BitInstant Company Presentation

8/13/2019 BitInstant Company Presentation

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About the CompanyMay 2012

[email protected]

Media and Investor Inquiries:Charlie Shrem, [email protected] x101


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Introduction to BitInstant

BitInstant leads the financial integration of the international, open-source Bitcoinpayment network. By enabling its customers to fund third-party exchange and payment accountsquickly and easily, BitInstant reduces the wait time associated with typical inter-system transfers.Customers use BitInstant to move their own funds from onepayment provider or exchange to another, without the burdensome(and often costly) delays associated with legacy payment networks(due to banking business hour conflicts and inefficiencies, weekends and holiday delays, and poorly designed transfersystems). Customers also use BitInstant to avoid wire transfer feesand other fees derived from and reliant on legacy networks.

By providing numerous bridges between the payment providers and exchanges, BitInstant has built itsown core position in the new global Bitcoin economy.

BitInstant believes that because all money is essentially digital already, so long as AML compliance can bemet, there should be no practical reason for a money transfer to take longer than a matter of minutes. Thisspeed and convenience of transfer is what BitInstant provides to its clients, and this service is desperatelyneeded both within the Bitcoin marketplace and throughout external financial systems in general.

Since launching in fall of2011, BitInstant has grownincredibly quickly andcurrently processes overa million dollars worthof transfers per month ,

with a growth rate in thehigh double-digits permonth.

This high growth hasoccurred despite the factthat the best new services of

BitInstant have not yet been released. Credit card purchases, cash deposits at convenience stores, andinternational payment options will ensure BitInstant sees even stronger growth throughout 2012 and

beyond. As a payment-enabling organization, BitInstant ensures that all transactions meet AML compliance, asdescribed in its extensive AML compliance policy.

BitInstant has builtits own core positionin the new globalBitcoin economy.

$225,892 $301,174$529,907 $564,190

$1,143,976

$0$200,000$400,000$600,000$800,000

$1,000,000$1,200,000

$1,400,000

December2011

January2012

February2012

March2012

April 2012

Monthly Revenue Growth


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Our Business

The Payments Industry and its Problem

BitInstant operates within the payments sector broadly, and more specifically within the digitalcurrency segment - a segment which has only recently started to gain widespread recognition. Digitalcurrency can refer to "digital transfers" of standard currency (such as Paypal, Dwolla, or Liberty Reserve with US dollars) or it can refer to a purely digital system such as Bitcoin, which floats freely on exchangemarkets as an independent currency.

While most digital payment systems look "new,"they are typically just fresh faces on the legacy paymentnetworks the world has used for decades. Paypal, forexample, enables instant money transfers between accountholders, but that is only possible because Paypal is keepingthese payments in-house. For any customer to transfermoney out of Paypal, she is unfortunately required to waitdays for a bank wire, EFT, or e-check to clear - and thesethree methods offer nothing fundamentally new in thepayments space.

Within only the last year or two, an entirely newmoney transfer system has emerged which is whollyindependent of the legacy payment networks and standardnational currencies. Bitcoin is the flagship example, but Bitcoin could be imitated or copied, so thatseveral such currencies may co-exist. One of the most attractive attributes of Bitcoin as a wholly new

system, is that payments are literally instantaneous - the moving of funds between hosts is immediate.Consider that with Paypal, if one wishes to "have his dollars," a Paypal to Paypal transfer would be instant, but before the user has his dollars, he must wait a few days for the currency (USD) to emerge out of thePaypal system, through the legacy networks, and into his bank or out of an ATM. Compare this to Bitcoin- if one wishes to "have his Bitcoins," the Bitcoin transfer is instant and then the exchange is over. Theuser is then in possession of his currency (BTC).

There is thus a significant discrepancy between the "old systems" of payment based on banknetworks and fiat currencies, and the "new systems" built on peer-to-peer networks and digitalcommodity currencies. Because the old and the new systems are becoming more integrated daily, and because a transfer is only as fast as its slowest component, there exists a market need for the ability of allpayment systems to "catch up" to the speed and efficiency of Bitcoin. Similarly, where Bitcoin users are

accustomed to instant transfers, they are burdened when trying to exchange between Bitcoin and fiatcurrencies - the speed they enjoy with the former is dismantled by the latter.

This is where BitInstant comes in.


