 The first phase in Bitcoin is what I would call the discovery phase. This is when people were first introduced to the concept, very technical people were still coming to grips with it, really command line based, so no tutorials really and very little use cases. So the risks for investors were extremely high. If you did VC investment, chances are very high that you got burnt. Even if you just bought Bitcoin, chances are high that you kind of lost them because there was no glacier protocol back then. So the strategy back then would have been to just buy and hold Bitcoin. The infrastructure phase is what we're in still today, I would argue, starting in 2013. And the reason why I picked that year was because that's when ASIC mining chips started being developed for the first time. So specialized mining chips, we saw the advent of these hardware wallets. And then it was also the year where it was clear that Mongkaks needed competition. And I remember in, I think it was like May 2013 at the San Jose conference, there were a lot of newly starting exchanges, Bitcoin exchanges. So to me, that's a good year for infrastructure phase to start. Infrastructure in Bitcoin really means that you work on the protocol stack. You work on debugging the code as much as possible. You work on improving the efficiency. So you work on scaling too. And then you think about how to, in a modular way, how to grow the system. And privacy, obviously, because Bitcoin is all about financial autonomy, censorship resistance. So having that goal of privacy in mind is important. So that's all that happens during the infrastructure phase. One other element that I think is part of that is what I call custody hardening. It's basically where custody systems, custody companies get tested. And when they fail the test, there's others who take the roll over. It's like creative destruction, basically. Exchanges get hacked and then new ones pop up. Also, lots of scam cycles. So as the price goes up, scammers see that there's a lot of money and information imbalance. So they pretend to know things that the investors don't and then, you know, scam them for the money. Infrastructure is also where we saw, we see early invest, sorry, early institutional involvement. So funds coming in and obviously that grows more and more. Like we're seeing the size of the funds that are looking to invest in the space are just massive. It's really impressive to see. But also institutions that get involved to start providing services because they see that there's a lot of money going around and so they want to be part of that ecosystem. So the strategy here would be still, you want to hold Bitcoin, you may want to invest in a basket of, you know, and I do mean a small basket of e-gold currencies that have maybe some complementary value. You can do trading, you can invest in the exchanges, which is also part of the infrastructure and the hardware solutions and so on. And so what I left out here is like the consumer facing startups and such. I don't think they will outperform Bitcoin until the infrastructure phase is really kind of over. So one part of infrastructure phase is that the market is still very immature and you see these beautiful setups in the charts. Like this is Litecoin, for example, last summer. It was $46 the month after it was already doubled in price and that's because the emotions are just very raw. Traders are often inexperienced and so it's not like you're playing chess with a grandmaster. It's more like, you know, everybody's an amateur. So it's a very interesting environment for trading. I wanted to mention mining as well because that's part of Bitcoin infrastructure. So what I did here was I looked at the daily mining revenues expressed in Bitcoin as a percentage of the circulating supply. So right now we have about 16 million Bitcoin in circulation. So what you see in red is the block reward. So that's the subsidy that miners get and that's how new Bitcoins are brought into circulation. And over time that's going to go to zero. And what's beneath that in blue is the transaction fee revenues. So basically what users do is they decide for themselves whether or not a Bitcoin transaction is worth doing and whether or not they want to, you know, pay a certain price for security. So one way that I look at, it's not a perfect analogy, but one way that I look at mining and Bitcoin as a security focused system, it's kind of like a custody bank. It's like a system that holds your funds in custody. And then the question is, well, how much are you willing to pay for the security of that system? And so right now we're talking about 0.7% of the market cap that is being given to miners on an annual basis. And so I think that that might increase a little bit of the mining subsidy declines. But overall, I think that's, you know, it's a pretty viable system. You know, there is no free lunch. So if you want security, somehow you have to pay for it. And so as we see here, there is actually, it makes sense that as more and more value was created or added in the system, the fee that's being charged for securing all that, it should go up as well. Just kind of like from an investment point of view, the mining revenues have gone just really high. We're talking about over $2 billion in revenues. That's not profit, but revenues the past year, that's definitely going to raise, have some potential projections later on. So then the third phase, I would call the deployment phase, which, you know, I think should come around by 2019-2020. That would be the kind of Windows 95 moment for Bitcoin. Wide adoption by institutions, Bitcoin is being used as a collateral asset for lending. Reserve asset as well, it could be held by central banks slowly, it could be held by banks. Mass markets start getting involved. And so this is like the Lightning Network that we're talking about, all these second layer solutions, like that is going to be under the hood when people use Bitcoin for payments, all that stuff. So mass market use. So the strategy here would be, not only are you going to hold Bitcoin, not only do you invest in the infrastructure still, because that's not going to stop in 2019, but you might have some chance to invest in second layer applications specifically, derivatives