BITCOIN. sdffdfdfd. Fundamental Asset Overview

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1 BITCOIN sdffdfdfd Fundamental Asset Overview

2 Fundamental Asset Overview Contents Asset Research Brief Overview. 2 Investible Asset. 2 Key Metrics. 3 Underlying Technology.. 3 Technical Details... 3 Project History. 4 Asset Supply.. 5 Price History.. 6 Trading Volume.. 8 Industry Growth. 10 About. 12 Disclaimer Alex Sunnarborg Founder & CFO September 13,

3 Asset Research Brief Overview An online payment system allowing users to send funds directly to one another without a financial intermediary. The network is purely digital and contains its own underlying currency, thus is inherently native to the internet and the world. The overall design of the open-source software s distributed database and consensus structure, dubbed a blockchain, has been seen as a significant technological breakthrough in computer science and cryptography with numerous applications throughout financial services and other major industries. Investible Asset The underlying asset on the Bitcoin network is called bitcoin (BTC). Bitcoin can be held over time or transferred directly to others anywhere at any time using open-source software called a wallet. Many organizations accept bitcoin in exchange for goods, services, and other financial assets like sovereign and digital currencies. The value of bitcoin is determined by supply and demand and consistently fluctuates relative to other currencies and assets. Bitcoin is highly divisible - up to 8 decimal places. 2

4 Key Metrics Website: bitcoin.org Whitepaper: bitcoin.org/bitcoin.pdf Software: github.com/bitcoin Current Price 1 : $ Sep. 13, 2016 All-Time High 1 : $1, Nov. 30, 2013 Previous Year High 1 : $ Jun. 20, 2016 Previous Year Low 1 : $ Sep. 21, 2015 Current Supply 1 : Million Supply Limit 2 : 21 Million Current / Limit: 75.55% Current Market Cap 1 : $9.64 Billion Underlying Technology Instead of relying on trust and third party intermediaries, Bitcoin uses numerous cryptographic techniques to establish proof and consensus across the network. Bitcoin utilizes a distributed database mechanism broadcasting every transaction occurring into a growing public ledger. The record book of payment history represents the full history and thus current state of the system, including the distribution of and trail to all bitcoin balances. The ledger is separated into time-stamped blocks of transactions and associated details, all chained to previous blocks, allowing a user to verify the validity of any Bitcoin balance, proposed transaction, or block. The innovative technical design structure has been dubbed a blockchain. Technical Details A payment network with distributed trust amongst other users requires global prevention of fraud to maintain data integrity on the history of all transactions. Bitcoin uses a system referred to as mining to release new bitcoin into circulation and incentivize coordination amongst users. Transactions, blocks, new bitcoin, and consensus generally work as follows on the Bitcoin network 3 : - Individual new transactions are broadcast to all participating nodes. - Nodes collect individual transactions and organize them into new individual proposed blocks, ensuring validity and considering transaction fees. - Nodes repeatedly calculate algorithmic values with inputs including proposed transactions into the new block, details about the last block, and something of a randomizing function. 3

5 - Values are compared to required solution ranges automatically adjusted by the network to ensure a correct value is found approximately every 10 minutes 2 regardless of the number of nodes, efficiency of hardware, or other competitive elements. - When a solution is found, the node broadcasts the details of the block and solution including the proposed transactions to the network. - The network validates the transactions in the block and the solution and express acceptance by using the details of the block in their solution for the next block. - When the block is accepted by the majority of the network, a reward of newly generated bitcoin are given to the miner who proposed the block. Bitcoin transactions between users are handled by Bitcoin wallet software. Bitcoin is built using public key cryptography, with users keeping secret private keys that can be used to send bitcoin to others, used to generate addresses to receive bitcoin from others with, and verify authenticity of control over funds. Users may specify a transaction fee when sending bitcoin to an address to incentivize miners to include their transaction in the block they re working on solving to more quickly have their payment included in the blockchain. Project History The concept behind bitcoin was initially described to the public in late 2008 in a whitepaper published under the pseudonym Satoshi Nakamoto 3. To this day, the identity of Satoshi Nakamoto is unknown. The first block in the Bitcoin blockchain, often referred to as the genesis block, was created in early January Over the coming months, the first transactions and code change suggestions were made between early developers & adopters, frequently communicating on small internet forums, chatrooms, and mailing lists. The following year 5 : - The first mobile phone bitcoin transactions were made. - Demand and transaction volume picked up enough for the first exchanges to launch. - Increased competition for block rewards caused a shift in mining hardware (from CPUs to more powerful GPUs) and mining structure (the first mining pools were formed, giving solo miners another option). Since, the ecosystem has continued to grow with large mining pools and specialized mining hardware (ASICs), major exchanges operating around the globe, numerous wallet providers, hundreds of developers contributing to the open-source code base, and millions of end users. 4

6 Asset Supply The first Bitcoin block released 50 bitcoin into the network in January The Bitcoin software specifies that every 210,000 blocks, the block reward will half, creating a cap of 21 million bitcoin 6. As the Bitcoin network automatically adjusts to strive for an average 10 minute block time, we can very accurately model the intended supply distribution timeline. As a 365 day year is approximately 525,600 minutes, the Bitcoin block reward should half about every 4 years. 7 However, the Bitcoin software dynamically adjusts for increased or decreased computational power on the network on a lagging basis and the intended 10 minute block interval frequently varies. 7, 8 5