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Our Value Proposition While Bitcoin transactions are instantaneous, fiat transactions over legacy networks are slow and tedious.

BitInstant makes these fiat transactions on the periphery those payments of national fiat currencies intoand out of Bitcoin nearly instant as well.

For example, if Bob in America wishes to make a Bitcoin payment to his friend Tom in Australia, theinstant-transfer benefit of Bitcoin doesn't count for much if Bob doesn't yet own them. To acquire theBitcoins, Bob would traditionally have to deal with the legacy banking system, waiting days for an EFT or wire transfer to process. However, with BitInstant, Bob can literally acquire Bitcoins within 30 minutes offirst thinking about it. The instant transfer to Australia then becomes practical.

And it is not just the transfer of USD into the Bitcoin exchanges which BitInstant makes practical, but alsoUSD transfers between exchanges (useful for arbitrage opportunities or to take advantages of differentpayment options between these exchanges). For example, if Exchange A offered USD withdrawals toPaypal, but Exchange B did not, and Bob has his USD balance at Exchange B, he can use BitInstant toinstantly transfer the balance over to Exchange A and thus take advantage of the Paypal withdrawal. Without BitInstant, this would take a minimum of 3-4 days and might require two bank transfers to even be doable.

BitInstant has thus created a way to bring the slow speeds oftraditional payment systems into the fast-paced Bitcoinmarketplace. BitInstant makes the transfer of funds

between exchanges (such as MtGox or Crypto XChange) and payment systems (such as LibertyReserve or Dwolla) as fast as the Bitcoin transfersthemselves, shaving several days off the wait time forour customers.

This value is being recognized increasingly by those involved with these payment systems (even by some who don't utilize Bitcoin at all). Further, BitInstant is constantly adding new payment systems andexchanges, which multiplies the network appeal of our service. These dynamics led BitInstant toprofitability in only a couple months and have resulted in growth rates in the high double digits permonth.


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Our Flagship Services

Cash depositsCustomers in the United States (and soon in many other countries) can use BitInstant to deposit physicalcash in any major bank branch throughout the country. The customer does not even need an account withthe bank. Once the cash is deposited, BitInstant credits the user's exchange account,enabling a purchase of Bitcoin with a round-trip time of under an hour. This iscurrently the fastest way for anyone in the US to purchase Bitcoins at a retail level.

Inter-exchange arbitrageBitInstant enables customers to transfer fiat (USD and soonother currencies) balances between Bitcoin currency exchanges.If the price of a Bitcoin is $4.90 on Exchange A and $5.20 onExchange B, customers will use BitInstant to engage inprofitable arbitrage maintaining uniform pricing acrossinternational Bitcoin markets.

QuickCo.in & Bitcoin-to-EmailQuickCo.in is a newly branded website catering to customers who are brand new to Bitcoin - the website isthe easiest way to acquire Bitcoins, bar none. QuickCo.in uses the BitInstant technology, but only enablescustomers to use the easiest input and output funding methods. Currently, this means customers use the

cash deposit system (mentioned above) and have Bitcoins emailed totheir email address automatically. The customer doesn't even need anexchange account.

Bitcoin-to-Email as a service revolutionizes the acquisition of Bitcointhroughout the Bitcoin economy. By enabling newly bought coins to be

sent to an email address, the burden of difficulty to get engaged in thismarket is lowered considerably.

Gift card redemptionThe gift card industry is over $100 billion annually in the US alone and roughly 20% of gift cards arenever used. This means there could be over $20 billion in gift cards sitting idle, waiting for a better use.Many people receive cards to stores they don't care about, and it's not worth their time to try and sellthem. BitInstant is currently integrating a platform wherein anyone with a gift card from a supportedretailer can instantly "cash out" and have a discounted credit in Bitcoins.

Next-Day ACHCentral to BitInstant's development plan is the ability to move money in both directions (both into andout of the new payment systems). To move money out and back to traditional banks, BitInstant has anarrangement to offer next-day ACH payments. Thus, a customer with USD funds in Mt.Gox can utilizeBitInstant to have his USD in his bank account within one business day(without BitInstant, it would take 3-10 days).