that are the things that are assets that are derived from cryptocurrencies, like we'll see assets being issued in this cryptocurrency environment. Like basically, we're challenging Wall Street, that's what's happening from a global or kind of like a macro perspective. Blockchain to blockchain trading, because exchanges are going to be more decentralized, we'll have more solutions to do that. Bitcoin e-commerce is going to be a thing, brokerage and banking service providers that is all, I expect all of that to happen in the Bitcoin ecosystem. So shifting gears to some analogies that work for me to like try and understand this market because it is unique, but at the same time there's always some parallels that could be drawn. So when it comes to the way the market is structured and how immature it is, I think it's interesting to look back at the forex market of the 1980s, like I wasn't around, but based on what I read and heard is that really it was a very early stage of that market. Right now it's the biggest market on the planet, but back then it was just the advent of electronic trading. And so if you wanted to buy Danish Kroner or something, then you had to make all kinds of weird phone calls and then the prices could be out of whack and things were not very reliable. So in that sense there might be a comparison there. The caveat is that there's no insurance in this market, there's no clawbacks. If the exchange is bust, there's no bailout for you. So caveat investor I guess you could say. Another analogy that it's often used and kind of obvious, this is the dot com bubble of the 90s where 99% of the startups are probably going to fail, but there is going to be a Google, there is going to be an Amazon eventually. The difference is that right now you can invest in the backbone. You can invest in the protocol backbone. It's as if you could buy shares and TCPIP by just buying bitcoin. So you don't have to have this wide diversification over all these startups and maybe have a domain name portfolio on the side. If you own bitcoin basically you're already, you have a seat on that train. So that's I think an interesting analogy. And of course dot com when it was at its height was totally a lemon market where lots of information, asymmetry, lots of scams, very hard to navigate for retail investors and even for institutions, lots of institutions lost their shirts as well. Another analogy, especially when people ask the inevitable question like isn't the government going to shut it down? It's like well, it's kind of the big torrent of money. So the government tried to shut down bit torrent and they never succeeded. And it's still around right? At some point bit torrent was over 20% of all internet traffic. It might be a little less now but it's still significant. And I remember reading recently that Netflix and all these video streaming services, they actually use bit torrent technology as part of their backbone, which I think is interesting. In terms of the value distribution in the space, like you know, are we going to have like let's say 10 years from now looking at all these cryptocurrencies? Is it going to be like fang where there's going to be five big ones like you know the way now Facebook, Apple and so on? Or is it going to be a duopoly? Is it going to be a monopoly? Is it going to be spread even over like 100? To me it's interesting to look at the top level domain name market to think about how value might be distributed in the cryptocurrency space because top level domain names and that's like .com, .org, .be, .fr, all that. Technically they don't differ from each other. A .ru domain name is technically exactly the same as a .com. But what happened is that early on people started associating .com with slightly better quality. It was slightly more reliable just in the even the subjective perception. And that caused people to be willing to pay just a little bit more. And that attracted entrepreneurs who had a little bit of a longer perspective. You know a scammer always wants to move on so he wants to minimize his overhead. And so it's interesting that the .com is so dominant even though that there's over 100 top level domain names I believe now. But if you look at the actual value in the market over 90% is .com. And it makes sense if you think of it like pizza.com is what it over five million or something if you want to buy it. Pizza.org is going to be like 50 grand or something like that. And so you know when thinking about like the network effects that Trace mentioned all these do add up and they make it so that the Bitcoin ecosystem is associated with I would argue less scams and a higher standard of security. So there's more reliability there. Like it's no coincidence that we have a list of like what seven or eight applications for Bitcoin ETFs. And then where's the rest right? Where's the Dogecoin ETF application? Whereas even the Ethereum ETF application I think there's only one so far and a very low chance of being approved. So the top level domain name market is interesting and there is research that backs this idea that .coms are more reliable. If you look at what percentage of a domain name market is associated with malware for .coms that's .5%. That's better so lower than .org it's better than what is the other one .net and obviously it's better than .ru there's the main names that have up to 50% scams associated with them for example .science ironically so don't ever serve to .science names. So that's basically my argument is that I think that Bitcoin is the .com of the space. Another analogy that works for me is just look at technologies with mass market appeal. So for example the radio there's some more here like electricity, air conditioning, telephone. So all these technologies like how were they adopted? Well they were adopted by people buying it but radios you can just keep producing radios you can't do that with Bitcoin it's finite in supply so that's going to have some effects on the price and so what we see over and over is this s-shaped adoption curve it goes from 0% to 100% adoption and an example is obviously the smartphone 10 years ago hardly anyone had one I'm probably I'm willing to bet that 99% of the audience here has one on on himself tonight. So when you