7 The Bitcoin network actually started out with average block times slower than 10 minutes & have since shifted to quicker than 10 minutes, averaging about 9.42 minutes per block since genesis. 7, 8 Price History The first bitcoins were released to the network with the mining of the Genesis Block in early January Bitcoins were initially traded directly amongst developer and early adopter groups on internet forums and chatrooms before the first exchanges were developed. Bitcoin first crossed $1 in early 2011, $10 a few months later, $100 in early 2013, and $1,000 by the end of the year. Bitcoin then slid in price for about 14 months into early January 2015, experiencing over an 80% drop from its height of $1,149 on November 30, 2013 to its low of $197 on January 17, In the approximate year and a half to follow, bitcoin rallied 209% to $608 on September 13, , 10 6

8 Bitcoin s historical yearly & monthly returns can be seen below beginning in % 153% 5520% Date Price Return Date Price Return Date Price Return 1/1/11 $ % 1/1/12 $ % 1/1/13 $ % 2/1/11 $ % 2/1/12 $ % 2/1/13 $ % 3/1/11 $ % 3/1/12 $ % 3/1/13 $ % 4/1/11 $ % 4/1/12 $ % 4/1/13 $ % 5/1/11 $ % 5/1/12 $ % 5/1/13 $ % 6/1/11 $ % 6/1/12 $ % 6/1/13 $ % 7/1/11 $ % 7/1/12 $ % 7/1/13 $ % 8/1/11 $ % 8/1/12 $ % 8/1/13 $ % 9/1/11 $ % 9/1/12 $ % 9/1/13 $ % 10/1/11 $ % 10/1/12 $ % 10/1/13 $ % 11/1/11 $ % 11/1/12 $ % 11/1/13 $ % 12/1/11 $ % 12/1/12 $ % 12/1/13 $1, % % 39% 33%* Date Price Return Date Price Return Date Price Return 1/1/14 $ % 1/1/15 $ % 1/1/16 $ % 2/1/14 $ % 2/1/15 $ % 2/1/16 $ % 3/1/14 $ % 3/1/15 $ % 3/1/16 $ % 4/1/14 $ % 4/1/15 $ % 4/1/16 $ % 5/1/14 $ % 5/1/15 $ % 5/1/16 $ % 6/1/14 $ % 6/1/15 $ % 6/1/16 $ % 7/1/14 $ % 7/1/15 $ % 7/1/16 $ % 8/1/14 $ % 8/1/15 $ % 8/1/16 $ % 9/1/14 $ % 9/1/15 $ % 9/1/16 $ % 10/1/14 $ % 10/1/15 $ % 11/1/14 $ % 11/1/15 $ % 12/1/14 $ % 12/1/15 $ % 9, 10 7

9 9, 10 Trading Volume Global total bitcoin trading volume has increased significantly over the past year, frequently crossing over the $1 Billion mark & currently averaging about $500 Million per day. 11 8

10 Looking at the composition of this volume by exchange, we can see that it s reportedly very heavily dominated by Chinese exchanges specifically OKCoin & Huobi. 11 9

11 Industry Growth Some of the current largest organizations in the industry can be seen below: Wallets Exchanges Miners 12 Infrastructure Investors Merchants Xapo, Multibit, Electrum, Breadwallet, Airbitz, Mycelium, Blockchain OKCoin, Huobi, BTCChina, Bitstamp, Coinbase F2Pool, AntPool, BTCC Pool, Bitfury, BW, Slush 21, Blockstream, Chain, Bitpay DCG, Blockchain Capital, Pantera Expedia, Dell, Overstock, Microsoft Venture investment into the space has grown tremendously over the last 3 years to over $1.2 Billion & 230 deals

12 Daily transactions on the bitcoin network have experienced steady growth to over 200, Data source: coincap.io API daily as of 9/13/2016, current supply implied by market cap / price 2 Reference & additional reading: bitcoin.org/en/faq 3 Reference & additional reading: bitcoin.org/bitcoin.pdf 4 Reference & additional information: blockchain.info/block/ d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26f 5 Reference & additional reading: en.bitcoin.it/wiki/category:history 6 Reference & additional reading: en.bitcoin.it/wiki/block 7 Intended timeframe assuming 10 minute blocks 8 Data source & additional information: blockchain.info/charts/total-bitcoins, blockchain.info/block/ b95347e83192f69cf c639f9b7228e9ba171342e, blockchain.info/block/ cce816c0ab2c5c269cb081896b7dcb34b8422d6b74ffa1, blockchain.info/block/ b54b443c93ee13f3144da2531da178d3aeed11a99d7d02 9 Data source: coindesk.com/price (daily: 7/18/10 4/27/13), coincap.io API (daily: 4/28/13 9/13/16) 10 Approximate calendar MoM return, *: YTD 11 Data source: bitcoinity.org, daily global total across listed exchanges, $ values imply coincap.io API daily price equivalent 12 Data source & additional information: blockchain.info/pools 13 Data source & additional information: coindesk.com/bitcoin-venture-capital of note, a small minority of deals deal with Blockchain Assets outside of bitcoin 14 Data source: coindesk.com/data/bitcoin-daily-transactions daily values 11

13 About is an investment platform & market research firm for Blockchain Assets. The mobile app is free to download on both ios & Android globally. More information can be found at lawnmower.io. s is written by the Founder & CFO Alex Sunnarborg, who has a professional background in financial analysis, working in investment banking & wealth management. To contact the author, please alex@lawnmower.io 12

14 Disclaimer s is provided for informative purposes only and should not be misconstrued or interpreted as fact, advice, recommendation, or anything of similar nature. This research is based on third party public information at the time written and should not be considered or relied upon as fully accurate, complete, or timely. This report contains heavy simplifications of complex topics and should not be interpreted as the full picture. This research is not a solicitation or offer to buy or sell any asset. It does not constitute a recommendation in any way. Prices, values, and data referred to in this research may change and fluctuate significantly. Past performance is absolutely no indicator of future performance. 13