 Hello, I'm Markus. Thank you all for being here, and today I will talk about cryptocurrencies. I myself would say I'm a kind of a Bitcoin enthusiast. I have spent much time in those cryptocurrencies, and this is because I'm really curious about them. And I also trade a little bit, and today I want to share something of the knowledge with you. So if you look about this chart here, which is a price chart of Bitcoin, you might have seen this in the news in the last days, what you will see is that Bitcoin rose from almost zero back in 2010 to more than $10,000 nowadays in less than eight years, and I don't know if you have watched the price today. We are still at 15,000, so this should be somewhere here. That means if you invested $100 in 2010, you would be a multi-millionaire right now, which is pretty cool, I think. So what in earth is Bitcoin, and why are they booming like that? First, let's answer the question, what are cryptocurrencies? Maybe you have heard that you can mine them, that you can pay with them, that you can use them somehow like money. To be precise, the term cryptocurrency is an umbrella term, not only used for Bitcoin, but also for so-called altcoins or alternative coins. Let's just say they come in different flavors, but the basic principle of almost all of them are the same. So today I will talk about Bitcoin only, and I also will use Bitcoin as a synonym for cryptocurrencies. Let's have a look at the definition of Wikipedia. Bitcoin is a worldwide payment system, and there's also a decentralized digital currency. That means there is no central institution like a bank or something, who is guarding them or who is manipulating them. In fact, trust is coming through the algorithm into the system. We will see about that later. This algorithm works with cryptographic techniques, therefore the name cryptocurrency, so that means you have some kind of authentication, where you can prove that the coins you own are actually really yours. And also this algorithm protects the currency against forgery or fraud. So how do they work? The very core of Bitcoin is the so-called blockchain. You might have heard that term, and this is basically a chain of blocks, of course, that's the name. They are also numbered and you can imagine them like pages in a book or journal. In former times, merchants used such a journal to record their trades, and the blockchain is basically the same. You will find information in there like accounts, like the balances, and also the transaction between those accounts. So what are transactions? Imagine a guy, let's call him Alex, and he wants to send the Bitcoin to his friend Bob. And for that, Alex has a Bitcoin address, which looks like this. It's a little bit like a cat has walked over a keyboard in the computer. And also Alex has an amount in mind he wants to send. He then needs the Bitcoin address of Bob, and the whole process is very similar to online banking. All what we need here is the sender address, the amount and the receiver address, and those records are stored in the blockchain. So, but if we don't have a central entity who controls stuff, how is it secured? Well, that is where the miners come into play. Imagine this here is the last block of our blockchain, and overnight we have enough new transactions, open transactions, so they fit into a new block. And then a miner tries to generate this block, and he tries also to secure them, to seal it with a so-called hash. A hash is a cryptographic method to secure data. If you alter this block here, the hash gets invalid. So that means you would have to regenerate the whole hash if somebody tries to falsify the data in this block. The cool thing about such a hash is that it is very difficult to generate. You need lots and lots of computing power for that. The miner spends lots of electricity and also has to pay an electricity bill, so it invests real money for that. And this is the protection of those blocks. If somebody wants to forge a block, he has to regenerate the hash. That means he has to spend all this money, all this electricity again. And this is usually more effort than he would gain from this forgery. Another task of those miners, another aspect of those miners is they get a reward for generating those hashes. Otherwise nobody would do that. Otherwise nobody would spend the money. They get a reward of Bitcoin, and this is how Bitcoin come into life. They are generated by finding those hashes. And that's also the reason why this is called mining. In the beginning, you got 50 Bitcoins for a new block, and every four years, the amount of Bitcoins you get as a reward is halved. It went to 25, and right now we are at 12.5 Bitcoins for a new block. And if you sum this up, if you do the math right here, we have the time here on this axis and the amount of Bitcoins here, you will see that we get to a total amount, to a total maximum of 21 million Bitcoins. You also might have heard this number. Right now we are about here at roughly 60 million, so there is still some way to go. And this is very important that we have a limit, a maximum here, because this protects us from inflation. So let's put all those parts together. We have the miners in the network, and we also have the wallets. A wallet is like an online banking app, which Alex and Bob used to do that transaction. You can