Fundamental Analysis: DigiByte [DGB]

BBOD Rating [05/03/2019]


ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

Overview


Currency CodeDGB
Transaction Start Date10/02/2014
Current Rank#43
Total Supply21,000,000,000
Circulating Supply11,509,175,132
Protocol TypeBlockchain Platform
Base ProtocolDGB
Where to trade with leverageBBOD
Where To BuyHuobi, Bittrex, Poloniex, Upbit

Problem to Solve


DigitByte aims to solve some of the key perceived shortcomings of the Bitcoin Blockchain. Although, project founder Jared Tate does not necessarily want to directly compete with the titan that is Bitcoin. Instead, he proposes an alternative for a community of individuals who believe improvements are necessary for mainstream adoption. As such, the project focuses its efforts on two distinct aspects which are viewed by many as obstacles to overcome in order for Bitcoin to function as an immutable currency, rather than a store of value. Whether illusive Satoshis Nakamoto intentions were to create an everyday currency or a store of value are outside the scope of this report, although personally, I would argue the latter.

Speed

Regardless, the speed of confirmations on the Bitcoin Blockchain means transacting fractional amounts is cumbersome and cost ineffective. In order for a transaction to be confirmed, on the Bitcoin network, one needs to wait for 6 confirmations, with each block confirmation taking approximately 10 minutes, totalling an hour. This simply does not work in retail environments where transactions are currently made in a matter of seconds using traditional intermediaries such as Visa and Mastercard. Although there have been efforts to introduce faster transactions by utilising a protocol known as the lightning network, nothing yet has come to fruition. Moreover, the limited supply of 21 million Bitcoin means its divisibility becomes questionable when working as a means of transfer. In the future, one might have to divide a Bitcoin into a single satoshi, 8 decimal places smaller than a Bitcoin itself. This is time-consuming and not especially user-friendly for small purchases.

Security

Additionally, some have questioned the security of the Bitcoin network, as although the Bitcoin Blockchain is incredibly robust at current, it only utilises one mining method. This may become a threat in the future, as those who can afford to mine Bitcoin will need to spend large amounts of money on extremely advanced hardware. Ultimately, this could lead to several centralised mining corporations controlling the network, making the likelihood of a 51% Blockchain attack more feasible. This may seem far-fetched but it is a genuine community concern for the long-term success of the Bitcoin protocol.

Solution


Speed

In order to circumvent the issue of speed, DigiByte’s [DGB] block time is 40x faster than that of Bitcoin, processing each individual block within 15 seconds as opposed to 10 minutes. Consequently, the DigiByte Blockchain is now the longest in the word, despite being introduced 5 years after Bitcoin. Superior block speed allows DigiByte to handle approximately 560 transactions per second, whereas Bitcoin can currently only handle 8 transactions. Such an achievement was the result of DigiByte becoming the first cryptocurrency in the market to implement segregated witness (SegWit). Essentially, SegWit separates transaction confirmations from the transaction information on the Blockchain, making the ledger more compact.

Clearly, fast transaction speeds afford DGB some ability to compete as a means of transfer in traditional retail markets, with Bitcoin currently being undeniably useless for fast payments. For example, Visa currently processes approximately 2000 transactions per second, only around 4x quicker than DigiByte. To put things in perspective, Visa was founded 60 years ago in 1958 and DigiByte in 2014. The DigiByte protocol doubles block processing times every two years, thus if successfully implemented, DigiByte will outpace monopolies of the payment world within 4 years. This is an incredibly exciting prospect and certainly rare in the cryptocurrency space. If DigiByte were to achieve such a feat and keep pace with industry giants, then the project would unquestionably gain large amounts of publicity, with the potential for mass adoption.

Moreover, whereas Bitcoin has a fixed supply of 21 million coins, DigiByte has 21 Billion, decreasing the amount DGB needs to be divided in order to be used for a means of transfer. For example, a cup of tea may cost you 0.0005 Bitcoin as opposed to 150 DigiByte. Consumers enjoy dealing in whole numbers as opposed to decimal figures and so this ensures the usability of the currency for small transactions remains highly functional.

