After an explosion of altcoins and funding, technical constraints and regulatory angst have taken over the headlines. Still, the frenzy of the past two years set the stage for the next wave of adoption with a steady inflow of talent and new, uniquely compelling use cases of digital assets.

1. CONFIDENTIAL
1
CONFIDENTIAL / PROPRIETARY
the state of crypto
2017 - 2018
2013 - 2015

2. CONFIDENTIAL 2
the basics
A blockchain is an open, digital, immutable, and distributed ledger of translations,
meant to act as a trusted system of record (ie think open database) in lieu of
other intermediaries.
Cryptocurrency is an asset that runs on a blockchain, created and held
electronically. These assets act as an incentive mechanism for the underlying
blockchain.
MAGIC NUMBER
BLOCKSIZE
VERSION
HACK OF PREVIOUS BLOCK
HASH OF MERKLE ROOT TIME
TARGET
NONCE
TRANSACTION COUNTER
TRANSACTIONS…
MAGIC NUMBER
BLOCKSIZE
VERSION
HASH OF PREVIOUS BLOCK
HASH OF MERKLE ROOT TIME
TARGET
NONCE
TRANSACTION COUNTER
TRANSACTIONS…
MAGIC NUMBER
BLOCKSIZE
VERSION
HASH OF PREVIOUS BLOCK
HASH OF MERKLE ROOT TIME
TARGET
NONCE
TRANSACTION COUNTER
TRANSACTIONS…
MAGIC NUMBER
BLOCKSIZE
VERSION
HASH OF PREVIOUS BLOCK
HASH OF MERKLE ROOT TIME
TARGET
NONCE
TRANSACTION COUNTER
TRANSACTIONS…

3. CONFIDENTIAL 3
the basics
Smart contracts are code that lives on a blockchain and enables business logic to
be automatically executable in a trestles way (i.e. asset custody, interest
payments, escrow, bets)
A family member
sends some Bitcoin
to another family
member
Consumer buys a
digital content
stream
Landlord remotely
locks non-paying
tenant out of
apartment
Seller lends buyer
funds to buy a house
Unit of a corporation
issues its own
bonds, and buyers
monitor payments
via a shared ledger
Self-driving trucks
make P2P deliveries,
pay local toll road
fees, and buy local
electricity
DIGITAL VALUE
EXCHANGE
SMART RIGHT &
OBLIGATION
BASIC SMART
CONTRACT
MULTIPARTY
SMART
CONTRACT
DISTRIBUTED
AUTONOMOUS
BUSINESS UNIT
DISTRIBUTED
AUTONOMOUS
ORGANIZATION

4. CONFIDENTIAL 4
Bitcoin: the most simple of the blockchains, Bitcoin is the ledger for the holders of
the cryptocurrency bitcoin. Created in 2008 as an electronic p2p cash system,
bitcoin has been cited as “digital gold”.
Ethereum: a blockchain-based computing platform to support smart contracts
and decentralized applications. Ether is the native currency.
the basics: cryptocurrencies

5. CONFIDENTIAL 5
common myths
MYTH
MYTH
MYTH MYTH
All blockchains are built equally.
Decentralization is always
necessary.
Speculation aside, there is no real
store of value use case for crypto.
As the applications and adoption or
crypto has evolved, blockchains
have sprouted up with various
features: settling 7 tps vs
thousands, validation via proof of
work vs staking and delegation,
encryption vs transparency.
Blockchains are constantly trading
off scalability, security and
decentralization.
Decentralization is most important
when you can't / don't want to trust
a central authority. For many
services (exchanges, gaming,
wallets), centralized entities can
design and iterate to users needs
faster, especially for regulated
services.
Censorship resistance benefits
those in regions with capital
controls. Limited supply benefits
those privy to hyperinflation.
Decentralized access benefits the
unbanked. Cheap / fast settlement
benefits global payment flows like
remittances.

6. CONFIDENTIAL
1/17
2/17
3/17
4/17
5/17
6/17
7/17
8/17
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10/17
11/17
12/17
1/18
2/18
3/18
4/18
5/18
6/18
7/18
8/18
9/18
10/18
6
funding evolution
$3,000
$1,500
$2,500
$2,000
$1,000
$500
$600
$300
$500
$400
$200
$100
SOURCE: COINDESK ICO TRACKER
ICO Funding ($MM) Crypto VC Funding ($MM)
Retail-backed ICOs have dried up, contracting crypto valuations and moving the funding model to
more traditional capital pools – this is the time for VCs to enter.

7. CONFIDENTIAL 7
bitcoin: 2014 - 2018 (+350%)
SOURCE: COINDESK ICO TRACKER
We’ve experienced Bitcoin winters before – BTC-USD was flat 2014 - 2016.
2013 2014 2015 2016 2017 2018 2019
Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16
-80% +80%

8. CONFIDENTIAL 8
the headlines: bitcoin’s timeline 2017 - 2018
SOURCE: COINDESK ICO TRACKER
A global retail-driven bubble is constrained by lagging global regulations. With that clarity, positive signals are starting to emerge.
2017 Mar May Jul Sep Nov 2018 Mar May Jul Sep Nov
$20,000
$15,000
$10,000
$5,000
$20,000
$15,000
$10,000
BTC breaks $1000 for the
first time in 3 years
SEC rejects
Winklevoss ETF
proposal
China shuts down
crypto exchanges &
ICOs
CFTC announces CME
& CBOE launch BTC
futures
SegWit locked in
Bitcoin Cash forks,
now worth $7.6B
Chinese authorities say
they will strengthen
crypto ban
BTC nears $20K, fees
break $50
South Korea regulates
crypto speculation
GS announces trading
operation
A16ZCrypto closes
$300M fund
Endowment funds
invest in crypto
Fidelity entering
crypto custody
FB bans crypto ads,
Google & Twitter follow
728
19870
4264

9. CONFIDENTIAL
the untold story: usage 2017 - 2018
Ignoring the surge around the Dec / Jan price swell, transaction volume (shaded) and transaction ct (bold) are
both up across the top digital assets, demonstrating a lasting uptick in adoption and development.
BITCOIN ETHEREUM LITECOIN
STELLAR ZCASH TETHER

10. CONFIDENTIAL
10 biggest vc rounds
Big rounds increasingly common, with money focused on either financial infrastructure or smart contract protocols.
2018 — DST Global,
Sequoia Capital, KP
2018 — Tiger Global, A16z,
Polychain Capital
2015 — A16z, Pantera, Khosla,
Founders Fund
2017 — Temasek, Bank of
America, HSBC, Barclays
2018 — A16zCrypto, Scalar,
Polychain, Multicoin
2018 — DCG, Draper,
FirstMark
ROBINHOOD COINBASE 21 INC
Raised $350M Raised $300M Raised $116M
R3 DFINITY LEDGER
Raised $350M Raised $300M Raised $116M

11. CONFIDENTIAL
after the crash, a stronger ecosystem
Protocol gaps have been exposed
Scalability is top of mind → new protocols, Layer 2 ⚡
⚖ Stablecoins are proliferating
Blockchain governance is evolving → forks, staking-as-a-service 🗳
Investors prepare to enter
Regulatory clarity emerging → ❌ ICOs 🚫
Financial infrastructure is racing 💸 to catch up
Consumer experimentation accelerates
Canadian citizens can track where their tax dollars go on Ethereum
Ethereum dApps gain momentum while Ether decouples
Sweden’s land registry conducted home transfers via smart contracts
🐱 Non-fungible tokens have been formalized