crypto research

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PRESS RELEASE: Schaan, December 12, 2017

INCREMENTUM AG PUBLISHES FIRST “CRYPTO RESEARCH REPORT”

• The “Crypto Research Report” is a quarterly research publication providing analysis

especially for financial market participants
• Bubble or viable investment? The Cryptocurrency market soared from $18 billion in
January 2017 to over $350 billion in December. Bitcoin witnessed an impressive
1300% increase in market capitalization during the past year. Recently Bitcoin
reached a new all time high of over $17,000 per coin.
• Crypto Currencies are going through an unprecedented process of monetization and
the cryptocurrency market is being financialized. However, significant risks prevail,
especially from technological and regulatory side
• Currently few banks, such as Bank Vontobel have entered the cryptocurrency arena
while most incumbents watched from the sidelines. The first Bitcoin futures have
recently been listed on the CBOE. Institutional money is expected to follow into the
sector.

On December 12, 2017, the inaugural edition of the quarterly “Crypto Research Report” was presented.
The responsible Analyst of the report is Demelza Kelso Hays from the asset management company
Incrementum AG. The “Crypto Research Report” is the sister-report to “In Gold we Trust” published by
Ronald-Peter Stöferle and Mark Valek of Incrementum AG. This year’s In Gold we Trust report was
downloaded more than 1.5 million times. Incrementum is convinced, that the new “blockchain”
technology is here to stay. Therefore, the team thrives to provide critical analysis on the developments
in this highly dynamic and under researched sector.

The Crypto Research Report can be downloaded from the following links:

Crypto Research Report – English

Crypto Research Report – Deutsch

Further information about the report and the authors can be found at www.cryptoresearch.report.

In 5 chapters and over 60 pages, the authors provide a critical and academic perspective on the
legal, technical, and economic aspects of crypto assets. Endorsed by Bank Vontobel, the
inaugural report includes an in-depth explanation of cryptocurrency concepts such as
blockchain, initial coin offering (ICO), and token generating event. After being ridiculed as money
for computer nerds and a conduit for illegal activity, investors are finally beginning to take notice of
Bitcoin and the underlying technology, the blockchain. However, Hays believes that the value of
cryptocurrencies is highly dependent on the state of the global financial and monetary system. Bitcoin
emerged amidst the 2008 global banking crisis. The creator of Bitcoin, unknown, was determined to
create a decentralized, private, and secure way to transfer value online, which did not rely on trusting
sovereign entities, central banks, or financial intermediaries.1

1 Lo, S., & Wang, J. C. (2014). Bitcoin as Money?. Federal Reserve Bank of Boston Current Policy Perspectives, 2014(4). Retrieved from
https://www.bostonfed.org/publications/current-policy-perspectives/2014/Bitcoin-as-money.aspx

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Recently Bitcoin breached $15,000 per coin. Since 2010 Bitcoin’s price has nicely followed a
logarithmic upward trend.

Chart 1: Logarithmic Time Series of Bitcoin Price

10.000,0

1.000,0

100,0

10,0

1,0

0,1

Bitcoin Price in USD

0,0
07/2010 07/2011 07/2012 07/2013 07/2014 07/2015 07/2016 07/2017 07/2018
Sources: Incrementum AG, Quandl.com

However, the Bitcoin network has reached its capacity limit. Transaction costs increased from 0.40 CHF
in early 2017 to over 8 CHF in December. Transaction confirmation times also increased. Demand for
a global payment system overflowed into alternative cryptocurrencies like IOTA, Dash and Ethereum.
Bitcoin hard forks such as Classic, Gold, and the cancelled Segwit2X also garnered attention by
investors captured by the dream of a borderless digital currency.

