BTCS Investor Presentation February 2021

BTCS Investor Presentation February 2021

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  1 Corporate Presentation BTCS Inc.(OTCQB: BTCS) February 2021
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  2 Safe Harbor The followingpresentation contains statements, estimates, forecasts and projections with respect to future performance and events, which constitute forward-looking statements. Those statements include statements regarding the intent and belief or current expectations of BTCS and its management team, regarding our transaction verification services business, the risk profile of our investments, expanding our development team, uplisting to a senior exchange in 2021, our beliefs regarding the correlation between the adoption success of the internet and the potential success and adoption of blockchain, accelerating the development of our platform and expectations on commercializing our digital asset data analytics platform. These statements may be identified by the use of words like “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “plan”, “will”, “should”, “seek” and similar expressions and include any financial projections or estimates or pro forma financial information set forth herein. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from our expectations include, without limitation, those detailed in our filings with the SEC, including our Form 10-K filed with the SEC on January 26, 2021. Neither BTCS nor any of its affiliates undertakes any obligation to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future. Summaries of documents contained herein and in our filings with the SEC may not be complete and are qualified in their entirety by reference to the complete text of such document. In making an investment decision, you must rely on your own examination of these documents and such additional due diligence as you deem appropriate. We have not authorized any other person to provide you with information that is different from the information contained in our filings with the SEC. If anyone provides you with different or inconsistent information, you should not rely on it. Our filings with the SEC are available to the public on, and may be reviewed at, the SEC’s website http://www.sec.gov and on BTCS’ web site (www.btcs.com).
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  3 Table of Contents SectionPage Investment Highlights and 2021 Goals 4 Industry Overview 5 Corporate Overview 14 Data Analytics Platform 17 Digital Asset Treasury Strategy 22 Appendix Blockchain 101 26
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  4 • BTCS Inc.(“BTCS”) is an early mover in the blockchain and digital currency ecosystems and the first “Pure Play” U.S. public company focused on digital assets and blockchain technologies. • Near-term revenue growth expected from restart of transaction verification services. • Developing digital asset data analytics platform; invite only beta release expected in Q2 2021. • BTCS is executing a digital asset treasury strategy with a focus on disruptive protocol layers; strategy generated 1,327% year-over-year gains in 2020.* • As blockchain protocols and applications are built and deployed, we believe we’re well positioned to identify tremendous opportunities to create shareholder value.** • Dedicated management team with the right combination of capital markets experience, industry expertise, and business leadership. • Management personally invested $1.1 million into BTCS in January 2021. • Pursuing uplist to senior exchange. Investment Highlights and 2021 Goals * While our digital asset treasury strategy is focused on protocol layer long lived intangible assets (i.e. digital assets) we may also acquire application layer assets and security tokens subject to certain limitations of the Investment Company Act of 1940. ** Subject to securing additional financing.
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  5 Industry Overview Update –from accounting deck
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  6 • The computerand internet age ushered in the digitization and proliferation of information on a global scale. • Blockchains are ushering in an age of asset digitization and transfer without the need for trusted intermediaries (banks, exchanges, governments, etc.) 1970s 1980s 1990s 2000s 2010s Growth Mainframe Computers Personal Computers Internet Social Media and Cloud BLOCKCHAINS Time Digitization of Information Digitization of Assets The internet changed the way people communicate with each other, blockchains change the way people transact with each other. Blockchains Ushering in a New Era of Technology * The above data was prepared by BTCS and reflects solely the opinion of BTCS and its management.
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  7 Blockchains are decentralizeddigital ledgers that record and enable secure peer-to-peer transactions without third party intermediaries. CURRENT TECHNOLOGIES (Centralized Systems) BLOCKCHAINS (Distributed Systems) Trust / consensus entrusted to third party intermediaries. Trust / consensus built into the Blockchain network and secured by cryptography. Susceptible to manipulation and corruption  Legacy systems consistently hacked Governed by computer code  Secured by cryptography  Never been hacked1 Blockchains Explained 1. Refers to bitcoin and ethereum blockchains.
