Not FDIC Insured May Lose Value No Bank Guarantee DISRUPTION 1 Disruptive technologies are changing our world Cryptocurrencies Blockchain Digital payments Disrupting ID: 716648
Download Presentation The PPT/PDF document "Taken on trust: Disrupting money" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
Taken on trust:
Disrupting money
Not FDIC
Insured
| May Lose Value | No Bank Guarantee
DISRUPTIONSlide2
1
Disruptive technologies are changing our world
CryptocurrenciesBlockchainDigital payments
Disrupting financial services
Revolutionizing how we create, store, value, and exchange moneyTransforming virtual monetary exchange across the globeSlide3
2
Deciphering the value of cryptocurrenciesThe expanding role of
blockchainMoving towards a cashless society AgendaSlide4
Cryptocurrencies
—
Deciphering the value Slide5
4
Crypto craze
Why bitcoin could soon be worth more than goldTime MagazineFebruary 23, 2017 Bitcoin trades full speed ahead
The Wall Street JournalJune 7, 2017 Bitcoin may now be the biggest financial bubble of all time CNBCDecember 14, 2017 Bitcoin tumbles nearly 30%; Coinbase temporarily halts tradingLos Angeles TimesDecember 2017 Bitcoin loses more than a third of value over a week BBC News
December 2017The thrill is gone as the frenzy over bitcoin fizzles The Wall Street JournalApril 13, 2018Slide6
5
What is cryptocurrency, exactly?
Fiat Money
Cryptocurrency
Physical
Digital
Bills and coins
1 private and 1 public piece of code
Unlimited supply
Government can produce as needed
Limited supply
Most have a set maximum
Issued by a government
Produced by computers
Centralized: issued and controlled by laws and banks
Decentralized:
n
o
government involvementSlide7
6Key characteristics of cryptocurrencies
Uses encryption techniques to control the creation of money and to verify the transfer of
funds
Has no intrinsic value in that it is not redeemable for another commodity, such as
gold
Has
no physical form and exists only in the
network
Its supply is not determined by a central bank and the network is completely
decentralizedSlide8
7
How a bitcoin transaction is processed
Bitcoin payer opens bitcoin “wallet” and initiates payment.1
This transaction, among others, is broadcast to the network.2Specialized computers on the network, “miners” are continuously combining transactions into a “block.”3
Miners processing the “block” reach consensus on what the “blockchain” will look like.4Miners are compensated with newly minted bitcoin for providing computing power. 5Miners publish the new blockchain
to the network.
6
Transactions
are recorded
in the
latest block.
7
The payee receives
bitcoin into
their “wallet.”
8Slide9
8
1. Source: Fabric Ventures Token Data, “The State of the Token Market: A Year in Review and an Outlook for 2018,” January 2018. 2. Source: Boston College, “Digital Tulips? Returns to Investors in Initial Coin Offerings,” May 2018.
Increasing popularity: red hot or red flag?201855.8% of Initial Coin Offerings (ICOs) die within four months2 2016
1 January 2017-April 20182$12B $240M Capital raised by ICOsSlide10
9
The challenge for authorities: who
regulates and how?
Regulatory BodyCryptocurrency Designation
ApproachUS Internal Revenue Service
Property
Subject to capital gains tax
US Treasury Department
Money-Like
Does not consider it legal tender
US Commodity Futures
Trading Commission
Commodity
Has placed virtual currencies on “heightened review”
US Securities
and Exchange Commission
Security
The SEC takes increasingly strong action against unregistered initial coin offeringsSlide11
10
Cryptocurrencies
The media has overly focused
on the price.Current
It’s worth paying attention to what’s happening within the area of cryptocurrencies, beyond price fluctuations, to how these technologies may disrupt businesses in many industries.Future
A clearer regulatory framework is likely to take hold.
The cryptocurrencies that survive will likely have a particular use case where there is value added by applying the underlying technology, like
blockchain.
We expect only a handful
to survive.
This material is intended to be of general interest only and should not be construed as individual investment advice or a
recommendation
or solicitation to buy, sell or hold any security or
to adopt
any investment strategy, including investing in
cryptocurrencies
or the technologies mentioned in this
presentation.Slide12
Blockchain’s
Expanding Role Slide13
12
What is blockchain?