Security

In order to improve upon the immense security of the Bitcoin network, DigiByte has implemented a unique mining protocol which ensures centralisation of the network by large actors is even less possible. They have achieved this by splitting mining activities into five separate pools of miners, as opposed to Bitcoins singular pool. Each separate pool requires a different level of algorithm difficulty, allowing for a more diverse and decentralised group of miners to maintain the security of the network. For instance, the immense amount of computational power it takes to mine Bitcoin means it simply isn’t feasible anymore for small actors. Contrary, DigiByte can be mined using a variety of different levels of computational power, ranging from personal computers to more sophisticated ASIC rigs which are now essential in Bitcoin mining. This has enabled the DigiByte network to span six continents with over 100,000 nodes. Ultimately, this makes centralisation of DigiByte’s distributed network impossible.

Moreover, DigiByte has implemented a multi-shield protocol coined Digishield. Essentially, Digishield prevents one of the mining algorithms from becoming dominant by constantly adjusting the difficulty of each algorithm as soon as the computational power becomes familiar with it. Eradicating the ability for miners with more processing power to manipulate smaller mining pools. Sophisticated difficulty adjustments further the case for preventing malicious centralised takeovers of the network and makes the DigiByte network one of the most secure in the world. In fact, after the success of Digishield, many other cryptocurrencies have implemented the same strategy on their own Blockchains. This continual technological foresight is ultimately why DigiByte has such a large community who believe the project is at the cutting edge of Blockchain technology and will continue to lead the way in the future.

Catalysts


Forward-Thinking Tech: DigiByte excels at being a true innovator in the cryptocurrency marketplace in terms of their underlying technology. They were the first blockchain project to implement SegWit successfully allowing for incredibly fast transactions. Whilst Digishield immense security has become widely used after it was implemented on the project. This forward-thinking approach may be unnoticed by many but should ensure DigiByte keeps pace with industry giants for when mass adoption becomes a reality.

Introduction of Futures contracts: BBOD, the world’s major cryptocurrency derivatives exchange, has announced that it is launching Digibyte futures contracts with up to 25x leverage. Digibytye was selected as one of 16 most popular and promising projects with the most enthusiastic community ( along with Bitcoin, Ethereum, EOS) .

Means of Transfer: If Blockchain technology is to be understood by the mainstream market then layman will need to see simple interactions work in practice. DigiByte provides a means of transfer which has the potential to rival huge multinationals such as Visa and Mastercard in traditional retail environments within 4 years. Regardless of this, the project could be an excellent means of transfer for remittances as it currently stands, with Western Union charging extortionate fees for 3-5 day transfers as opposed to DigiByte’s minimal fees transferring within 15 seconds. Remittances certainly have the potential to become their leading market in the future.

Risk Factors


Fierce Competition: When the project launched in 2014, Bitcoin was still the dominant cryptocurrency, although it did not possess the world standing it has today. Competing with the biggest cryptocurrency in the marketplace is not an easy task. The success of DigiByte will likely stem from a move away from their comparison to Bitcoin and towards how unrivalled speed and security allow DigiByte to become one of the first cryptocurrencies to become a successful means of everyday transfer rather than Bitcoins competency as a store of value.

Adoption: The extremely decentralised nature of the DigiByte project leaves the founder Jared Tate at the helm with little team member support for necessary marketing and business strategy activities. Despite this, the project is propped up by a large community of individuals who believe in the cutting-edge technology, perhaps a testament of what the project could become a more aggressive marketing strategy. Whether the focus, for now, is purely on excelling at becoming the most technologically advanced cryptocurrency is up for debate, but if this is the case it should be communicated to DigiByte’s dedicated community.

Conclusion


DigiByte constantly strives to ensure the underlying technology of the protocol is cutting edge in an already incredibly innovative ecosystem. Although marketing certainly isn’t the projects strong suit, the continual foresight for implementing technical updates before anyone else in the industry, such as SegWit and DigiShield, speaks a thousand words. If the project can continue on its current trajectory with continual speed and security updates, it has a real chance of becoming ‘the’ immutable currency the industry adopts. If this is proven correct, DigiByte will gain enormous amounts of publicity and most importantly has the potential to fuel the day to day adoption that the cryptocurrency ecosystem currently needs. Certainly, one to keep a close eye on as it quietly continues to succeed.


Trade Futures Contracts with TrueUSD as a deposit currency.
Go Long or Short Digibyte/TUSD. Up to 25x leverage.