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  8 Internet Blockchain Technology OverviewStateless Protocol → Unable to store data Stateful Protocol → Able to both transmit and store data Application Layer World Wide Web Email Video Streaming Cloud Applications Social Media Crypto Currencies Identity Management Smart Contracts Health Care Records Governance Protocol Layer IP v4/v6, TCP, UDP, HTTP, SMTP, IMAP, RTP, FTP, DNS, RTMP Infrastructure Layer Network Hardware, Internet Service Providers, Storage etc. Mining Servers, Pools, Blockchain Nodes Internet vs. Blockchain Technology Stacks* * For illustration purposes only, i.e. simplification of technology stacks. Stellar Ethereum Bitcoin EOS Litecoin Cardano Polkadot Chainlink Cosmos
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  9 Blockchain Potential UseCases & Disruption Blockchain technology is radically changing the future of transaction based industries.* * The above data was prepared by BTCS and reflects solely the opinion of BTCS and its management.
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  10 Free of 3rdparty to facilitate trade and ownership Yes Yes No No Yes Government Issued No No Yes Yes* No Secure (Counterfeiting) Scarce (Predictable Supply) Poor Excellent GOLD, SILVER 600BC - present CREDIT CARDS, ELECTRONIC BANKING C1950 - present CRYPTO CURRENCIES C2009 - present In transitioning to our current monetary system, control of our assets has been yielded to trusted intermediaries that often fail. Blockchain Use Case #1: Crypto Currency BARTER Before 600BC FIAT C806 - present * Credit cards and electronic banking are typically based on government issued currency. ** The above data was prepared by BTCS and reflects solely the opinion of BTCS and its management.
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  11 Blockchain Use Case#2: Securities Blockchains have the potential to remove middleman, lower asset exchange fees, and reduce instability of securities markets. Current Process Blockchain Based Shareholders Trading Clearing Settlement Custody, Asset Servicing, and Registry Issues: • Highly complex and fragmented. • Tasks often duplicated. • Expensive and time consuming settlement. • Shares are held in “Street Name”, therefor corporations often don’t know who their shareholders are. Benefits: • Streamlined process. • Middleman can be eliminated. • Potentially lower fees. • Increased transparency. • Direct communication possible between corporations and shareholders. Exchange and Post-Trade Blockchain Based Infrastructure EXCHANGE CLEARING HOUSE CENTRAL SECURITIES DEPOSITORY, SHARE REGISTRAR SETTLEMENT PROCESS Buyer Seller Corporations Buyer Seller Corporations * For illustration purposes only, i.e. simplification of process.
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  12 $0B $200B $400B$600B $800B $1,000B $1,200B $1,400B $1,600B Top 50 Digital Assets Google Market Cap Facebook Market Cap World Silver Reserves Argentina GDP Finland GDP Asset Market Cap Comparison* Price & Interest in Digital Asset Ecosystem 1 2 2 3 3 3 70m Blockchain Wallet Users4 2021 50m 30m 20m 2019 2020 Confirmed Transactions Per Day4 2019 2021 2020 500K 400K 300K 200K 100K Total Digital Assets Market Capitalization1 2017 2018 2019 2020 2021 $2T $1.5T $1T $0 $500B Sources: 1 Coinmarketcap 2. Yahoo Finance; 3. U.S. Central Intelligence Agency Stock of Broad Money; 4. Blockchain.com * As of 2/17/2021, 60m 40m
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  13 Blockchain Timeline First 10 Years10 – 20 Years 20 – 30 Years Internet Timeline 1969 First Message Transferred Internet Open To Public Limited DNS Established 1984 World Wide Web Created 1989 TCP/IP Protocols Adopted 1983 1991 1994 Email Invented 1972 1995 1999 2008 2009 Bitcoin Blockchain White Paper Published First Bitcoin Transaction 2011 Bitcoin Reaches Parity With U.S. Dollar 2014 Ethereum White Paper Published (Smart Contracts) 2015 Ethereum Initial Release 2017 Smart Contract Era Begins (ICOs, DApps, etc.) Blockchains are in “1st Inning” • The internet took 20 years to transition from proof of concept to mass adoption. Smart contract blockchain technologies are in their first 6 years of deployment and may take at least 15 years to be applied across multiple industries.* • Bitcoin is a great proof of concept for blockchain technology, similar to the internet prior to its mass commercialization. Commercialization Begins Commercialization Begins 2021 Tesla Buys $1.5B Bitcoin 2018 Corporations Working on Blockchain Ledgers: * For illustration purposes only, i.e. simplification of timeline. Bitcoin Marketcap Reaches $500B 2020
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  14 Corporate Overview
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  15 After 7 yearsparticipating in the blockchain ecosystem we believe we’ve refined our strategy to create the most shareholder value. 2013-2014 2013 2015-2018 2019-2020 Initial Focus Transaction Verification Services Platform Development and Digital Asset Treasury Focus E-Commerce 2021+ Transaction Verification Services*, Platform Release, and Treasury Management Bitcoin and Ethereum Mining Digital Currency Ecosystem Strategic Partnerships Investments 2021+ Leverage 7 Years of Blockchain Experience Beta Development Digital Assets * Refers to Proof-of-Stake (“PoS”).
