The Great F(l)attening: Unintended Consequences of Architecture

Transcript

1. The Great F(l)attening Unintended Consequences of Architecture August 2019 Meltem Demirors | CoinShares @Melt_Dem / @CoinSharesCo
2. This document, which is provided for informational purposes only, is intended to provide a high level overview of the CoinShares investment philosophy adopted by certain investment products promoted by the CoinShares Group only. Nothing in this document should be interpreted as constituting an offer of (or any solicitation in connection with) any investment products or services by any member of the CoinShares Group (and nothing herein constitutes, or should be construed as being, advice relating thereto). Access to any investment products or services of the CoinShares Group is in all cases subject to the applicable laws and regulations relating thereto. CoinShares General Partner Limited and CoinShares GP II Limited, who are the joint issuers of this document, have their offices at 28 Esplanade, St Helier, Jersey JE2 3QA. References in this document to ‘CS Strategies’ should be interpreted as being a reference to a common investment philosophy adopted by a family of investment products promoted by the CoinShares Group. ‘CS Strategies, CS1, or CS2’ is not a reference to any particular investment product or structure. The specific application of the ‘CS Strategies’ investment philosophy, and the actual investments held by products pursuing it, will differ on a product-by-product basis. Each ‘CS Strategies’ investment product may have a distinct structure, including (without limitation) in respect of fee arrangements applicable thereto, and regulatory treatment in the jurisdiction in which it is domiciled. The information presented in this document has been developed internally and / or obtained from sources believed to be reliable; however, no representation or warranty, express or implied, is made as to the accuracy, reliability, or completeness of such information. Predictions, opinions and other information contained in this document are subject to change continually and without notice of any kind and may no longer be true after the date indicated. Any forward-looking statements speak only as of the date they are made, and the CoinShares Group has no responsibility, and does not undertake, to update forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. The CoinShares Astronaut is a trademark and service mark of CoinShares (Holdings) Limited. © 2019 CoinShares Group. All rights reserved. Note Ms. Demirors herself is an investor in cryptocurrencies and companies, some of which are referenced in this deck for informational purposes only. You can find her disclosures and investments at meltemdemirors.com under “disclosure” and “investments”. Important Disclaimer
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8. The Great F(l)attening: Consequences of Architecture Copyright © 2019 CoinShares Group. All rights reserved. 8 Architecture is essentially a social and cultural product, and is influenced by the ideas, values, beliefs, activities, relationships and forms of the social organizations that they sustain. Society produces buildings, and the buildings, although not producing society, help to maintain many of its social forms. - Pritzker Prize Design has profound implications for the civic possibilities of innovation and experience for everyone. If you build something, it doesn’t affect just you. It affects everything around it. - Virgil Abloh, Designer
9. The Great F(l)attening: Consequences of Architecture The Times We’re Living In MISTRUST GENERATIONAL SHIFT DISRUPTION • Rising populist tide, trade wars, growing societal unrest • Constant revelations of abuses of power of all types • Balkanization of society in physical and digital world • Largest generational wealth transfer under way – or maybe not? • Failing social entitlement systems • Millennials facing life-long indebtedness • Fundamental shift in trust models • Drastic reduction in friction and barriers • Fractional, tokenized ownership models The preference for crypto is driven by social, political, and economic factors Copyright © 2019 CoinShares Group. All rights reserved. 9
10. The Great F(l)attening: Consequences of Architecture The Presents Shape our Desires for the Future Copyright © 2019 CoinShares Group. All rights reserved. 10
