Bitcoin's Killer App 2017 - Dubai - Sean Walsh - DOWNLOAD FOR SPEAKER NOTES

Bitcoin’s Killer App
How We’ll Achieve Mainstream Adoption
Keynote, Dubai – February 2017
Sean M. Walsh - sean@redwoodcityventures.com - @SeanWalshBTC - www.linkedin.com/in/SeanWalsh

Sean M. Walsh
Background:
• Redwood City Ventures (Bitcoin Ecosystem Focus)
• China/US Business & Investment Partnerships
• Previously Vice President at Bertram Capital ($1.5B
Silicon Valley Private Equity firm)
• Created several $100 Millions in new Enterprise Value
• Launched many software products & online businesses
Contact Information:
• sean@RedwoodCityVentures.com
• Twitter: @SeanWalshBTC
• www.linkedin.com/in/SeanWalsh
• WeChat: BigWaveW

Bitcoin – A Fascinating Intersection
Ecommerce
Monetary
Factors
Social
Networking
1. Ecommerce/Online User
Acquisition
2. Social Networking / Viral
Marketing
3. Monetary/Economic Factors
1. Monetary History
2. Asset Design
3. Foreign exchange
4. Global trade
sean@redwoodcityventures.com - @SeanWalshBTC - www.linkedin.com/in/SeanWalsh

Our Argument
1. “Killer App” = Rapid Mainstream Adoption
2. Bitcoin’s “Killer App” is Bitcoin!
3. We simply need to finalize and execute a typical
product Go To Market Strategy
4. Advance positioning will yield extraordinary ROI

Supporting Our Argument
1. Analyze the whole of Bitcoin as a single product in need
of a Go To Market Strategy
2. Discuss thought process to identify most effective tactics
to achieve our goal.
3. Review GTM Plan + ROI Model
Standard Product Management Process:
1. Ask Root Questions
2. Find Key Evidence
3. Draw Actionable Conclusions
4. Create & Execution GTM Plan

Step 1: First Principles
1. What is the product? What is Bitcoin?
2. What is the current market situation?
3. What is our goal?
4. What is desired Product-Market fit?
5. What transactions can Bitcoin improve?
6. Who are the target users?
7. What resources do we have?

1st Principle – The Current Situation?
• About 500k people with 1+ BTC
To me, these are our “Customers”
• $1,100+ per BTC (and about 50k new BTC per month)
• 300k+ transactions per day
• 1+ Million BTC traded per month on Top 10 exchanges
• Developer turmoil (let’s ignore that for now)
• Crackdown on Chinese exchanges?

390,290
571,061
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
July, 2015 February, 2017
+1 BTC Wallets
Avg Monthly
Growth Rate: 2%
$277
$1,175
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
July, 2015 February, 2017
Appreciation of BTC Price
Avg Monthly
Growth Rate: 7.9%
Current Situation – Interesting Trend

3600 BTC
1800 BTC
BTC/Day
July 2016
The “Halving”
Current Situation – Interesting Trend, Cont.

1st Principle – What Is Our Goal?
Reach 1 million people who own 1+ BTC within 24 months.
(double today’s total)
• This requires giving people enough reason to go through the
trouble of spending $1,100 on BTC.
• What are those reasons going to be? We need to elicit
emotional motives that will inspire our desired actions.

1st Principle – What Is Product-Market Fit?
MP
A product that meets some burning needs of the target market(s)

1st Principle – What Is Bitcoin?
• The best form of money ever invented
• But, what is money?
1. Unit of Account
2. Means of Exchange
3. Store of Value
• How to compare different monies? SDDRFT
1. Scarcity
2. Durability
3. Divisibility
4. Reconizability
5. Fungability
6. Transportability

1. Scarcity: limited, predictable supply
2. Durability: won’t decay
3. Divisibility: easy to subdivide
4. Recognizability:difficult to counterfeit
5. Fungibility: units is exchangeable
6. Transportability:easy to move
They all boil down to trustworthiness of the money.
1st Principle – “Moneyness”- The 6 Characteristics of Money