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BBOD Rating Standard


BUY: A low-risk buying opportunity

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

HOLD: Maintain current levels of position until further research is published

SELL: Investment is associated with the potential of losing capital



Disclaimer BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis. This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold an asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

Fundamental Analysis: BBOD (BBD)

BBOD establishes a new industry standard for cryptocurrency futures traders by providing high-speed leverage altcoin trading, stablecoin deposits, and non-custodial client accounts.

Company overview

Key Metrics
Ticker BBD
Target Price N/A
Total Supply 117,382,569
PlatformEthereum, ERC-20
Token Type Utility
Utility typeTrading fee discount
Website https://bbod.io/

Blockchain Board of Derivatives (BBOD) is a semi-decentralized cryptocurrency futures trading platform that provides a real-time, ultra-fast matching engine in conjunction with decentralised, secure blockchain based settlement.

BBOD accepts deposits in the stable coin TrueUSD (TUSD) and offers futures trading on 16 cryptocurrencies against TUSD, enabling one to make profits from both rising and falling cryptocurrency prices.

BBOD’s hybrid architecture offers the user experience of a centralised trading platform whilst providing the security and privacy of a decentralised exchange.

The exchange boasts a matching engine that can perform 1.25mln messages/sec and is known for its high capacity and low latency.

Behind the platform is a professional team of 35+ employees residing in Cambridge, Barcelona, Seoul, São Paulo, Manilla, Ho Chi Minh City and Mumbai.

BBOD is primarily an altcoin margin trading focused exchange, differentiating itself from Bitmex, Deribit, Huobi DM, and Okex. The platform aims to average $100m trading volume per day by the end of 2019.

BBOD looks forward to launching the beta version in Q1/2019.


Token economics

BBD Token overview

BBD is an ERC-20 token issued on the Ethereum blockchain.

The BBD contract address is: 0xb79fc5505ea4f3b920ee7e3349de064226692717

Total Supply: 117,382,569 BBD

Max. Supply: 275,803,582 BBD

Please note that, Max. Supply is higher than Total Supply because BBOD performed a ‘token migration’ in 2018. BBD token-holders migrated the tokens from the old contract address to the current contact address. As a result, BBD token-holders received additional BBD tokens. The split ratio was 100-for-1.

The old contract address: 0x5ca71ea65acb6293e71e62c41b720698b0aa611c

*Definition of Total and Max. Supply: https://coinmarketcap.com/faq/

BBD as a utility token

BBD is the native utility token that functions within the BBOD ecosystem and has several core use cases, including:

  • All trading fees are paid in BBD
  • Trading fee discounts
  • Participation in BBD giveaways through the ‘BBOD Lottery’
  • Participation in Trading Competitions
  • Professional, individual trading strategy courses
  • Renting/buying algorithmic trading bots
Trading fee discount

A user who has a sufficient amount of BBD tokens will receive a ‘BBD discount’ of up to 10% for taker fees based on their current BBD balance. (Table 1)

Table 1. BBD holdings discount

TierBBD HoldingsDiscount
0≤ 5000
1> 5006%
2> 2,5008%
3>10,00010%

A user who has a sufficient amount of BBD tokens will receive a ‘Volume discount’ of up to 8% for taker fees based on their traded volume generated during the last 30 days. (Table 2)

Table 2. Volume discount

Tier 30-day Volume(TUSD)Discount
0≤ 9,000,0000
1> 9,000,0004%
2> 30,000,0006%
3> 90,000,0008%

A user may combine both discounts receiving up to an 18% discount for taker fees in total. E.g. A user is able to receive 8% + 4% = 12% discount if he/she has a current BBD balance of 2,501 BBD and has generated traded volume of 9,000,001 TUSD during the last 30 days.

Participation in BBD give away through ‘BBOD Lottery’

BBOD plans to organise weekly ‘BBOD Lottery’ events with attractive rewards. The initial requirements to enter the lottery will be possessing a sufficient BBD token balance and trading volume. The higher BBD holdings and the more trading volume, the more lottery tickets the participant shall receive. BBOD aims to give away a substantial amount of BBD received from trading fees.

BBD Token Distribution

BBD token-holders distribution is highly concentrated. The top 5 holders collectively own 70.34% of the total supply.

Table 3. Top 5 BBD holders

RankQuantity (Tokens)Percentage
129,275,07624.9399%
225,919,72122.0814%
310,147,3898.6447%
49,698,3888.2622%
57,529,8706.4148%

BBOD vs. Competitors

BBOD is classified as a semi-decentralised cryptocurrency futures trading platform. Currently, there are a few other futures trading platforms on the market, however, all of them are fully centralised.