Record of transactions, like a traditional ledgerA blockchain allows participants to reach consensus on a shared digital history, without a middleman
Designed to store information in a way so that it is transparent and unalterable, where tampering is easily detected by other usersSlide14
13
Example:
mortgage process using private blockchainThe mortgage application is represented online as a “block”The block is broadcasted to third parties in home buying process
Through data sharing on the blockchain network, homebuyer’s application is verified Loan offer contract is generatedHomebuyer signs with their private key Funds are transferred, and transaction is recordedLand title is also transferred and recordedHomebuyer is now a homeowner
65432
1
7
8Slide15
14Pan-sector opportunities
for blockchain
Insurance
Real Estate
Healthcare
Fraud detection
Risk prevention
Claims prevention and management
New distribution and payment models
Payments
Record keeping transfers
Paperless
mortgage applications and payments
Allow hospitals to safely store medical records
Secure medical record sharing
Improved data security
Ride Sharing
D
ecentralized
versions of peer-to-peer
ride sharing
This material is intended to be of general interest only and should not be construed as individual investment advice or a
recommendation
or solicitation to buy, sell or hold any security or
to adopt
any investment strategy, including investing in
cryptocurrencies
or the technologies mentioned in this
presentation.Slide16
15
Blockchain
We think
blockchain may have promising use cases and we are actively exploring investment opportunities in this area.In terms of long-term winners and losers, we see opportunities in places where large networks have been built up, whether they are physical, technological or people.
This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy, including investing in cryptocurrencies or the technologies mentioned in this presentation.Slide17
Moving Toward
a Cashless SocietySlide18
17
For illustrative purposes only. The evolution of payment methods
Barter Gold, silver, copper Checks
Minted coins Paper moneyCredit,debit cards ChipMobileBiometricsFrom barter to biometricsSlide19
18Factors supporting the pace of change
Impact of technology
Shifting customer expectations
Changing global demographics
Rise of
e-commerce
Logos are trademarks of their respective owners and are used for illustrative purposes and should not be construed as an endorsement or sponsorship of Franklin
Templeton Investments
.Slide20
19
1. Source: United Nations, Department of Economics and Social Affairs, Population Division, June 2017. 2. Source: The Global Findex Database, World Bank Group, 2017.
Emerging markets’ sweet spotEmerging markets account for 83% of the global population154% of the emerging market population is under the age of
301The need for financial inclusion: nearly 2 billion adults worldwide are unbanked2 Connected: In 2017, nearly 80% of adults in emerging economies had a mobile phone.2
Slide21
20
E-payments ecosystem
Merchant acquirersMerchant processorsCard networksFinancial institution
Card issuerMerchant's bankConsumer’s bankStored valuewalletWearables
RemittanceMobile moneyPoint of Sale (POS)Chip and pin cardsSocial Payment Systems
Venmo
Square
Paypal
Samsung
Visa
Mastercard
Apple Watch
Jawbone
UP4
Snapcash
Twitter Buy
Independent
Service Provider
Merchant
Service
Provider
Western Union
Digital
Gift
C
ards
Mobile
wallet
Apple
Pay
Google W
allet
Mastercard
MasterPass
Slide22
21
Digital payment systems
New forms of innovative technology and digital
payment systems have the potential to facilitate the exchange of goods and services within global economies in ways we are only just beginning to see.Current
Our interactions with the firms we are researching indicate the next several years will be an important time for the advancement of digital payments. Future
This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy, including investing in cryptocurrencies or the technologies mentioned in this presentation.Slide23
22
Cryptocurrencies—still early days, closely monitoring, waiting for more regulatory clarityBlockchain—we are actively exploring ways the
technology can be embedded in the right industries and companiesDigital payments—plenty of opportunity today and in the future Recap- our views
This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy, including investing in cryptocurrencies or the technologies mentioned in this presentation.Slide24
Franklin Templeton Distributors, Inc.One Franklin ParkwaySan Mateo, CA 94403-1906franklintempleton.com
DMNY PPT 8/18
Important data provider notices and terms available at www.franklintempletondatasources.com.Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, talk to your financial advisor, call us at (800) DIAL BEN/342-5236 or visit franklintempleton.com. Please carefully read the prospectus before you invest or send money.IMPORTANT LEGAL INFORMATIONThis material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy, including investing in cryptocurrencies or the technologies mentioned in this article. Companies named in this article may or may not be held by any investment vehicle advised by Franklin Equity Group. This material does not constitute legal or tax advice.The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. All investments involve risks, including possible loss of principal.
Buying and using a blockchain-enabled cryptocurrency, such as bitcoin, carries risks. Speculative trading in cryptocurrencies, many of which have exhibited extreme price volatility, carries significant risks. Among other risks, interactions with companies claiming to offer cryptocurrency payment platforms and other related products and services may expose users to fraud. Blockchain technology is a new and relatively untested technology and may never be implemented to a scale that provides identifiable benefits. Investing in cryptocurrencies and ICOs is highly speculative, and an investor can lose the entire amount of their investment. If a cryptocurrency is deemed a security, it may be deemed to violate federal securities laws. There may be a limited or no secondary market for cryptocurrencies.Data from third-party sources may have been used in the preparation of this material and Franklin Templeton Investments (“FTI”) has not independently verified, validated or audited such data. FTI accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments opinions and analyses in the material is at the sole discretion of the user.