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  16 Management and Board CharlesAllen CEO and Chairman of the Board Charles has been involved in the blockchain industry since its earliest days. Since joining BTCS in 2013, he has leveraged his extensive experience in business strategy, investment banking, and capital markets transactions to develop and lead the Company’s evolving business model. Charles began his career as an engineer in the telecom industry and brings a balance of business and financial leadership as well as technical proficiency to the BTCS team. Prior to joining BTCS he worked domestically and internationally on projects in technology, media, natural resources, logistics, medical services and financial services. Highlights include Managing Director at RK Equity Capital Markets LLC, Managing Director at TriPoint Global Equities, LLC, and Managing Director at Broadband Capital Management LLC, all boutique investment banks focused on advising and raising capital for small and mid size companies. He received a B.S. in Mechanical Engineering from Lehigh University and a M.B.A. from the Mason School of Business at the College of William & Mary. Michal Handerhan COO and Director A co-founder of BTCS, Michal supports both our business and research and development strategies, and has played a key role in the Company’s ability to capitalize on the rapidly expanding opportunity in the blockchain space. From February 2011 through February 2014 he served as an independent IT and web services consultant to the National Aeronautics and Space Administration (NASA). From October 2005 until February 2014 Michal was the President and CEO of Meesha Media Group, LLC, which provided high-definition video production services, Web 2.0 development, database management, and social media solutions. From March 2002 through October 2006 he served as a team leader for NASA in their Peer Review Services group. Prior to NASA Peer Review Services Michal served as the web developer for Folio Investments. He received B.S. in Computer Science from Czech Technical University. David Garrity Director David has over 30 years’ experience in the financial services industry. He has held senior roles including CFO and board of director positions for both publicly- held and private companies, and has extensive experience in several disciplines including operating, advisory and research, and is CEO of New York City-based consulting firm, GVA Research. He is President of BTblock, an emerging technology & cybersecurity consultancy firm, and currently serves as the Independent Director of EncrypGen. During 2008 and 2009, David served as CFO and a director at Interclick, Inc., a publicly-held behavioral targeting internet advertising network. From June 2011 to May 2013, he was Chief Financial Officer of Aspen Group, Inc., a publicly-held online for-profit university. From May through October 2013, he was Executive Vice President Corporate Development for Aspen Group, Inc. and from February 2017 through January 2018 he was acting CFO of Mutualink, Inc.
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  17 Data Analytics Platform
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  18 Overview Consolidate and analyzecrypto position data across multiple exchanges in one place. Consolidate crypto position data Evaluate performance Run year-end tax reports across multiple exchanges* On development roadmap: * Year end tax reporting is lower on the development roadmap and likely will not be a part of the beta releases.
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  19 Preview
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  20 Roadmap and Features Q12020 Initial Design/Requirements; Exchanges Selection and Full Stack Selection Q2-Q4 2020 Beta Development/ Testing Q2 2021 Invite Only Beta Release for Testing and Feedback Q3-Q4 2021 Public Beta Release 2022 V1 Public Release Research and Development Beta Release Public Release * The roadmap and features described herein are forward looking in nature and based on managements development assumptions. The Company can provide no assurance that the timeline will be met or that the commercialization of the platform will generate revenue or profit in excess of the development costs.