BBOD is the only leveraged trading platform that offers non-custodial accounts for traders.

We have identified four other projects that portray significant similarities to BBOD with regards to their trading products offering.

Table 4. Main competitors

HUOBIOKEX BBODBITMEX BITFINEX
Standard Futures Contracts
Perpetual Futures Contracts
Go Long/Short Altcoins
Non-custodial Accounts
On-Chain Settlement
Proof-of Solvency
Data Feeds for Index Calculations4594N/A
Max. Leverage20x20x50x100x3.3x
Number of Underlying Instruments48168+100
Deposit/Settlement CurrencyMultiplesMultiplesTUSDBTCMultiples

Competitive advantages

SAFETY
The world’s first margin trading platform that introduces non-custodial accounts. The platform does not hold either the clients’ digital assets or their private keys.

HIGH LEVERAGED ALT TRADING
There is no other place to trade such a large variety of smaller altcoins with up to 50x leverage. This allows one to utilise capital more efficiently.

TRANSPARENCY
All balances of the clients’ smart contract accounts are visible on the blockchain (e.g. via Etherscan.io website). In comparison, traders’ deposits at centralised exchanges are located in one or several large wallets controlled by the owners of the exchange.

PROOF OF SOLVENCY
Due to the full transparency of our clients’ funds, BBOD proves solvency (assets = liabilities) every day, once the daily settlement on the blockchain has been performed. It is not clear if our competitors have sufficient funds to satisfy all of their clients’ withdrawal requests.

ADVANCED INDICES DESIGN
Our robust, efficient and intelligently responsive algorithm combines data feeds from 9 spot exchanges. The component spot prices are dynamically weighted according to the current market conditions.

FAIR LIQUIDATION RULES
Any remaining funds from liquidation stay in a clients’ account. Some competitors take all the remaining equity after liquidation.


Roadmap

BBOD is very conservative in terms of announcing future project developments. However, BBOD aims to add three key features to the platform moving forward:

  • Q2/2019: Crypto Index Futures (10 most liquid cryptocurrencies)
  • Q4/2019: New deposit/collateral currencies: Bitcoin, Ethereum and other stable coins pegged to USD and JPY, KRW, EUR, GBP
  • Q1/2020: Vanilla Options on Futures

Valuation

The most popular approaches to assessing the value of a token are the Discounted Cash Flow model (DCF) and Relative (multiple) Valuation model. Due to the lack of historical data related to the traded volume on BBOD, DCF is not an applicable model to assess the value of BBD tokens.

Thus, the Relative Valuation Approach using a dataset of comparable exchanges was adopted to derive a Market Value/Volume multiples (MV/Vol) for all selected exchanges to estimate a possible price range of the BBD token.

The MV/Vol ratio measures the dollar value of the traded volume relative to the total token market value (Market Value). This is a simple way to compare how the market prices one unit of traded volume across exchanges.

We sampled a set of 12 exchanges. The main factor was the Market Value of their tokens. We excluded some exchanges which may not report genuine trading volume.

First, we calculate the Average Daily Volume (Avg. Daily Volume) for each exchange as:

Avg. Daily Volume = 30-day Volume / 30

The MV/Vol ratio for each exchange is computed as follows:

MV/Vol = Market Value / Avg. Daily Volume 

In order to compute the ratios, we selected comparable exchange tokens and collected the required data from https://coinmarketcap.com as of 10/02/2018.

Table 5. Overview of comparable exchange tokens

ExchangeSymbolToken PriceTotal SupplyMarket Value Type  
BinanceBNB$9.150189,175,490$1,730,955,734Centralised
OkexOKB$0.6331,000,000,000$633,299,000Centralised
Huobi
HT$1.010500,000,000$505,000,000Centralised
EthfinexNEC$0.1211,007,949,847$121,984,106Decentralised
CoinbitDEX$0.0531,877,411,130$99,131,062Centralised
KucoinKCS$0.375179,939,916$67,531,450Centralised
BiboxBIX$0.129264,480,791$34,158,488Centralised
Kyber NetworkKNC$0.141215,232,645$30,451,760Decentralised
LatokenLA$0.062400,000,000$24,886,800Centralised
CossCOSS$0.065200,000,000$12,945,600Centralised
Crypto BridgeBCO$0.37027,000,000$9,990,000Decentralised
CobinHoodCOB$0.0091,000,000,000$9,360,000Centralised

After calculating the MV/Vol for each of the selected exchanges, we assigned weights to each exchange.