11. The Great F(l)attening: Consequences of Architecture A Paradigm Shift Physical World Price of Physical Things = pp Today – the digital world is undervalued, and controlled by a small group of companies In the Future – an increasingly digital world where pd > pp creates massive arbitrage opportunities VALUE TO BE CAPTURED Digital World Price of Digital Things = pd Copyright © 2019 CoinShares Group. All rights reserved. 11 $800B $500B $900B $1,000B $900B Our Digital Overlords $4.1T in Market Cap / 5% of US GDP
12. The Great F(l)attening: Consequences of Architecture Mapping Out This Paradigm Shift Copyright © 2019 CoinShares Group. All rights reserved. 12
13. The Great F(l)attening: Consequences of Architecture 1982 Independent Dependent Digital Physical Wine Gold Precious Metals Oil Real Estate Equities Copyright © 2019 CoinShares Group. All rights reserved. 13
14. The Great F(l)attening: Consequences of Architecture 1992 Independent Dependent Digital Physical Wine Gold Precious Metals Oil Real Estate Equities Domain Names Copyright © 2019 CoinShares Group. All rights reserved. 14
15. The Great F(l)attening: Consequences of Architecture 2002 Independent Dependent Digital Physical Wine Gold Precious Metals Oil Real Estate Equities Game Assets Domain Names Copyright © 2019 CoinShares Group. All rights reserved. 15
16. The Great F(l)attening: Consequences of Architecture 2012 Independent Dependent Digital Physical Wine Gold Precious Metals Oil Real Estate Equities Bitcoin Game Assets Domain Names Copyright © 2019 CoinShares Group. All rights reserved. 16
17. The Great F(l)attening: Consequences of Architecture Pay no attention to the man behind the curtain
18. The Great F(l)attening: Consequences of Architecture 2019 Independent Dependent Digital Physical Wine Gold Precious Metals Oil Real Estate Equities Game Assets Domain Names Copyright © 2019 CoinShares Group. All rights reserved. 18
19. The Great F(l)attening: Consequences of Architecture What Does a World Without Trust Look Like? Copyright © 2019 CoinShares Group. All rights reserved. 19
20. The Great F(l)attening: Consequences of Architecture Crypto is Different Copyright © 2019 CoinShares Group. All rights reserved. 20 “Financial institutions make people feel safe by hiding risk behind layers of complexity. Crypto brings risk front and center and brags about it on the internet.” - Elaine Ou, Global Financial Access
21. The Great F(l)attening: Consequences of Architecture Independent Dependent Digital Physical Wine Gold Precious Metals Oil Real Estate Equities Game Assets Domain Names Copyright © 2019 CoinShares Group. All rights reserved. 21 $80T $280B “Tokenized" Equity “Tokenized" Debt “Tokenized" Commodities $250T Markets are Taking Notice
22. The Great F(l)attening: Consequences of Architecture Ideas Don’t Exist in Isolation Regulation User Preferences Service Providers Compliance Requirements Political Pressure Macroeconomic Climate Financing Talent Technology Execution Financial Planning Operational Discipline User Acquisition Idea Distribution Security
23. The Great F(l)attening: Consequences of Architecture Not so Much Revolution as Evolution Evolution Early adoption fits the existing regulated structure Revolution Experimentation phase takes time… Decentralized Financial System Centralized Blockchain Applications DENIAL ANGER DEPRESSION BARGAINING ACCEPTANCE *The Kübler-Ross grief model serves as a good index of how incumbents and stakeholders alike will react as we progress through the parallel paths VALUE TO BE CAPTURED
24. The Great F(l)attening: Consequences of Architecture But Are We Flattening the Stack? Identity Layer 1: Protocol Layer 2: Token / Asset Layer 3: Smart Contract Layer 4: Issuance Platform Layer 5: Exchange Governance Data Key Management Storage Conflict Resolution Blockchain Application Stack Additional Services and Logic
25. The Great F(l)attening: Consequences of Architecture People Want Stuff that Works When the hype fades, consumers and businesses only care that stuff works. $8 B 5 Years $5 B 4 Years $4 B 5 Years $5 B 2 Years ISSUE DISTRIBUTE MANAGE EXCHANGE
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27. The Great F(l)attening: Consequences of Architecture md@coinshares.co