generate the keys with that, you can get your addresses, and you can do the transactions. It's basically like an online banking app. And miners and wallets are connected via nodes. A node is a server in the internet, and those nodes store the blockchain. There are many, many of them. They form the Bitcoin network, and also other miners and other wallets can connect to them. And the interesting thing about the nodes is they all keep a separate copy of the blockchain. Each node has its own copy, and they check each other constantly, if the copies are the same, if they are identical. And that is how trust comes into a system where basically no one trusts each other. If some of those nodes would go bad, would try to do something fishy, then the other nodes just outcast him. He has not an identical copy of the blockchain anymore, so he gets thrown away. So the question now is, how would you get some Bitcoins if you don't want to mine them? Mining is a really complex process right now, and that is where exchanges come in. Exchanges are connected to banks, and with that you can transfer your money to the exchange and actually sell and buy Bitcoins. In the beginning, in 2010, there were no exchanges. The people had only Bitcoins, which were mined, and at some point in time they just started trading. There was a very first and famous Bitcoin trade where a guy, a Bitcoin miner, bought two pizzas, and instead of money, he offered 10,000 Bitcoins to the delivery boy. And also this delivery boy mined Bitcoins, and he did the math very quickly and said, okay, I have to spend money to get them. This is less than I have to pay for the pizza, so let's do it. And in this very same year, the first trading exchange called Mt. Gox came into life, and people started trading Bitcoins for roughly 10 US cents back then. In less than one year, the price rose to one dollar, and from that point on, it got up, got up and up and up, until in 2011, we hit $30. This was a time where very much greed was in the market. Everybody wanted to have those Bitcoins, and other people started to get careful, and they sold some. And then a selling rush started, fear reigned the market, and we got down to two Bitcoins, and this is a drop for over 95%. And this is what we call a bubble and a burst in the stock markets. You see that in charts and in trading in markets all over again. And this happened until now. We are going from bubble to burst, from bubble to burst with an average price raising. You might have noticed that this is the very same chart I showed you in the beginning, but it looks quite different. This is about the axis here. It is scaled logarithmic. In trading, you use that to show these early peaks. So if I show you the original chart, you see that you see nothing here, and also the line you have seen before, actually this is an exponential growth. So we have very high volatility in this system, and this prevents people actually really from using them as they are intended as money. So the question resides, why is that? What exactly are them? How can we classify them? And I tried to do that to compare them with a new technology. Let's consider Bitcoin as a new technology for monetary systems. When a new technology comes up, it hits a certain market over time, and this usually happens in a three-step process. In the beginning, you have the early adopters. Maybe you know this image here. This is a mobile phone in the 80s, and back then they were very heavy and expensive, so only businessmen could afford them, who had really a need to use them. In the second phase, there was market penetration. They got to mass production at some time. Maybe you remember those. This is a Nokia phone from the 90s, and usually you have exponential growth in that phase. And finally, you reach the market saturation, because each market has some kind of limit. This is, well, if I have one mobile phone or two, there is just no need to buy a third one. So if you want to place Bitcoin in the chart, I would say they are somewhere in between here, in between the early adoption phase and maybe already in the market penetration phase. This would explain the volatility, and this would also mean we have still lots of headroom until we reach the saturation. So in my opinion, it can be that we see other prices, higher prices like 100,000 or even a million in the next 10 or 20 years. But please don't count on that, because each technology needs to penetrate this market, and it can vanish again. To say it with the words of Niels Bohr, a prediction is always problematic, especially if it contains the future. So in summary, we have a protection against manipulation. There is no central entity, and trust is built into the system by the miners, by putting an effort, by publishing the blockchain. The total amount is restricted, which is very important to prevent inflation. If you look at countries today like Argentina or Zimbabwe, you have inflation there, and actually people are using Bitcoin to get their value secured somehow. And also in the last century, and two world wars here in Germany, we had hyperinflation sometime. If you have invested in gold at the right time, you could prevent the loss of this value. And I'm pretty sure with Bitcoin, it would have been the same thing. On the other hand, owning them means responsibility, especially