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Integrated Partners

Mt. Gox - Mt. Gox is theleading and longest-running Bitcoinexchange. (Tokyo)

Bitcoinica -A leveragedmargin-trading Bitcoinplatform and exchange.(Singapore)

Crypto X Change -Second largest USDBitcoin exchange andlargest AUD exchange.(Sydney)

Liberty Reserve - Digitalcurrency and paymentsystem backed by USD.

Dwolla - USD paymentnetwork offeringextremely low transferfees.

VirWox - "The Virtual World Exchange"enables customers to buy and sell LindenDollars.

BTC-E - Third largestUSD Bitcoin exchangeand alternate crypto-currency exchange.(Bulgaria)

BitStamp - USD Bitcoinexchange. (Slovenia)

OpenBucks - Gift cardpayment platform.

ZipZap/CashPayment -Cash deposits atpopular retail andconvenience locations.

Jumio/Netverify -Fraud prevention and AML compliance

Kount - Fraudprevention

2000Charge - Globalpayments

Currency Cloud - Globalpayments

Payliance - Fast ACHpayments

iCheckGateway - Fast ACH payments

Everbank - Currencyexchange, multi-currency accounts, andinternational banking

CouponTrade - Enablestrading, purchase, andsales of giftcards.
http://www.mtgox.com/http://www.mtgox.com/http://www.bitcoinica.com/http://www.bitcoinica.com/http://www.cryptoxchange.com/http://www.cryptoxchange.com/http://www.libertyreserve.com/http://www.libertyreserve.com/http://www.dwolla.com/http://www.dwolla.com/http://www.virwox.com/http://www.virwox.com/http://www.btc-e.com/http://www.btc-e.com/http://www.bitstamp.net/http://www.bitstamp.net/http://www.openbucks.com/http://www.openbucks.com/http://www.zipzapinc.com/http://www.zipzapinc.com/http://www.jumio.com/http://www.jumio.com/http://www.kount.com/http://www.kount.com/http://www.2000charge.com/http://www.2000charge.com/http://www.thecurrencycloud.com/http://www.thecurrencycloud.com/http://www.payliance.com/http://www.icheckgateway.com/http://www.icheckgateway.com/http://www.everbank.com/http://www.everbank.com/http://www.coupontrade.com/http://www.coupontrade.com/http://www.everbank.com/http://www.icheckgateway.com/http://www.payliance.com/http://www.thecurrencycloud.com/http://www.2000charge.com/http://www.kount.com/http://www.jumio.com/http://www.zipzapinc.com/http://www.openbucks.com/http://www.bitstamp.net/http://www.btc-e.com/http://www.virwox.com/http://www.dwolla.com/http://www.libertyreserve.com/http://www.cryptoxchange.com/http://www.bitcoinica.com/http://www.mtgox.com/


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Legal Compliance

BitInstant operates as a retailer of stored value selling stored value in online exchange accounts and

accepts payment for this service in line with the FinCEN regulations. BitInstant is not a moneytransmitter and does not interact directly with regulated financial institutions, instead using intermediary bodies to process fund transfers and acts as a third party to accelerate transactions. All of BitInstant's transactions are Closed Loop, meaning all monies cannot be withdrawn without proper AML and KYC measures being taken as outlined in our ALM compliance policy. Customers cannot simplycash out of Bitcoins as all of the exchanges with which BitInstant works have strict limits and AMLprocedures. Additionally, BitInstant does not store any customer funds and does not engage in currencyexchange. (31 C.F.R. 103.11(vv))

Key features:

1) Bitinstant does not store any client funds on its servers, nor do customers holdaccounts with BitInstant. BitInstant is not an "eWallet" or similar entity.

2) BitInstant does not engage in currency exchange. The currency that is paid toBitInstant is the currency in which the customer is credited.

3) Without proper AML and KYC documents, no customer can transfer over $1,000

4) According to Federal and State law, BitInstant is a seller of Stored Value - funds ormonetary value represented in digital electronics format (whether or not speciallyencrypted) and stored or capable of storage on electronic media in such a way as to beretrievable and transferable electronically. (31 C.F.R. 103.11(vv))

As of May, 2012, Patrick Murck (Attorney and Principal at Engage Legal) was brought on board asBitInstant's Director of Legal Affairs.

Legal compliance is explained in further detail in BitInstant's AML Compliance Manual


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About Bitcoin

Bitcoin enables instant, secure, irreversible payments between any two parties directly.

