CryptoCurrency Updates The Future of Money Longterm Asset

Crypto-Currency Updates The Future of Money Long-term Asset Preservation Best Past President – Cryonics Institute Employee – Biomedical Research & Longevity Society 1

Wealth Preservation What assets will have value in 50 -100 years? n What crypto-currencies will have value in 50 -100 years? n What fiat currencies (government money) will have value in 50 -100 years? n The best wealth preservation asset would be an asset that greatly increases in value (i. e. , is also a good investment) n Many assets and currencies will disappear, but others will appreciate in the next 50100 years n 2

What is FIAT? Government money has not been backed by gold or anything else (other than guns and jails) for many decades n Governments have declared non-government money to be illegal, and have declared government money to be “legal tender” n Government money is called FIAT, which is Latin for “it shall be” – money created by command or decree n 3

What is the future value of FIAT? n Fiat from countries with the highest annualized inflation rate cannot be expected to have much future value n Venezuela 1, 623, 656 % n Zimbabwe 67 % n Argentina 55 % n Iran 48 % n Countries with the highest fiat inflation rate have the highest use of cryptocurrency n Funding of cryonics contracts with insurance 4

What is the future value of FIAT? n Governments have little inhibition about printing money, but some are less inhibited than others n Since the Federal Reserve took-over US Dollar issuance in 1913, US Dollars have lost 98% of their value n Dollar value appreciated in the 1800 s when backed by gold n Crypto-currency prices are currently very volatile, but could become more stable than fiat 5

What is the future value of FIAT? n n CI Member had French Francs in a safe deposit box that became worthless after the adoption of the Euro Banks dealing in foreign exchange formerly only held gold in reserves, but now mostly hold reserve currencies n n n 62% of reserve currency held is US Dollars 21% of reserve currency held is Euros 5% of reserve currency held is Japanese Yen The US Dollar is the world’s leading reserve currency, allowing the USA to flood the world with its money If the US Dollar ceased to be a reserve currency, Dollars would flood into the US, with huge loss of 6

Why have crypto-currencies had value? n. A cash register has value because it facilitates monetary transactions n If money did not exist, cash registers would have no value n Crypto-currency has had value by facilitating monetary transactions n Sending money to a different country through banks can take many days and cost up to 10% n Bitcoin could send money to a different 7

n SWIFT for FIAT transfer to other countries SWIFT : Society for Worldwide Interbank Financial Telecommunications Headquarters in Belgium n Links to over 11, 000 financial institutions in over 200 countries n Until recently, SWIFT took many days with fees up to 10% of amount sent n n Edward Snowdon revealed that the National Security Administration (NSA) spied on SWIFT has been pressured by US Government to exclude Iran and Russia as part of sanctions US Treasury used SWIFT to seize assets of a Danish businessman accused of violating the embargo against Cuba 8

SWIFT for FIAT transfer to other countries n n n SWIFT was hacked twice in 2016, losing $12 million and $81 million to different hackers In 2018 Iran, Russia, China, Germany, France, and other countries proposed to develop an alternative FIAT transfer agency rather than SWIFT’s new Global Payments Initiative (gpi) reduces transaction times to under 24 hours in response to challenges from Ripple and JP Morgan Coin 9

Digital money and cryptography n Coins and paper currency are becoming obsolete. n Cryptography is the only way to protect privacy and digital money on the internet n Prior the 1990 s (and “cypherpunks”) the US government classified cryptography as a “munition” n If you don’t want the world to know your SSN, bank account or credit card info, you must be a spy, terrorist, drug dealer or child pornographer n In 1991 Phil Zimmermann distributed his software “Pretty Good Privacy” (PGP) free on 10

Not all cryptography is created equal In 2013 the Target retail store chain had about 40 million debit and credit cards accessed by hackers, who obtained expiration dates and CVV codes. Target did not have good encryption. n Hackers can only steal crypto-currency if the private key is being stored at a crypto-currency exchange rather than on a hardware or paper wallet n In the 20 months following January 2017, a specialized unit of the North Korean military hacked at least half-a-billion dollars from crypto-currency exchanges n International Monetary Fund (IMF) head Christine Lagarde has urged central banks to issue government-backed crypto-currencies to make 11 n