today. If you lose your wallet, you have no means to prove anymore that the coins are yours. You cannot spend them anymore. Also, you have to be careful about viruses on your computer, who can steal bitcoins. So you have to put in some effort at first. Also, they depend on existing technology. You need the internet to connect to, to do transactions. And also, if you have your wallet on such a smartphone, if your battery dies, you can't pay anymore. On the other hand, this is really cool because transactions are very faster right now than bank transactions. You don't need days anymore. They can go into minutes. And also, people use them when they work in a foreign country. Bitcoins know no borders. If somebody works in a foreign country, he can send them back to their families at home without any problem. All in all, I would say the pros outweigh the contrast. Otherwise, I think they would not get used. They would not have come that far. And if you're curious now about the prediction of if you should buy them or not, well, I'm not a financial advisor. So legally, I'm not to tell you anything about this. I can only tell you what I would do. If I would have some money to invest, I would maybe use half or a third or something to go in now and then save the rest to wait for the next drawdown, for the next burst of the bubble. We are just running in and then invest the rest. And this is also because I am speculating about this technology breakthrough. But please, please be careful. If you do that, only use money you can't afford to lose. Otherwise, you have maybe trouble sleeping at night. Okay, so thank you very much. I also run a little project I want to share with you. I said in the beginning that I trade a little bit in Bitcoins and I'm an IT guy. I'm really lazy, so I wrote an algorithm who can do that for me. And right now, I'm publishing the signals of those algorithms in a small newsletter I have made. If you're interested, you can go to my Facebook page. So this is Facebook slash BTC, which is the currency symbol for Bitcoin. And then T-SYS for Trading System. And there I publish the signals and also publish some news, especially about this technology thing. Right now it's totally for free, as 15 times 4, it's not commercial. So just feel free to share. I also want to give a very, very big thank you to all the guys here at 15 times 4 for all this feedback you gave me through the rehearsals, which was really, really great. Also your patience with me, without you, this talk would not be possible this way. So thank you very much. And now I'm open for questions. Thank you very much, Marcus, for your inspiring talk and for your feedback. Questions, please. Well, I think the threads are, in one point, are those viruses or negative publicity who try to harm Bitcoins. If you get to a phishing site, you can get a virus which tries to steal your wallet and tries to steal your Bitcoins. There's also some ransomware who tries to cryptography your hard disk and tries to blackmail you to give you Bitcoins. It's, I think that the main point is the technology part. Bitcoin is a really cool technology. And if it got its breakthrough, it will rise further. If it doesn't, it will fall again. It will vanish again. So I would pay attention to this technology side. Yeah, one more question. So you already gave some examples. Well, there are examples of lots of companies who accept Bitcoin as a payment. But right now, I think this is the huge volatility which prevents that people start actually spending them. You would not spend something when you speculate that the value of it doubles tomorrow. So I think, first, the volatility has to decrease. They have to come to this saturation phase and then people will start using them more as money as they intended to. Okay, the last question from this side. In the Swiss, you have a village where you pay all your taxes by a Bitcoin. Can you repeat it? Yeah, this is really cool. I also have heard of this. In my opinion, this is the very first approach. Government tries to embrace those Bitcoins. Usually, you have to pay your taxes in the very currency. Your government tells you to do so. And the Swiss are really fond about money, as we know. So I think it is a logical step that they embrace this new technology. So do you still want to... I have a question, yes. You mentioned that the number of Bitcoins is limited, right? Yes. What happens when all the Bitcoins are created? How do you reward the people mining? Actually, this is a really cool question. I could not fit that into my talk. I think I exceeded the time limit already. You also have a transaction fee. You also have a small fee, which is subtracted from each amount of a transaction. And when those... In a normal currency. So you need another currency to keep... No, no, it's the same. It's also in Bitcoin. It's also in Bitcoin. The small fee in Bitcoin, which is just subtracted from the amount you want to send. So you mean that means all other people are paying kind of commission, and these Bitcoins are taken from the commission? Exactly, exactly. Each trade has a small commission fee. And when a new block is formed, the miner gets as a reward, not only the new Bitcoins, but also all the fees of the transactions he can put into this block. All right. Thank you very much, Markus. Thank you.