Bitcoin is the world's first fully decentralized, open-source digital payment system. Bitcoin is also thename for the unit of account (the currency) used on this open-source payment network.

As a scarce commodity, Bitcoin has a marketprice based on supply and demand and thismarket price is established among various Bitcoinexchanges. Bitcoins can be traded for anything,and can thus be exchanged in and out oftraditional fiat currencies.

Payments in Bitcoin are processed and secured by advanced cryptography instead of a central bank or corporation. Bitcoin transactions have no base fee, are instantaneous and global, and do notrequire any personal information, making itexponentially safer for online purchases byprotecting against identity theft. Further, aBitcoin transaction is functionally impossible tocounterfeit, so recipients can be 100% sure thanthe funds are legitimate and irreversible.

Bitcoin is technically an open-source software, developed by a global community. Bitcoin is not owned orrun by any corporation, but many corporations and systems are developing around the currency to offerproducts and services. Just as there are private companies designed to cater to USD systems, so too arethere now companies designed to cater to BTC (Bitcoin) systems.

An introduction to Bitcoin can be found at WeUseCoins.org


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By the Numbers

BitInstant has been enjoying rapid growth only since launching in Fall 2011. Monthly revenues areconsistently growing in the high double digits per month, with over 50% month-on-month growthfrom December to April of this year.

It is important to note that this growthhas been obtained before the muchmore convenient payment methodshave been launched. As BitInstant isable to offer transfers via credit cards,gift cards, and cash deposits at groceryand convenient centers, volume islikely to far surpass current numbers. Add to this the upcoming internationalpayment methods and BitInstant will

be conservatively generating over$2,000,000 in top line revenue by theend of 2012.

Key figures:

Over 8,000 customers

46.9% of our customers use BitInstantmore than once

Average transaction is roughly $500

Gross revenue grew 97% from Jan. toFeb. 2012 (almost doubling in onemonth), then almost doubling againfrom March to April.

Net profit grew 46% during the same period

Monthly Revenues and Gross MarginDecember January February March April

Funds Received $225,891.86 $301,174.04 $529,907.10 $564,190 $1,143,976Funds Sent $219,352.11 $292,920.29 $513,619.39 $545,371 $1,107,865Gross Revenue $6,539.75 $8,253.75 $16,287.71 $18,819 $36,111Gross Revenue % 2.90% 2.74% 3.07% 3.34% 3.16%

Merchant Fees $4,360 $4,449 $10,928 $13,813 $17,247

TTL P/L $2,180 $3,804 $5,567 $5,006 $18,864

$225,892 $301,174$529,907 $564,190

$1,143,976

$0$200,000$400,000$600,000$800,000

$1,000,000$1,200,000$1,400,000

December2011 January2012 February2012 March2012 April 2012

Monthly Revenue Growth

$6,540 $8,254

$16,288$18,819

$36,111

$0$5,000

$10,000$15,000$20,000$25,000$30,000$35,000$40,000

December2011

January2012

February2012

March2012

April 2012

Monthly Gross Revenue


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Upcoming Expansions

International IntegrationEven with the rapid growth thus far, until now, BitInstant has been almost entirely a US-endeavor. Yetroughly half of the Bitcoin market exists outside of the United States and this proportion is expected togrow (especially in developing countries where reliable payment systems are a luxury - making Bitcoineven more attractive).

BitInstant has already begun integration with payment systems outside of the US. Primarily, a corporaterelationship and multi-currency bank account has been established with Everbank. Further, SEPAintegration for European payments is underway. The branded website QuickCo.in will be translated intomajor languages, enabling those brand new to Bitcoin to engage with the marketplace quickly fromcountries around the world.

These developments will enable BitInstant to accept over a dozen national currencies natively, and

transfer them to Bitcoin exchanges and other payment systems, increasing customer value, vastly broadening the market, and multiplying arbitrage opportunities.

Credit Card IntegrationBitInstant is engaged with several fraud management solutions which will overcome the risk ofchargebacks for digital goods. As these relationships are solidified, BitInstant will be the first companyoffering transfers into Bitcoin from popular consumer credit cards.

Offering credit card payments within the Bitcoin economy will generate vast revenues that have remainedso far untapped, as it would represent by far the easiest and most efficient way to exchange nationalcurrencies for Bitcoins.