0
1
2
3
4
Scarcity
Durability
Divisibility
Recognizability
Fungibility
Transportability
1st Principle – “Moneyness”- The 6 Characteristics of Money
Bitcoin
SDDRFT Score = 22
(out of 24)

S
Dur.
Div.
R
F
T
Gold = 18
S
Dur.
Div.
R
F
T
USD = 13
S
Dur.
Div.
R
F
T
Arg Peso = 10
S
Dur.
Div.
R
F
T
Frequent Flier Miles = 5
S
Dur.
Div.
R
F
T
Starbucks Cards = 6
S
Dur.
Div.
R
F
T
Cowry Shells = 11

0
5
10
15
20
25
Frequent
Flier Miles
Starbucks
Cards
Arg Peso Cowry
Shells
USD Gold Bitcoin
“Moneyness”

A Note On Recognizability…

1st Principle – What Transactions Can Bitcoin Improve?
For now…
– forget about scalability
concerns
– focus on Go-To-Market
– focus on financial services
What are the use cases?
1. Non-correlated asset class
for storing value
2. Digital money for retail
discounts
3. Global P2P Money
Transmission

1st Principle – What Transactions Can Bitcoin
Improve?
Note: there are thousands of use-case archetypes across these Categories.
Consumer
to
Business
Consumer
to
Consumer
Business
to
Business
"Financial
Transcations"

1st Principle – Who Are The Target Customers?
1. Individual Investors
2. International Workers (from ~10 Countries)
3. Coupon Clippers

Target #1 – Individual Investors
Why Bitcoin?
1. Store of Value
2. Non correlated asset class (portfolio diversification)
3. Incredibly asymmetric return profile
4. SDDRFT, best form of money ever
5. Portfolio diversification: 1% - 5% target
6. Almost inconceivably scarce
7. Value is up over 5,000% in 4 years
Note: There are also over
250 Million people around
the world who own Gold
as a Store of Value.

50.00
60.00
70.00
80.00
90.00
100.00
110.00
120.00
130.00
Jan-2015 Feb-2015 Mar-2015 Apr-2015 May-2015 Jun-2015 Jul-2015 Aug-2015 Sep-2015 Oct-2015 Nov-2015 Dec-2015
PriceIndex
Asset Prices #1, Last 12 Months
Arg Peso
USD DXY
10YrUSTr
Gold
Case-Shiller
WTI Oil
BTC Price

50.00
60.00
70.00
80.00
90.00
100.00
110.00
120.00
130.00
140.00
150.00
Jan-2015 Feb-2015 Mar-2015 Apr-2015 May-2015 Jun-2015 Jul-2015 Aug-2015 Sep-2015 Oct-2015 Nov-2015 Dec-2015
PriceIndex
Asset Prices #2, Last 12 Months
S&P 500
NASDAQ
SSE
S&P 500 Corp
MSCI EM
BTC Price

-0.144
0.063
0.319
0.877
0.588
0.066
0.487
-0.190
0.289
0.200
0.099
-1.000 -0.800 -0.600 -0.400 -0.200 0.000 0.200 0.400 0.600 0.800 1.000
BTC Price
Gold
S&P 500 Corp
NASDAQ
Shanghai Stock Exchange
10YrUSTr
MSCI EM
Case-Shiller
WTI Oil
USD DXY
Arg Peso
Asset Class Correlation – S&P 500 vs Others, 12-Month

-0.144
-0.411
-0.330
0.001
-0.316
0.054
-0.357
0.154
-0.691
0.496
-0.651
-1.000 -0.800 -0.600 -0.400 -0.200 0.000 0.200 0.400 0.600 0.800 1.000
S&P 500
Gold
S&P 500 Corp
NASDAQ
Shanghai Stock Exchange
10YrUSTr
MSCI EM
Case-Shiller
WTI Oil
USD DXY
Arg Peso
Asset Class Correlation – Bitcoin vs Others, 12-Month

Target #1 – Individual Investors
John Exter
(NY Fed President)

Target #1 – The Investing Public
Graphics courtesy of http://www.visualcapitalist.com/its-official-bitcoin-was-the-top-performing-currency-of-2015/

Target #1 – The Investing Public
Graphics courtesy of http://www.visualcapitalist.com/33-signs-that-bitcoin-growth-isnt-slowing-in-2016/

1st Principle – What Resources Do We
Have?
1. $500 Million / 657k BTC in annual miner revenue
2. $9.3 Billion / 10.3 Million BTC spread across just
18,000 people (wallets over 100 BTC)
3. 500k people with at least 1 BTC
4. A new network that just… won’t… die!