According to Hays, “2017 was the year of initial coin offerings, hard forks, and exponential price
increases. The cryptocurrency market has witnessed tremendous growth during the last couple of
weeks. The prices are rising too far too fast. Every asset class has ups and downs. If cryptocurrencies
are really a new asset class, they must come down at some point. However, there is strong evidence
that the upwards trend might continue and gain more momentum as investors continue to hunt for
returns in unchartered macroeconomic conditions.”

Chart 2: Daily Price of Bitcoin and Gold from 2010 – 2017

12.000

10.000

8.000

6.000

4.000

2.000

0
12/2010 12/2011 12/2012 12/2013 12/2014 12/2015 12/2016
Gold Ounce in USD Bitcoin Price in USD
Sources: Incrementum AG, Quandl.com

Bitcoin and the underlying blockchain technology were designed to replicate the characteristics of gold,
which make it uniquely suited to be money. However, Bitcoin’s daily returns have had a low to slightly
negative correlation with gold for the past eight years because these are two distinct asset classes. The
authors believe that both Bitcoin and Gold are alternative forms of liquidity outside the current fiat
money systems, each providing different advantages. Despite the potential upside of a
cryptocurrency investment, one must be aware of the extremely high volatility of
cryptocurrencies and the risks. In November, the price of Bitcoin dropped by 20% in one day.

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Furthermore, the Bitcoin network relies on the Internet and on cryptographic encryption techniques that
have only existed for a few decades, whereas gold has a track record of over 5000 years.

At the University of Liechtenstein, Hays is working on a classification system of

cryptocurrencies. Over 1,000 different cryptocurrencies exist; however, Hays believes that the
majority of them have value solely because of Bitcoin’s hype and will not be around in five years
from now. Based on the end-consumer’s use of the cryptocurrency, the system has three main
classes:

 Money: Medium of Exchange or Store of Value

Bitcoin, Litecoin, Dash, and Bitcoin Cash are part of the money class because these digital tokens
compete with fiat currencies such as the U.S. dollar, euro, and renminbi. They offer fast, private, and
“permissionless” payments.

 Infrastructure
Cryptocurrencies such as Ethereum, Lisk, and IOTA are infrastructure coins because they provide users
with a platform for smart contracts in addition to sending payments. For example, marriage contracts,
cosmetology licenses, and seal of approval certificates can be issued and publicly stored on the
Ethereum network.

 General Purpose
Cryptocurrencies such as eSports.com’s Reward Token (ERT) and the Spectre.AI (SXS) fall under the
general purpose category because they are not designed to send payments or host smart contracts.
Instead, they represent digital shares in the company that investors can trade online. General purpose
cryptocurrencies are challenging venture capital and traditional stock markets. Some of the latest
cryptocurrencies even offer dividends and standard investor rights.

In their research analysis, the focus is on fundamentals. To find underpriced cryptocurrencies, Hays
studies how the cryptocurrency can be used, the competency of the development team, and the
economic incentives created by the software protocol.

Chart 3: Highest Market Capitalization Coins

1%
1% 12%

1%
1%
2%

3%
1%

8%

57%

13%

BTC ETH BCH LTC XRP DASH NEM XMR IOTA NEO Others

Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash(BCH), Litecoin (LTC), Ripple (XRP), Dash (DASH), NEM (XEM), Monero (XMR), IOTA (MIOTA), NEO (NEO)
Sources: Incrementum AG, Coinmarketcap.com

Hays continues to be bullish on Bitcoin and cryptocurrencies: “If banks, governments,

universities, and the media are laughing at Bitcoin then the price can still go up. How many
people do you know that stopped using email after they learned how email works?”

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About the “Crypto Research Report”:

As a sister report to the internationally acclaimed In Gold We Trust report, the Crypto Research Report brings the
same quality and rigor to understanding the cryptocurrency market. The Cryptocurrency Research Report is a
quarterly produced by Incrementum AG. The CRR is available in German and in English for free.

Demelza Kelso Hays

Demelza has been conducting research in the field of crypto-related assets since 2013. In
addition to teaching a course on cryptocurrency at the University of Liechtenstein, Ms. Hays
regularly presents and writes on the topic of cryptocurrencies.