look at the prices of you know of this market any investor that looks at this chart and especially if I actually make it realistic and make it go up to 20,000 would say stay away it's this is a bubble it's gonna you know it's gonna die after this it's unsustainable but if you look at the same chart on a logarithmic scale all of a sudden it looks a lot more orderly and then if you in your mind's eye take this graph and kind of slant it a bit and imagine that's part of that s-shaped adoption curve maybe it makes even more sense right maybe we can look at it this way where you know a million dollar bitcoin is not all that outrageous to to project. A few possible scenarios just kind of like you know it's always interesting to get the discussion going if bitcoin because I do think that fundamentally bitcoin is digital gold that's its first value proposition a reserve asset so bitcoin achieves 20% of the value of the above ground physical gold we're probably talking about an $80,000 bitcoin price there's lots of assets that are stored offshore and the censorship resistance of that is very questionable nowadays right I mean the even the swiss banks are with all the leaks and stuff are more and more vulnerable to scrutiny so it's it's not unthinkable that bitcoin might take that role at some point and then you're talking about $400,000 bitcoin there's also a huge assets you know a collection of assets that are the the low yielding bonds so bonds that basically pay negative interest rates zero or up to 1% which means negative really I mean we have more than 1% inflation even in the strongest fiat currencies so these these assets are losing value every year I think it's about 20 trillion dollars if I remember right so if you then you know calculate that back with that what would that mean if all that money went into bitcoin you're probably talking about a one million dollar bitcoin um and it's interesting also to kind of look at what would that mean for the mining sector right if we keep that same ratio of like a 0.7 percent annual tax for security well then you're talking about a mining sector that would have revenues of between 50 to 500 billion dollars and that seems incredibly high until you realize that maybe what's happening is that you know this is wall street that might be replaced like you know Manhattan and all the other buildings that you can imagine and you know the Federal Reserve and all the other central banks that is being challenged and we're we might be going to a system where energy is being converted into financial security right I mean bitcoin is basically a proof of energy spent and so in order to attack it you have to spend the same amount of energy which is I think incredibly efficient I'm going to skip this one it's just we can definitely go back it's basically my my view of what happened last year which could be interesting but it's it's just the it's just a bit far probably from the people behind so looking forward um well so basically let me just say this like last year to me what happened was that the bitcoin fees went to kind of one dollar uh not actually even the mean bitcoin fee but it was more like people started running into one dollar bitcoin transactions and they kind of freaked out and they were like hey well we thought that bitcoin was this crazy free money that was free to you know send and now all of a sudden I have to pay a dollar um so so basically this chart shows you the dominance of bitcoin it's like how what percentage of the total market share was represented by bitcoin and so early 2017 it was like 90 percent people started freaking out about this one dollar bitcoin transaction um they new investors came in they started buying ether because it's like it had a lot less kind of conflict associated with it and then we had stories about forks coming in bitcoin and forks that were going to threat threaten bitcoin that might split the chain all kinds of scary stories and then we had this political movement of the user activated soft work which also could have led to a chain split and so that's why around the summer bitcoin dominance dropped to a low and then segwit got merged and the optimism increased with the promise of lightning and and then the cme came out with bitcoin futures um all the while people were buying like for example ripple which is a centralized currency which is like nothing to do with crypto but uh people liked the idea that it had you know low transaction fees maybe it wasn't as scary because it wasn't associated with so many cipher punks um ether had some problems which lowered its dominance as well and then basically at the end we saw this massive junk rally right i mean the the the altcoins that were top 10 and lower now below the top 10 they started taking it's like 23 percent of the entire market which is something by the way that usually happens at the end of bull markets so this is something to you know keep in mind like this could alert everyone that people are throwing money at anything that moves so that could mean that there's a lot of weekends in the market so very brief wrapping up looking forward i see more institutional involvement even more lots and lots of stuff is in the pipeline second layer scaling is happening i mean like look on crypto twitter or bitcoin twitter it's just you know lots and lots of examples of how lightning is being used and there's other other things in the pipeline too smart contracts are coming to bitcoin more privacy is coming to bitcoin and then finally i do expect a stress test basically you know it could be a you know kind of a regulatory crackdown which scares people but um i'm kind of thinking it could be more that the the custody infrastructure i think might be challenged because a lot of the infrastructure was built when when the whole ecosystem was maybe five billion dollars and now it's what almost a trillion and so that means that all these exchanges have huge targets on their back they're like huge bug bounties for hackers to try and attack and steal the bitcoins and so because they've been scaling so fast i don't know if they've been able to just as fast upgrade their security protocols so i think it's possible that we'll see some exchange hacks that really surprise people that's it thanks