What does cryptocurrency encrypt? n Crypto-currency encrypts the “private key” of the crypto-currency owner, giving the owner exclusive control of the money. A “public key” corresponds to an address, which anyone can see, and which corresponds to the “private key”, which only the owner can see. 12

Short review of how Bitcoin works, beginning with a Ben Best bitcoin address 13

A Bitcoin transaction (technical version) 14

Transactions are collected together into “blocks”. The miner who first solves a puzzle adding a block of transactions to the blockchain and is rewarded with 12. 5 newly “mined” bitcoins (reward decreases to 6. 25 BTC in May 2020) A new block is “mined” every 10 minutes “Mining” with computers consumes considerable electricity, but mostly excess electricity from renewable sources 15

The miner whose first solves the cryptographic puzzle adds his/her block, which is chained to the previous block 16

Transactions are collected by “miners” in a distributed network 17

Bitcoin blockchain has accumulated half-a-million blocks since January 2009 18

How bitcoin and other crypto-currencies are secure The bitcoin blockchain is copied on nearly 10, 000 nodes worldwide n There is no single central database that can be attacked or altered n Data on a secure blockchain is permanent and becomes essentially impossible to erase after several blocks n Crypto-currency on the blockchain can only be spent by the owner/possessor of the private key n 19

n Danger of quantum computers? The crypto-currency IOTA is already quantum-safe because IOTA uses a directed acyclic graph rather than a blockchain, and because IOTA generates new private keys after each send transaction n Other crypto-currencies could be made safe from quantum computers by doubling the private and public key size, but this would greatly reduce efficiency. Most crypto-currencies are already struggling to scale (handle more transactions, faster). n Currently, even bitcoin “deposits” to the blockchain can be secure against quantum computers as long as bitcoin is never sent from that address (which 20 would give clues about the private key)

What cryoptocurrencies will have value for many decades? Will crypto-currency innovations continue to disrupt and replace existing crypto-currencies? n Bitcoin has 10 -minute confirmation times, blocks can only store 2 Megabytes of data, and Bitcoin blockchain data is public, not private. Bitcoin does not scale. Despite being so inefficient, bitcoin has a larger market capitalization than all other n 21

May 2018 Top 8 Cryptocurrencies by Market Capitalization Name Market Capitalization Price Bitcoin $146 Billion $8, 570 Ethereum (Ether) $71. 6 Billion $720 Ripple $28. 2 Billion $0. 72 Bitcoin Cash $23. 9 Billion $1, 393 EOS $11. 3 Billion $13. 2 Litecoin $7. 97 Billion $141 Cardano $6. 90 Billion $0. 266 Stellar $6. 65 Billion $0. 358 22

May 2019 Top 8 Cryptocurrencies by Market Capitalization Name Market Capitalization Price Bitcoin $102 Billion $5, 795 Ethereum (Ether) $17. 6 Billion $166 Ripple $12. 9 Billion $0. 306 Bitcoin Cash $5. 09 Billion $287 Litecoin $4. 80 Billion $77. 9 EOS $4. 66 Billion $4. 94 Binance Coin $3. 29 Billion $23. 3 Tether $2. 79 Billion $1. 00 23

May 2014 Top 8 Cryptocurrencies by Market Capitalization Name Market Capitalization Price Bitcoin $5. 625 Billion $440. 73 Litecoin $295 Million $10. 40 Ripple $46 Million $0. 006 Peercoin $44 Million $2. 08 Dogecoin $35 Million $0. 00045 Nxt $32 Million $0. 032 Namecoin $18 Million $2. 05 Mastercoin $17 Million $29. 28 24

May 2016 Top 8 Cryptocurrencies by Market Capitalization Name Market Capitalization Price Bitcoin $7. 042 Billion $453. 32 Ethereum $797 Million $9. 98 Ripple $216 Million $0. 006 Litecoin $177 Million $3. 87 Dash $44 Million $6. 76 Digix. DAO $28 Million $14. 22 Made. Safe. Coin $24 Million $0. 053 Dogecoin $23 Million $0. 00022 25

n The Lindy Effect predicts that the longer a nonperishable thing has survived, the longer it will survive n The Lindy Effect predicts that a book that has been in print for 40 years can be expected to remain in print longer than a book that has been in print for 20 years n That the top 6 of the top 8 cryopto-currencies have remained in the top 6 for the past year is a positive sign for their continued survival n Versus disruptive technologies? n Disruptive technologies replaced Polaroid cameras and Blockbuster video n New crypto-currencies may be disruptive not 26 only to fiat currencies, but to other crypto-

