Institutional money will enter into the space when there is a solid infrastructure. Cryptocurrency is a highly speculative asset class, and one must understand that any investment into the space could lead to 100 percent losses. 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 27
Summary Digital money will be the future. Be cautious of ICOs and do your homework. Blockchain will revolutionize certain industries, sectors, and companies. (It will take time.) 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 28
Want a copy of this presentation? Visit www.guildinvestment.com/ moneyshowcrypto/ 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 29
Visit us at Booth 225. Guild Investment Management can help you reach your financial goals. Contact us today to schedule a portfolio review. guild@guildinvestment.com 310-826-8600 www.guildinvestment.com 12400 Wilshire Blvd. Los Angeles CA 90025 guild@guildinvestment.com 310.826.8600 Page 30
Recommend
More recommend
