. 5 . . Investment oldman Do Cryptocurrencies Meet the Criteria for Currencies? Maneoment 1) Bitcoin is an Inefficient Medium of Exchange Division 6 5 - 4 E $3.4 53 - -----------------Jj--------\/--------- $21 1 4 0 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 = Processing is expensive. The average transaction cost is ~$3.40, rendering transfer of small fund balances uneconomical. = Processing is slow. Transaction processing typically takes a minimum of 10-20 minutes, but can take up to 18 hours if the network is congested (Visa and Mastercard authorize transactions in ~20 milliseconds). = Bitcoin is not broadly accepted. A mere 9k merchants accept bitcoin, compared to the 37mil that accept Visa and MasterCard, and the billions of merchants and people globally that accept US dollars.! = Further, the IRS considers all cryptocurrency gains a taxable event (including for de minimis purchases). (1) Do Digital Currencies Pose a Threat to Sovereign Currencies and Central Banks?, Daniel Heller, PIIE. Source: Investment Strategy Group, Bloomberg, Cryptocompare.com. 13 HOUSE_OVERSIGHT_025676