Bitcoin n Bitcoin is the only crypto-currency in the USA that the SEC clearly defines as a commodity, not a security. n The bitcoin network is secured by being so much larger than any other crypo network, with no mining pool having over 20% of the hashrate n Bitcoin is limited by a ten minute block confirmation time, 2 megabyte block size limit n Bitcoin is a store of value, not a medium of exchange (proven by the Bitcoin Cash fork). n Bitcoin has more name recognition than any other cryptocurrency, and has a market capitalization larger than all the other 2, 149 27 cryoptocurrencies listed on coinmarketcap. com,

Ethereum (Ether) n The Ethereum network has an order of magnitude more developers than any other crypto, and will continue to innovate to produce more scalability, speed, privacy, and quantum computer resistance, among other features. n Ethereum has the most powerful developer toolkit of any crypto-currency network n Ether is not simply a crypto-currency n The Ethereum network provides a Turing-complete platform for smart contracts (Dapps, decentralized 28

Ripple n Challenging SWIFT with a capacity for international bank transfers within seconds rather than days at minimal cost n Used by over a hundred banks (versus SWIFT, over eleven thousand financial institutions) n Works with government regulators n Uses a corporate (not public) blockchain or uses “chains of trust” n Ripple owns 60% of all XRP (Ripple coins) 29

Bitcoin Cash hard-forked from Bitcoin on August 1, 2017 to be a medium of exchange (a disruptive technology that failed to disrupt bitcoin) n Bitcoin Cash hard-forked again into two coins on November 15, 2018 in a bitter hash-war, each side attempting to eliminate the other, each spending $12 million in first week in mining power drawn from other crypto-currencies n The hash-war ended November 23, 2018 after causing the bitcoin price to fall from $6, 500 to $3, 100 n The two new coins are BCH and BSV n BCH is #7 and BSV is #14 by market cap n 30

Litecoin n Hard-fork from Bitcoin in 2011 by Charles Lee n Transaction confirmation time 2. 5 minutes n Smaller network similar to Bitcoin has spearheaded Bitcoin innovations (Segregated Witness, Lightning Network) n Plans to become private and fungible some time in 2019 (using the same software as the Monero privacy coin) 31

EOS. IO (EOS) n Competitor with Ethereum for Dapps (distributed applications) n March 2019, EOS had six times as many Dapps as are on the Ethererum network n Transaction confirmation speed average 67 per second (maximum nearly 4000 per second) n Centralized: 21 “Block Producers” with power to reverse transactions and freeze accounts n Accused of mis-governance (“vote-buying”) n Plans to host a blockchain-based 32

Binance Coin n Binance is the largest cryopto-currency exchange in the world (moved to Malta from Hong Kong) n Owners of Binance Coin have reduced fees when trading on the Binance exchange n Binance Coin has been on the Ethereum network, but is moving to its own blockchain (Binance Chain) where it will fuel transactions and be the basis for a decentalized crypto-currency exchange n Binance Coin price was about $6 in early 33

Tether is a so-called “stablecoin” priced at about $1 on the Ethereum blockchain, backed by US Dollars n Tether has 10 times the market capitalization of the next largest stablecoin based on US Dollars (USD Coin) n Tether is owned by i. Finex, Inc (registered in British Virgin Islands), which also owns the Hong Kong based crypto-currency exchange Bitfinex n Provides a more stable price than other cryoptocurrencies n Has the liquidity advantages of other cryptocurrencies on crypto-currency exchanges 34 n

Tether n Tether is required to have $2. 79 billion in bank deposits to match its $2. 79 billion market capitalization n No insurance can cover such a large deposit, and no major auditing firm will take the risk of auditing the deposits (although Bloomberg reviewed the bank statements in December 2018, confirming balances) n Deposits are held at Deltec Bank and Trust (Bahamas) n The crypto-currency market tumbled on April 25, 2019 on charges that $850 million of Tether backing is a “loan” to Bitfinex 35 n Despite the allegations, Tether still tracks the US

