Welcome and Introduction
Vicky Milner, Callington Chambers
De-crypting cryptocurrencies: what
are they; should Jersey care?
Mark Loane, C5 Alliance
For information on Mark Loane’s slides, please visit the
links below:
• What is Bitcoin?
http://youtu.be/Um63OQz3bjo
• How Bitcoin Works Under the Hood (Deep Dive)
http://youtu.be/Lx9zgZCMqXE
• CoinDesk State of Bitcoin 2014 (A very interesting slide set
released yesterday)
http://www.slideshare.net/CoinDesk/coindesk-state-of-bitcoin2014
Bitcoin – Money 2.0
Opportunities for Jersey
Jonathan Day, Carpe Diem
[email protected]
27th February 2014
Money 1.0 - Defined
 Definition of Money:
 “Money is any object or record that is generally accepted
as payment for goods and services and repayment of debts in
a given socio-economic context or country.”
 The main functions of money are distinguished as:
 a medium of exchange
 a unit of account
 a store of value
 Over time money has been:
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Barter – shekel, cowry
Commodity money – gold, silver coins
Representative money – gold standard
FIAT currency – pegged to USD/Gold until 1971
Now…180 currencies – no intrinsic value, legal tender
FIAT – Medium of Exchange?
 a medium of exchange
 Yes, but no underlying changes in 50 years…..not fit for purpose
 No improvements to support global commerce, micro payments
 Cash and cheques – cost businesses £££
 Currencies don’t cross borders without cost and complexity
FIAT – Store of Value?
 To act as a store of value, money must be able to be reliably saved, stored,
and retrieved
 Only if not eroded by inflation
 Or lack of trust in banks and government
 Or by printing money!
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UK Inflation since 1980 – 215% or 6.5% pa – only 2.5% compound
Banking deposit guarantees – capped at £50k
QE in UK - £375 billion !
QE in US - $80 billion per month !! Heading to $4 Trillion !!! 7 x plan
Iceland inflation
Peso vs USD
Post Lehman – banks have been rescued not reformed
Cyprus savings – 10% taken by Central Bank
Iceland - Inflation
Argentinean Peso Vs US Dollar
Gold as The store of Value?
Money 2.0 - What is Bitcoin?
 An open source P2P digital currency
 Bitcoin is a digital currency, a protocol, and a software that
enables:
 Instant peer-to-peer transactions; Worldwide payments
 Irreversible by design; Almost no processing fee
 Relies on cryptography and p2p network – no central authority
 Finite - 21 million Bitcoins issued – no QE possible!
 12.5 million (60%) ‘mined’ to date; Gold is c 50% mined
How Significant?
“Eventually mainstream products, companies and industries emerge to
commercialize it; its effects become profound; and later, many people
wonder why its powerful promise wasn’t more obvious from the start.
What technology am I talking about? Personal computers in 1975, the
Internet in 1993, and – I believe – Bitcoin in 2014.”
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Marc Andreessen
Bitcoin vs bitcoin
 Bitcoin is the infrastructure; the protocol – a step
change that we need to understand
 What would have happened if we regulated http: before
the browser took off?
From dumb to smart money
 Bitcoin Protocol – like http for internet, smtp for email
 Scarcity – coins can only be creating via the mining process and
the amount are mathematically locked at the outset
 Trust – the blockchain solves the issue of double spending of
digital currency
 A public ledger for all transactions, nearly instant, free,
frictionless commerce
 Possible to transfer property rights (such as shares, certificates,
gold, assets, etc.)
 Transactions can take place without the involvement of a trusted
intermediary such as a government, notary, or bank.
Bitcoin Facts
 ECB said < 1 year ago – < 10,000 users, $1bn, niche, ‘like virtual currency but can
be used in physical world’
 1 year on:
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Bitcoin is 5 years old with no technical issues at the protocol or wallet level
Over 1 million wallets, growing at 200,000 per month
Mining capacity growing at 2% per day compound
40+ countries have issued their views
100+ alt coin currencies are traded
Iceland launching Auroracoin in 3 weeks for every citizen
Goldmoney, BullionRock – cold storage, insurance,
28,000 Paypoints in UK alone
Overstock, ebay, Scan,, ….snapcard.com
Bitpay – 1,000 new merchants per week
Neo & Bee – Cyprus £6m investment into new banking ex EU
Switchless.com – Standard Bank’s ‘full product suite’ for Crypto banking
Regulatory thoughts
 California – AB219 – Clarify that crypto currencies are not caught
within the counterfeiting laws
 New York – ‘Bitlicense’ – bad idea, can be text – remember PGP
 Exchanges – FIAT/Crypto – need regulation – but see Ben Lawsky
NYDFS –
 “My hope is that if we can get appropriate guardrails in place to
prevent money laundering, we can take a deep breath and really
focus on trying to ensure that virtual currency firms flourish and
continue to develop and innovate.”
 “We’ve had some success in getting these regulations amended
so they don’t crush smaller community banks. Any regulations we
issue for virtual currency firms will have to be carefully tailored
with this in mind.”
Risks
Whether we like it or not, crypto currencies are rapidly becoming part of
our every day life
- People are mining
- ATMS are springing up
- Exchanges exist, unregulated at present
- Businesses are accepting bitcoins
- We wish to take advantage of the timely opportunities
- There is significant risk to existing income and jobs in
Jersey if we do not take proactive steps to understand
the impact of the changes that are taking place at pace
Opportunities for Jersey
Digital Currencies offer the perfect FinTech
diversification opportunity
 Cost savings for high street, customers
 Crypto tourism - a great niche
 Exchanges – appropriate regulation could support
 Commodities / Expert Funds
 Payment providers
 Gaming
 Cold Storage / Security
 Custody / KYC
 Digital Currency trials - beat Auroracoin to launch?
Requirements
If we are a financial and technology leader, we need to
have an opinion and voice it in the market
 Individuals and businesses need clarity relating to the
legality of accepting, using, mining currencies
 Tax implications need to be clarified
 Regulatory implications need to be clarified
A Gift
 Carpe Diem BitCoin ‘Faucet’
 First 50 people to set up a Wallet and Bitcoin Address and
send the address by email to [email protected]
 Will each be sent 0.01 BTC – c £5
 A quick and easy way to get a wallet is from
 https://blockchain.info/wallet
 Slides available from www.carpediem.je
Open Discussion
Crypto currencies:
Is there a case for
regulation?
Mark Ashburn, KPMG
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Is there a case for regulation?
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What would actually be regulated?
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What are the obstacles?
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Should Jersey get involved?
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Do we have the skills?
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What is the value to Jersey Plc?
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What are the risks?
Bitcoin from a commodity trader’s
perspective
Daniel Masters, Global Advisors
Note: Please see the additional PDF for Daniel Masters notes
Open Discussion
End of Event
Thank you all for coming
Please join us at The Adelphi