Bitcoin Network Resilience…
2011.11.23
$2.37
2012.12.24
$13.30
2013.08.08
$93.57
2013.11.06
$433.57
2014.12.16
$325.10

More Bitcoin Network Resilience…
2015.02.15
$217.87
2016.01.14
$429.73
2016.10.12
$635.43
2016.12.08
$771.23
2017.02.24
$1,184.47

Strategies For Growth?
1. Direct Referrals (Selling) is very scalable
2. Starting in a small geography is proven
(Boiling the ocean is difficult / quicker solution to empty-room problem)
3. Refine the message / accelerate Word of Mouth
- Think “Ashton Kutcher tweet”

How To Spread Message?
STEPPS:
1. Social Currency
Koreatown bar’s nightly code word
2. Trigger Moments
Budweiser “wazzap?” campaign
3. Emotional Stimulation Level
Emotion’s polarity is secondary
4. Public Displays
Apple’s white headphones
5. Practical Value
How-to Youtube videos
6. Stories
Fundamental to humanity

Strategies For Growth
We need to think like so-called “Growth Hackers”
We need K > 1.0

Campaign Details, 1 of 4
1. Beijing
2. California
3. Florida
4. New York
5. Shanghai
6. Shenzhen
7. Texas
8. The UK
9. Venezuela
Where:
Who:
1. Investor ($40k+)
2. Online Brokerage
3. Smartphone Owner
4. Age < 50
Note – the target is ~50k customers per region

What’s The Pitch? You should buy Bitcoin
because…
1. Non-correlated asset class / portfolio diversification.
2. Most unique Store of Value ever created. Inconceivably scarce.
3. Most asymmetric return profile in history.
4. Placing 1% of a balanced portfolio into Bitcoin ~3 years ago would
have doubled the entire portfolio.
5. Bitcoin usage and ecosystem growth strongly suggest that
continued appreciation for many years to come.

What’s the Outreach Strategy?
1. Affiliate Marketing Campaign in each target market.
2. Affiliate Success = New Customer purchases 1+ BTC on a
participating local exchange.
3. Recruit 1,000 Affiliates in each market (in partnership with
Exchanges).
4. Affiliates will inspire their respective follower-bases to become
customers (offline activity, online events, etc.)
5. New Customers = 500,000 (avg. 50 per affiliate)

What’s the Budget? Schedule?
1. Affiliate Commission = $50 per new Customer (paid in BTC)
2. Campaign Duration = 1,000 days
3. New Customers Per Day Per Market = 55
4. Budget = $33M + $500k per month
5. % of New Bitcoin Supply Absorbed = Over 20%
This brings us to a Virtuous Cycle…

Economic Theory: Price Elasticity of Supply
New Minted Coins
(54k per month)
+
Coins Sold
by Holders
BTC
Supply =
We can prime the pump and it
will then accelerate, on it’s own!
Bottom
Line:

Variables and Data Points Values
Outstanding BTC 16,188,075
BTC Still Available 12,500,000
Available BTC Float 500,000
Monthly BTC Production 54,000
% of Monthly Production Sold By Miners 80%
New 1+ BTC Wallet Growth, Monthly 2.0%
Average Monthly Price Appreciation, Monthly 7.9%
Projected New Customer Growth, Monthly 10,000
% of New BTC Production Absorbed 19%
Marketing/Sales Cost Per New Customer $50
Total Marketing/Sales Cost, Monthly $500,000
Projected Price Appreciation, Monthly 5.5%
Break-Even BTC Long Exposure $9,090,909
Target Investment size $100,000,000
Monthly Cashflow (See Charts)
Investment Leverage Multiple 3
Actual Equity Capital Required $33,333,333
Investor
Model:
Inputs