Her work has been published in several distinguished print and online magazines including
Forbes, Süddeutsche Zeitung, Zerohedge, Mises.org, and Frankfurter Allgemeine Zeitung.

Ronald-Peter Stöferle
Ronnie is partner of Incrementum AG and responsible for Research and Portfolio Management.
He studied Business Administration and Finance in the USA and at the Vienna University of
Economics and Business Administration, and also gained work experience at the trading
desk of a bank during his studies. Upon graduation he joined the Research department of
Erste Group, where he published his first “In Gold We Trust” report in 2007. Over the years,
the Gold Report has proceeded to become one of the benchmark publications on gold,
money, and inflation.

Since 2013 he has held the position as reader at scholarium in Vienna, and he also speaks at
Wiener Börse Akademie (i.e. the Vienna Stock Exchange Academy). In 2014, he co-authored
the book “Austrian School for Investors” and in 2017 “Die Nullzinsfalle” (The Zero Interest
Rate Trap). Moreover, he is an advisor for Tudor Gold Corp. (TUD), a significant explorer in
British Columbia’s Golden Triangle.

Mark Justin Valek

Mark is partner of Incrementum AG and responsible for Portfolio Management and Research.
While working full time, Mark studied Business Administration at the Vienna University of
Business Administration and has continuously worked in financial markets and asset
management since 1999. Prior to the establishment of Incrementum AG, he was with
Raiffeisen Capital Management for ten years, most recently as fund manager in the area of
inflation protection and alternative investments. He gained entrepreneurial experience as co-
founder of Philoro Edelmetalle GmbH.

Since 2013 he has held the position as reader at scholarium in Vienna, and he also speaks at
Wiener Börse Akademie (i.e. the Vienna Stock Exchange Academy). In 2014, he co-authored
the book “Austrian School for Investors” and in 2017 “Die Nullzinsfalle” (The Zero Interest
Rate Trap).

Incrementum AG

Incrementum AG was founded in 2013. Independence and self-reliance are the cornerstones of our philosophy,
which is why the four managing partners own 100% of the company.

Prior to setting up Incrementum, we all worked in the investment and finance industry for years in places like
Frankfurt, Madrid, Toronto, Geneva, Zurich, and Vienna.

We are reluctant to believe that the basis of today’s economy, i.e. the uncoveredcredit money system, is
sustainable. This means that particularly when it comes to investments, acting parties should look beyond the
horizon of the current monetary system. We want to re-think investment strategies and implement them in a way
that is in line with today’s requirements. Our clients appreciate the unbiased illustration and communication of our
publications. Our goal is to offer solid and innovative investment solutions that do justice to the opportunities and
risks of today’s prevalent complex and fragile environment.

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Contact:

Incrementum AG
Im alten Riet 102
9494 – Schaan/Liechtenstein
www.incrementum.li
http://www.cryptoresearch.report

Email: crypto@incrementum.li
Demelza Hays: dh@incrementum.li
Mark Valek: mjv@incrementum.li
Ronald-Peter Stoeferle: rps@incrementum.li

Disclaimer:

This publication is for information purposes only, and represents neither investment advice, nor an investment analysis or
an invitation to buy or sell financial instruments. Specifically, the document does not serve as a substitute for individual
investment or other advice. The statements contained in this publication are based on the knowledge as of the time of
preparation and are subject to change at any time without further notice.

The authors have exercised the greatest possible care in the selection of the information sources employed, however,
they do not accept any responsibility (and neither does Incrementum AG) for the correctness, completeness or timeliness
of the information, respectively the information sources, made available, as well as any liabilities or damages, irrespective
of their nature, that may result there from (including consequential or indirect damages, loss of prospective profits or the
accuracy of prepared forecasts).

Copyright: 2017 Incrementum AG. All rights reserved.