Weight = Market Value / Sum of Market Value for each exchange

Finally, we computed the Weighted Average Market Value/Volume multiple (WA MV/Vol). (Table 6)

WA MV/Vol = Sum of (Weight * MV/Vol) for each exchange

The valuation is highly sensitive to the weighting methodology. Due to the fact, that trading volume on many exchanges is often higher than in reality. Thus, we decided to assign the weights based on the Market Value of the tokens. We believe that the MV/Vol ratios of the tokens with the highest Market Value are more stable and more efficiently valued by market participants.

Interestingly, the decentralised exchanges offer higher multiples which may be a sign of a premium for proof-of-solvency and real volume calculation.

Table 6. MV/Vol Valuation

ExchangeMarket Value30-day VolumeAvg. Daily VolumeMV/VolWeight
Binance$1,730,955,734$16,398,429,527$546,614,3183.252.8%
Okex$633,299,000$12,751,427,596$425,047,5871.519.3%
Huobi
$505,000,000$8,756,094,701$291,869,8231.715.4%
Ethfinex$121,984,106$46,542,806$1,551,42778.63.7%
Coinbit$99,131,062$1,641,185,589$54,706,1861.83.0%
Kucoin$67,531,450$138,418,538$4,613,95114.62.1%
Bibox$34,158,488$8,809,972,787$293,665,7600.11.0%
Kyber Network$30,451,760$5,350,486$178,350170.70.9%
Latoken$24,886,800$4,032,024,713$134,400,8240.20.8%
Coss$12,945,600$146,323,139$4,877,4382.70.4%
Crypto Bridge$9,990,000$13,774,782$459,15921.80.3%
CobinHood$9,360,000$35,531,872$1,184,3967.90.3%

Weighted Average Market Value/Avg.Volume multiple = 7.19

BBOD is planning to be launched in the coming weeks, thus we cannot assign an actual volume to the calculated multiple. The only way to assess the price of the BBD token is to present the hypothetical range of volume we can expect based on the average volume from similar exchanges.

We calculated the Avg. Daily Traded Volume of all relevant margin trading platforms. (Table 7)

Table 7. Main competitors and their Avg. Daily Notional Traded Volume

ExchangeAvg. Daily Volume
Bitmex$800,000,000
Huobi DM$400,000,000
Okex Futures$300,000,000
Bitfinex$140,000,000
Deribit$50,000,000
Predicted BBD Price = (WA MV/Vol * Avg. Daily Volume) / Total Supply

Table 8. Estimated BBD token valuation based on Avg. Daily Volume

Avg. Daily VolumeEstimated BBD PriceTotal SupplyMarket Value
$20,000,000
$1.23117,382,569$143,396,338
$50,000,000$3.06117,382,569$358,490,846
$100,000,000$6.13117,382,569$716,981,692
$200,000,000$12.26117,382,569$1,433,963,385

Thus, our estimation of 12-month EFV* for the BBOD tokens is in the range of $1.23 – $12.26 per BBD token depending on the traded volume. (Table 8)

*Estimated Fair Value

Please note, that the above valuation is based on the Total Supply of the BBD token. If Max. Supply is taken into consideration, our estimation of 12-month EFV for BBOD tokens should be multiplied by 0.426 (the ratio of Total Supply/Max. Supply) However, we cannot be certain that the remaining tokens are migrated (users might have lost their private keys or simply do not want to migrate their token in the near future).


Conclusion

We believe that due to the unique features of the platform, such as high-speed leveraged altcoin trading, stablecoin deposits and non-custodial client accounts, BBOD will start to capture a substantial share in the market segment of leveraged trading platforms

Overall, for the reasons listed below, BBOD Research affirms its view that:

  • In comparison to many other exchanges, BBOD collects all trading fees only in BBD tokens which could create instant and substantial demand for BBD.
  • Tokens of decentralised exchanges (Bitshares, Ethfinex, Crypto Bridge) are priced more favourably by the market with the average MV/Vol ratio = 366.2.
  • The combination of decentralised features with the addition of the highly leveraged altcoin futures contracts offering may induce an additional premium by market participants.
  • The BBD token price shall be resilient to short and mid-term fluctuation in the cryptocurrency market (as traders may go long or short) and should offer decent risk diversification for heavily skewed BTC/ETH/EOS portfolios given its lower correlation among the major coins.
  • The expected inflow of institutional money (hedge funds, family offices) shall result in high demand for USD-denominated funds for their clients. BBOD is perfectly positioned for this very likely event due to accepting deposits in TUSD.