Dai Coin (GREATLY OVERSIMPLIFIED) Dai is a “stablecoin” on the Ethereum blockchain that maintains a price of $1. 00 n Dai can be created as a loan by depositing Ether in excess of the value of the Dai n If Dai drops below $1. 00, borrowers will pay off their debt at a cheaper price removing Dai from the system and elevating the price n If Dai rises in value, borrowers can create more Dai and sell it for more than $1. 00, increasing supply and thereby lowering price n The price of Dai has remained close to $1. 00 since December 2017, without requiring the bank deposits used by Tether and other US$-based “stablecoins” 36 n

Bitcoin Price in US$ DATE PRICE October 5, 2009 $0. 000764 July 22, 2010 $0. 05 December 24, 2010 $0. 25 June 2, 2011 $10. 60 August 1, 2013 $97. 08 November 20, 2013 $1, 151 December 18, 2013 $537. 85 May 9, 2014 $445. 06 May 11, 2016 $450. 00 April 7, 2017 $1, 186 December 15, 2017 $19, 499 May 19, 2018 $8, 372 May 4, 2019 $5, 795 37

Major bitcoin price drops since 2010 n Bitcoin has had several major percentage price drops since 2010 (“bubbles”) n 2011 dropped from $39 to $2 n 2013/2014 dropped from $1, 151 to $177 n Bitcoin buyers, more than other investors have a get-rich quick attitude n Many buy when the price rises and sell when the price drops n Buy high, sell low is a formula for losing 38

US$ Bitcoin Price from May 2014 to May 2016 39

Initial Coin Offerings (ICOs) n n n Much of the boom in cryptocurrencies in 2017 was driven by the creation of new cryptocurrencies , i. e. ICOs are a means of “crowdfunding”, avoiding the regulations and intermediary costs of IPOs – good for start-up companies short on cash Nearly half of ICOs sold in 2017 had failed by February 2018, and about 10% were fraudulent 80% of ICOs have been on the Ethereum network In September 2017 the Chinese government declared ICOs illegal, and demanded that all ICO sale proceeds be refunded South Korea soon after also declared ICOs illegal 40

Initial Coin Offerings (ICOs) The US Securities Exchange Commission (SEC) declared most ICOs to be securities, requiring SEC regulation n The SEC has prosecuted and fined many companies behind ICOs, and fined several celebrities who had promoted ICOs n $6. 9 billion had been raised by ICOs in the first quarter of 2018, but only $118 million was raised by ICOs in the first quarter of 2019 n Funds raised by ICOs were primarily in Ether, and selling of Ether for fiat money by ICO companies has contributed to the Ether price decline n n Ether price dropped to less than 1/15 of the 2017/2018 high, compared to Bitcoin, which dropped to about 1/741

Predictions for the next 50 -100 years The US Dollar will cease to be the leading world reserve currency, and will greatly lose value n SWIFT will cease to be the major means of international money transfer n The leading world reserve currency and means of international money transfer will be a cryptocurrency, likely a Dai-like stablecoin reflecting a basket of commodity prices on the Ethereum network n Crypto-currency friendly countries like Malta, Singapore, and Switzerland will attract more capital and software experts than the USA or China, which will “brain drain” 42 n The price of Bitcoin and Ether will become the n

Qualifying Predictions n Violations of the Lindy Effect n The US Dollar would be expected to continue to be the leading world reserve currency n SWIFT would be expected to continue to be the major means of international money transfer Prediction is hard, especially about the future n BREAKING NEWS: Facebook is planning to have a US Dollar-based stablecoin, but can it overcome the problems faced by Tether? n 43

Recommendations for asset preservation for the next 50 -100 years n Have a diversified portfolio of fiat, jewelry, precious metals, and cryptocurrency n Deposit at least 5 -10% of assets onto a Bitcoin and Ether address from which there is no spending (to be Quantum. Computer safe) n No trust is required if you save your private key n BUY AND HOLD until reanimation 44

Cryptocurrency news n. COIN TELEGRAPH nwww. cointelegraph. co m 45