$0.5M
$12M
$38M
$271M
$50M
$100M
$150M
$200M
$250M
$300M
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
INVESTMENT GROWTH VS CUSTOMER
ACQUISITION EXPENSE
Total Expense Total Investment Value
TVPI %: 813%
Initial Capital ROI %: 731%
Expenditure ROI %: 1982%

$33M $33M
$79M
$233M
$874M
$200M
$400M
$600M
$800M
$1000M
0.5% 2% 5% 10%
MOM Growth
Investment Return: Total Value / Paid-In Capital
Starting Investment Value Investment Value in 24 Months
TVPI: 4.4x
Expenditure
ROI = 7,000%
TVPI:
9x
TVPI:
28.2x

Measure & Optimize GTM Success
1. Create a Closed Feedback Loop
Build >> Measure >> Learn
2. Achieve Validated Learning to
test product assumptions
3. Avoid Headline Metrics

Measuring Our GTM Success
Key Metrics:
1. Number of wallets containing over 1 Bitcoin
2. BTC Price
3. Transactions per day (excluding popular addresses)
4. Number of Bitcoin Nodes
5. New Customer Acquisition Cost (Campaign Expenditures / New Customers)
Note: Monthly trends for these metrics are important, too

Our Biggest Risks Ahead
1. Regulatory Crackdown
2. Renewed attempts at regulatory circumvention (illegal
activities)
1. It’s terrible publicity to our target Users
2. It intensifies regulatory scrutiny and crackdown risk
3. Developer infighting and stalemate?

Regulatory Crackdown, 1 of 2

Regulatory Crackdown, 2 of 2
L

$13 Billion
Bitcoin Scale In Perspective
http://money.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization/
$70 Trillion – 5400x BTC
$80.9 Trillion – 6200x BTC
Bitcoin

Private Blockchains Are Not A Risk
1. There are plenty of use cases to go around
2. Refer to the early days of the World Wide Web.
3. Refer to the early days of telephone networks

Conclusion
1. Bitcoin is already wildly attractive to 300+ Million people.
2. We have incredible resources at our finger tips.
3. There are many proven Go To Market Strategies.
4. The 1-Million Customer Campaign is highly practical.
5. Campaign ROI will be enormous.
6. This may be the single most valuable thing we can do for
Bitcoin.

NEW
2017
Miner
POV
Total TTM Revenue, $ $500,000,000
% of the Industry Participants that Contribute 50%
Campaign Allocation $25,000,000
Target number of new users 250,000
Available User Acqusition Expense $100.00
Resultant Upward Price Movement 50.00%
Incremental Mining Industry Revenue $250,000,000
Incremental Revenue to Participants $125,000,000
Breakeven BTC Price Increase 10.00%
Profit to Participants $100,000,000

NEW
2017
User
POV
Value of Users with 100+ BTC, $ $8,000,000,000
% of the Industry Participants that Contribute 10%
3% of BTC Holdings $25,000,000
Resultant Upward Price Movement 50.00%
Incremental BTC Holding $4,000,000,000

$100M
$200M
$300M
$400M
$500M
$600M
15% 20% 30% 50% 75% 100%
Bitcoin Price Growth
ROI – User Acquisition Campaign - Miners
Incr Mining Revenue
Participant Profit

$1000M
$2000M
$3000M
$4000M
$5000M
$6000M
$7000M
$8000M
$9000M
5% 15% 30% 50% 75% 100%
Bitcoin Price Growth
ROI – User Acquisition Campaign - Users
Incr BTC Holding
Participant Profit
28,000%
ROI

Target #2 – International Workers
From: USA, UK, China, Philippines, Mexico, Colombia, India,
Brazil, Argentina
Elevator Pitch:
1. Use Bitcoin to get money home quickly
2. Easily divide up your remittances among family members
3. Bitcoin is an interesting Store of Value, and is probably clobbering your home currency
4. Easy to sell Bitcoin and deposit into your home bank