Overall, based on our observations, the performance of leveraged trading platforms has been extraordinarily strong during the current bear market. The unprecedented drops in cryptocurrency prices that happened last year have created a unique environment for the potential of a dynamic bounce back. The favourable economic situation (the volatile crypto market) should create a strong demand for BBOD derivatives products which will result in demand for BBD tokens. New future developments like a vanilla options offering will, in our view, support the upcoming year’s valuation of the token.

We initiate a strong bullish stance towards the BBD tokens, Overweight, 12-month EFV in the range of $1.23 – $12.26 per BBD token depending on the traded volume.


Join our Glogal Community

Stay updated on the upcoming BBOD developments via our various social media channels:

Telegram: https://t.me/BBODCommunity

Twitter: https://twitter.com/BBODTrading

Facebook: https://www.facebook.com/BBODTrading

YouTube: https://www.youtube.com/c/BBODTV

Linkedin: https://www.linkedin.com/company/bbod


Disclaimer : BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis. This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold an asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

Fundamental Analysis: TrueUSD (TUSD)

Overview

Currency CodeTUSD
Transaction Start Date06/03/2018
Circulating Supply206,986,215 TUSD
Market Cap209,635,525 USD 
TypeOff-chain, fully collateralized USD-backed
Where To BuyOKex, Binance, DigiFinex
Where to trade FuturesBBOD

TrueUSD (TUSD), the first asset issued by the TrustToken platform, ERC20 stablecoin pegged to the value of the US Dollar that utilizes a distributed network of trustworthy escrow accounts to fully collateralize client funds, ensuring TUSD is consistently backed 1-1 by USD fiat reserves. The use of numerous escrow accounts as opposed to one centralized bank provides token-holders with accountability of funds at all times and legal protection against any misappropriation, ultimately reducing counterparty risk. Trust firm accounts in the network are required to publish their fiat holdings publicly on a regular basis and are subject to monthly attestations. To further the confidence that users funds are safe third-party security audits of trust firms are consistently carried out by world leading auditors for best security practices.

Although TrustToken recognizes that making use of escrow accounts is certainly not the end game to a truly decentralized stablecoin, they appear open to exploring other possibilities once the cryptocurrency ecosystem matures enough for such a solution to be achievable. Ultimately, in a market where firms such as Tether (USDT) have taken advantage of user funds by providing no proof of solvency while storing fractional reserves in one centralized account, TUSD appears one of the most viable options for traders to hedge their portfolio against often extremely volatile market conditions.

Problem To Solve

Untrustworthy Stablecoins

Up until recently, there was little debate over whether one could trust a specific stablecoin. With so much noise in the space and profit to be made, individuals were simply too distracted to comprehend the relative safety of their funds. Over the past year, however, such an outlook has predominantly changed, which can largely be attributed to the Tether (USDT) scandal that began in 2017 and continues to unravel in the cryptocurrency market today. After an investigation from both avid cryptocurrency community members, namely Bitfinexed, and now more trusted investigative journalists such as Bloomberg and The New York Times, it has become apparent that Tether was likely used to inflate prices during the 2017 bull market benefiting exchanges such as Bitfinex who possess dubious ties to USDT. Perhaps more importantly for market participants, however, has been the clear acquisitions of the “Fractional Reserve Baking” method being utilized, where only a fraction of USDT funds is verifiably backed by money in a physical bank account. Continuing to add doubt to this debate, is Tethers inability or unwillingness to provide regular audits for their users, questioning the solvency of their funds altogether. Moreover, the inability to withdraw funds on exchanges such as Bitfinex and Kraken on certain occasions has spooked users who now want reassurance that their funds are verifiably safe and so are actively looking for new stablecoin alternatives. While numerous stablecoins are now battling to become the new pegged cryptocurrency of choice, which stablecoin will prosper will likely reflect firms who clearly tackle the failures of USDT. Ultimately, becoming the newly trusted counterparty for traders the ecosystem needs.