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  21 Digital Asset TreasuryStrategy
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  22 Blockchain protocols representthe next generation of internet technology. Blockchain Protocols Value Proposition • Compared to Web 1.0/2.0, Web 3.0 blockchain protocols handle business logic. As a result, the execution of business logic migrates from applications to their underlying blockchain protocols. • Historically large incumbent tech companies have monetized business logic and therefore value capture should shift from applications to the underlying blockchain protocols. • Our treasury management efforts are focused on disruptive blockchain protocol layers. Companies: Internet Protocols TCP/IP Web 1.0 & 2.0 Information Exchange Era 1995 < Business Logic, User Interface & Experience Companies Internet Protocols TCP/IP Blockchain Protocols Web 3.0 Value Exchange Era 2008 < User Interface & Experience Business Logic * The above data was prepared by BTCS and reflects solely the opinion of BTCS and its management.
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  23 Blockchain Protocol Layersof Interest Crypto Currencies Smart Contract Protocols Internet of Things (IoT) Computing Data Storage Keenly focused on highly disruptive verticals.
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  24 585 985 985 2305 2555 2674 3249 0 500 1000 1500 2000 2500 3000 3500 19Q319Q4 20Q1 20Q2 20Q3 20Q4 As of 02/20/21 ETH** 14.9 20.6 20.6 54.3 63.9 66.9 88.1 0 20 40 60 80 100 19Q3 19Q4 20Q1 20Q2 20Q3 20Q4 As of 02/20/21 BTC* Fair Market Value of Digital Assets Digital Asset Treasury Holdings $0.23M $0.28M $0.26M $1.02M $1.61M $3.92M $11.65M $0M $2M $4M $6M $8M $10M $12M $14M 19Q3 19Q4 20Q1 20Q2 20Q3 20Q4 As of 02/20/2021 BTC ETH Total * Rounded to nearest tenth. ** Rounded to nearest one. U.S. GAAP requires us to carry our digital assets at the lowest value since acquisition. As of 12/31/2020 the balance sheet value of our digital assets was $995,652.
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  25 Summary • BTCS isan early mover in the blockchain and digital currency ecosystems and the first “Pure Play” U.S. public company focused on digital assets and blockchain technologies. • Near-term revenue growth expected from restart of transaction verification services. • Developing digital asset data analytics platform; invite only beta release expected in Q2 2021. • BTCS is executing a digital asset treasury strategy with a focus on disruptive protocol layers; strategy generated 1,327% year-over-year gains in 2020.* • As blockchain protocols and applications are built and deployed, we believe we’re well positioned to identify tremendous opportunities to create shareholder value.** • Dedicated management team with the right combination of capital markets experience, industry expertise, and business leadership. • Management personally invested $1.1 million into BTCS in January 2021. • Pursuing uplist to senior exchange. * While our digital asset treasury strategy is focused on protocol layer long lived intangible assets (i.e. digital assets) we may also acquire application layer assets and security tokens subject to certain limitations of the Investment Company Act of 1940. ** Subject to securing additional financing.
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  26 Appendix Blockchain 101
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  27 How Blockchains Work Atransaction is request The transaction is broadcasted to a peer-to-peer (P2P) network that consists of computers (otherwise known as nodes) The network of nodes uses consensus algorithms to validate the transaction A verified transaction can involve cryptocurrency, contracts, records or other information The transaction is combined with other transactions, once verified, to create a new block of data for the ledger The new block is added to the existing blockchain ledger (which is permanent and unalterable) The transaction is complete
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  28 Blockchain Ledger • Ablockchain ledger is a distributed ledger maintained by a network of computer nodes that verify and validate transactions. • All transactions on a blockchain can be viewed through blockchain explores which read and display the public data. • An explorer allows you to look up a wallet address and view all its transactions on the public blockchain. Example below: Centralized System with Stored Ledger Traditional System Distributed System with Distributed Ledger Blockchain System
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  29 Consensus Mechanisms toSecure Blockchains The key difference between PoW and PoS is the consensus algorithm used by the network nodes. Proof of Work VS Proof of Stake Miners receive block rewards to solve a cryptographic puzzle Hackers would need to have a computer more powerful than 51% of the network to add a malicious block, leading to 51% attack Hacker would need to own 51% of all the cryptocurrency on the network, which is practically impossible and therefore, makes 51% attacks impossible Mining capacity depends on computational power Validators do not receive a block reward, instead, they collect transaction fees as reward Validating capacity depends on the stake in the network Node: A physical server that hosts the entire blockchain ledger, validates transactions, and writes new blocks to the blockchain. Uses a lot of electricity Requires less energy