3.9M
3.4M
2.9M
1M
.6M
1.2M
1.2M
11.2M
3.5M
http://www.oecd.org/els/mig/World-Migration-in-Figures.pdf
International Workers by Origin
Total = 28.9 Million
People

Target #2 – International Workers
Graphics courtesy of http://www.visualcapitalist.com/its-official-bitcoin-was-the-top-performing-currency-of-2015/

Target #3 – USA Coupon Clippers
http://www.slideshare.net/InmarInc/2015-inmar-coupontrends-presentation-2014-yearendreport

Recent Breakdown of Wallet Balances
https://www.cryptocoinsnews.com/1-bitcoin-community-controls-99-bitcoin-wealth/

Annual Mining Industry Expenditures
Input Variables
Global Network, January, 2016 (PH) 811
Global Network, January 2015 (PH) 314
TTM Miners Retired/Failed, PH 250
Net Miners Produced, PH 747
Miner Design/Production Cost, per PH $200,000
PSU Cost, per PH $50,000
Subtotal $186,750,000
Datacenter Expansion, MW 200
Datacenter Expansion Cost, per MW $150,000
Subtotal $30,000,000
Power Cost, per MW per Year $525,600
Operating Cost, per MW per Year $262,800
TTM Average Miner Efficiency, MW/PH 0.5
TTM Average Miner Power Draw, MW 281.25
TTM Total Opex Expense, Global Network $221,737,500
Total TTM Miner + Opex Expense $408,487,500
Total TTM BTC Generated 1,200,000
TTM Average $ per BTC $300
Total TTM Revenue, $ $360,000,000
% of the industry participants that contribute 50%
15% of disposable expenditures $30,636,563
Resultant upward price movement 100.00%
Incremental Mining Industry Revenue $360,000,000
Mining
Expenditure
Breakdown

Notes
BTC Price 1/1/2013 $ 13.41
BTC Price 1/1/2016 $ 433.59
Bitcoins Outstanding 1/1/2013 6,000,000excluding 4M "dead coins"
Bitcoins Outstanding 1/1/2016 11,000,000excluding 4M "dead coins"
Total BTC Market Capitalization $ 80,460,000
Total BTC Market Capitalization $ 4,769,490,000
% Change 5828%
Bitcoin Market Capitalization – 3 Year

Variables and Data Points Values Notes
Outstanding BTC 16,188,075 As of 2017.02.26
BTC Still Available 12,500,000 * due to loss in the early years
Available BTC Float 500,000 this may be(come) significantly lower due to increased regulation in China
Monthly BTC Production 54,000
% of Monthly Production Sold By Miners 80%
Miners have essentially been operating at negative net cash flow for the past 3 years.
Enormous turnover/attrition. Over 75% now in China.
New 1+ BTC Wallet Growth, Monthly 2.0% Average Monthly Growth in BTC Users Since 2015.07.21
Average Monthly Price Appreciation, Monthly 7.9% Average Monthly Price Appreciation Since 2015.07.21
Projected New Customer Growth, Monthly 10,000
% of New BTC Production Absorbed 19%
Marketing/Sales Cost Per New Customer $50
Total Marketing/Sales Cost, Monthly $500,000
Projected Price Appreciation, Monthly 5.5% 0.5% is Breakeven
Break-Even BTC Long Exposure $9,090,909
How much would you need to invest, prior to the campaign, in order to cover the cost of
execution?
Target Investment size $100,000,000
Use leverage to create this amount of exposure, with a fraction of the actual capital.
Leverage is possible via combination of:
1. Purchasing blockchain security datacenter assets, in addition to BTC directly (BTC-
producing assets, they trade like BTC-itself)
2. Commercial loans for #1
3. BTC derivitaves contracts
Monthly Cashflow (See Charts) Need a separate table, as this grows by a monthly %, while expenses are flat.
Investment Leverage Multiple 3 change to "3x" on Presentation
Actual Equity Capital Required $33,333,333

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