Choice of Collateral

The underlying technology of stablecoins can be categorized into three key areas: fiat-collateralized, crypto-collateralized and non-collateralized. All models possess their own unique strengths and weaknesses and so it is what market they wish to facilitate or the philosophy of their founders that ultimately determines which category a stablecoin falls under.

Fiat-Collateralized Stablecoins

First, fiat-collateralized stablecoins such as TrueUSD and Tether are rooted in a similar fashion to traditional fiat currency issued by a bank, they simply represent an IOU for a specified amount of money. As such, each stablecoin token equates to the equivalent value in USD (or any other fiat currency), 1 fiat collateralized stablecoin = 1 USD/other fiat currency. This method is perhaps the most viable option for a stablecoin at current, the cryptocurrency market continues to be extremely volatile and fiat reserves can provide the stability that simply no other type of stablecoin can achieve as if the cryptocurrency market collapses the reserves remain in fiat and so are unaffected. The model also has the ability to be highly regulated and so one can be more likely to receive legal discourse from the issuer if the stablecoin fails to hold value. This is all well and good if you can trust the party which has issued the stablecoin, but ultimately you are once more relying on a centralized party to determine your financial fate. As such, continual audits carried out by independent third party firms are essential to ensure that funds are indeed solvent.

Crypto-Collateralized Stablecoins

Second, crypto-collateralized stablecoins such as MakerDAO’s DAI. This method aims to circumvent the traditional fiat system altogether by providing a specified cryptocurrency as collateral as opposed to a fiat currency. In this manner, centralized intermediaries can be avoided altogether and a stable currency can exist without needing any entity to rely on other than the cryptocurrency market itself. The caveat to this solution is that as everyone is fully aware of, the cryptocurrency market is especially volatile, and so if the market crashes, measures must be in place to ensure enough reserves are held. The way to mitigate such a ‘black swan’ event is to over-collateralize the stablecoin so that it can absorb extreme price fluctuations. If the price fluctuation of a crypto-collateral reaches a certain point of instability the balance will automatically get liquidated, managed entirely by the blockchain. Although this seems to ensure the security of funds at first, the catch 22 is positions will be liquidated back into the cryptocurrency that was chosen for collateral, for example, Ethereum, which would likely be almost worthless in the case of such a ‘black swan’ event. Companies such as MakerDAO are beginning to try to mitigate this risk by multi-collateralising DAI against numerous different assets, but until this proof of concept proves to be a success, it cannot be shown to be the most secure stablecoin in the market.

Non-Collateralised Stablecoins

Finally, non-collateralised stablecoins, which are simply not backed by collateral whatsoever. This idea is akin to when the Gold standard was removed in the US and the transition to fiat money began. No longer was cash backed by Gold in a secure location, instead, parties simply had to trust the government that they were good for their word, the money was available if needed and no individual needs to be concerned. After numerous cases of government failure in countries such as Zimbabwe, Venezuela and more recently Turkey, however, It is clear that the ability of governments to control the money supply in certain parts of the world is broken. As such, to consider such a model for a cryptocurrency stablecoin becomes even less appealing. If one cannot trust certain governments to keep funds safe, then placing that authority in the hands of a for-profit cryptocurrency firm seems at best irresponsible. Basis is a perfect example of a non-collateralised stablecoin failing to foresee the regulatory requirements necessary for the success of such a project, recently being forced to return all funds to investors.

Store of Value

Perhaps the most obvious problem that stablecoins aim to mitigate is the extreme volatility the cryptocurrency market has shown since its inception. Although this may be extremely beneficial for experienced speculators, the continual fluctuations in the market value of cryptocurrencies ensure they are currently a useless store of value. Until the market matures enough so that well-known cryptocurrencies such as Bitcoin are akin to traditional assets such as Gold, one can expect the value of their account to fluctuate by double-digit figures in a single day on a regular basis. Ultimately, this stifles real-world adoption as the cryptocurrencies we know today cannot be used for regular transactions unless businesses and consumers want to take on unnecessary risk in the hopes of long-term profit. Moreover, individuals who live in countries with corrupt governments are not interested in speculating in order to profit, they simply want to utilize the revolutionary technology that is blockchain as a store of value to escape their collapsing economy while maintaining the value of their assets. At current, cryptocurrencies such as Bitcoin and Ethereum cannot offer them that guarantee.