BitInstant is closer than anyone to making this a reality.

Other Leading Exchanges With its brand reputation and extensive reach, BitInstant is at the top of all new exchanges' lists fordevelopment priorities. BitInstant integration increases exchange volume often by a multiple or more. Forthis reason, BitInstant is able to pick and choose the exchanges it would like to integrate with, and itguarantees that the launch of new exchanges (and the success derived therein) will benefit BitInstant.

This reputation also means BitInstant is often approached by (or is able to approach) firms outside of theBitcoin space, bringing these firms into orbit around the core payment network BitInstant has developed.


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Use of New Capital

BitInstant's primary hurdle comes from its inability to expand more quickly is due to reserve constraints .

The mechanism BitInstant employs to enable instant transfers is to hold pools of reserve capital with various payment systems and exchanges. After customers make a transfer, the imbalanced funds arerebalanced periodically. However, this rebalancing takes a couple days, and often in this span of timereserves can be completely drawn down due to rapidly expanding business.

This has put an upper limit on BitInstant's growth,as elaborate marketing campaigns or integration ofpopular new sites would place too much demand onthe reserve capital. Having more capital to hold inreserve solves this problem and allows BitInstant togrow much more quickly.

New capital will thus be primarily placed intoreserve pools as assets, as opposed to being spent orconsumed in some way. BitInstant managementestimates allocating 80% of new investment capitalinto these reserve pools, and 20% to be spentcollectively on marketing, development, and otheroperational costs.

80%

20%

Investment Capital Allocation

ReservePools

Expenses


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The BitInstant Team

Gareth Nelson - CTO Gareth is co-founder of BitInstant LLC and current CTO, responsible for the development of the software used to

provide the service and statistical analysis and modeling. He has extensive knowledge of functional programmingand distributed systems alongside past experience in managing and working for virtual world and general "web 2.0"startups.

Upon seeing some of the frustrations caused by slow transfers on the main Bitcoin exchanges, he developed theinitial concept for BitInstant and is now working alongside Charlie to build a service that uses mathematicalmodeling techniques developed from his interest in artificial intelligence to ensure speedy and reliable transactions.

Charlie Shrem - CEO Charlie is co-founder of BitInstant LLC and the current CEO. Known on the Bitcoin forums as 'Yankee', he has over 5 years experience working with start-ups and business development in the eCommerce industry. Along with Gareth,he found the need for a more secure, fast and convenient way of transferring funds between and within exchanges.

Currently residing in New York City he is also the Director of Operations for DailyCheckout, Inc and consults withdozens of business's to manage their development and success.

Roger Ver - Director of Business Development Roger is our current Director of Business Development. Roger brings to us his experience at his companyMemoryDealers using and promoting Bitcoin in an online retail environment. With a background in economics andmoral philosophy, Roger has contributed some keen insights on marketing Bitcoin in general and how BitInstant'sservice fits into the overall economy.

Erik Voorhees - Director of Marketing and Communications Erik heads the marketing and communications of BitInstant, joining the team in February 2012 - a full elevenmonths before the Mayan apocalypse. A writer, designer, brand developer, monetary theorist and creative strategist,Erik fell down the Bitcoin rabbit hole and has not been able to escape. As one of the most well-known members of theBitcoin forum (aka "evoorhees"), Erik brings his ideological passion and energy to BitInstant, hoping to help changethe world for the better.

Formerly, Erik worked as Head of Communications for the largest real estate agency in Dubai, and also currently hashis hands involved in several other Bitcoin-based projects like the well-known FeedZeBirds.com.

Patrick Murck - Director of Legal AffairsPatrick has been helping clients innovate, operate and grow their business with a heightened focus on the legal andregulatory issues governing the use of virtual economies, gamification, alternative payment systems and social loyaltyand reward programs. He joined BitInstant in May 2012, heading up all matters related to legal compliance in

BitInstant's various jurisdictional markets.

Peter Douma - Developer Accomplished Senior Manager offering over twenty years of demonstrated hands-on experience with an exemplaryrecord of planning and delivering high-quality, dependable IT systems and services aligned with long-term businessobjectives. Technically proficient in developing web based systems using Python, Django, JavaScript/Ajax, HTMLand CSS. Experienced developing real-time communication and operating systems using Python, C, C++, andmachine level languages. Awarded twelve US patents.

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