INCREMENTUM AG PUBLISHES FIRST CRYPTO RESEARCH REPORT

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1 PRESS RELEASE: Schaan, December 12, 2017 INCREMENTUM AG PUBLISHES FIRST CRYPTO RESEARCH REPORT The Crypto Research Report is a quarterly 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 ed 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 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

2 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 , ,0 100,0 10,0 1,0 0,1 Bitcoin Price in USD 0,0 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 / / / / / / /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.

3 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 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 12% 2% 3% 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 after they learned how works?

4 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 in the field of crypto-related assets since 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 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 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 cofounder 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 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.

5 Contact: Incrementum AG Im alten Riet Schaan/Liechtenstein Demelza Hays: Mark Valek: Ronald-Peter Stoeferle: 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.