Tokenization of Real-World Assets

Outside of corrupt states, a reliable store of value will become increasingly necessary as roughly $256 trillion worth of real-world assets begin to become tokenized. Such a process is already starting to take place, with tokenization occurring in key markets such as real estate, commodities, securities and fine art at current, with the list only set to expand as individuals strive to transact value with one another on a global scale using tokenization to offer innovative investment opportunities such as shared ownership. What is lacking for the success of tokenization, however, is a definitive store of value that cryptocurrencies themselves cannot yet provide and perhaps never will. For tokenization to prosper, a stablecoin which is consistently audited, that offers guarantees over the underlying assets with full collateral and possesses legal consequences for bad actors and remunerations to affected parties is essential. Up until recently, no stablecoin in the market offered such advantages.

Solution

A Trustworthy Stablecoin

Fully Collateralised

Whereas Tether has decided that only fractional reserves placed in a centralized location are necessary for their product to function effectively, TrueUSD has implemented full collateral for their clients using a distributed network of trust company escrow accounts. Such a prospect is extremely more robust as it ensures every TUSD that is minted is fully collateralized by USD ensuring client funds are safe at all times. The system works as follows, every time an individual decides to purchase TUSD they must clear their USD through one of the trusted decentralized escrow accounts, the corresponding USD is then held in that account ready to be retrieved any time the client deems necessary. If USD is redeemed the escrow fund burns the associated TUSD ensuring there is a continuous 1:1 ratio between TUSD in circulation and USD in the escrow accounts. This is a considerably superior offering to what Tether has chosen to provide its clients where one can never be certain whether the USDT is not only fully collateralized but backed by physical USD at all. Besides Tether not being verifiably fully collateralized, centralization of funds in one single bank account is incredibly risky as it is far more prone to being hacked as a single point of failure. TrueUSD tackles this head-on with it’s distributed network of trusted escrow accounts, a traditional banking protocol that has worked effectively for high value accounts for a considerable amount of time.

Consistently Audited

Although Tether now provides some transparency of their funds to the public, the fact that this is an internally organized audit furthers the question of the solvency of their funds altogether. Such a publication could easily be corrupted by those within the organization if they perceived they were at risk of losing their current market dominance. To combat such an issue TrueUSD provides regular audits to the public which are carried out by trusted third-party companies with no skin in the game. In the unlikely event that TrueUSD was proved to be insolvent, they would be called out by such trusted third parties who would not be willing to risk their reputation to uphold a company which they have no fiduciary responsibility for. This provides TrueUSD clients confidence that their funds are undeniably safe.

Legal Protection

Further to the never-ending scandal of Tether, in certain instances, clients have been unable to withdraw USDT from exchanges such as Bitfinex and Kraken in order to exit the cryptocurrency market for fiat. Ultimately, this has left experienced traders unable to withdraw funds at specific times where the market appears to be turning bearish. This leads those individuals to lose out on profit that they should be legally entitled to. The trusted escrow accounts which hold TrueUSD would be held legally accountable in such instances if they could not exchange client funds for fiat at a specific instant. Although placing TUSD on centralized exchanges does not necessarily guarantee any legal action will be taken if funds cannot be withdrawn when chosen, such initiative with their escrow accounts should force centralized exchanges to follow suit if they wish to retain clients moving forward.

Choice of Collateral

A Verifiably Safe Fiat-Collateralised Stablecoin

Fiat-collateralized stablecoins currently seem to be the most viable solution to ensure the absolute safety of user funds if designed correctly. As previously mentioned, TrueUSD is fully collateralized utilizing a distributed network of trusted escrow accounts which are consistently audited, and legally responsible for the loss of any of its client funds. Ultimately, TrueUSD appears to have learnt from the failures of their predecessors by tackling each and every issue that one might be concerned with when placing their trust in a centralized authority. In fact, it could be argued that TrueUSD itself is decentralized, as although the company is clearly centralised, the way in which client funds are managed in a decentralized network of accounts ensures that a single point of failure is avoided and detaches the company from the process of minting and burning TUSD altogether.

A Definitive Store of Value for Real World Adoption

As a fully collateralized, regularly audited and legally backed stablecoin, TrueUSD appears to provide the cryptocurrency ecosystem with the essential attributes that are necessary for real-world use cases. For example, for those who are seeking to escape corrupt regimes or increasingly volatile fiat currency situations, TUSD appears a viable hedge which would be definitively more secure than holding USD cash reserves in person. The distributed network of escrow accounts that TrueUSD works with provides immense security of funds above what one single individual could ever achieve while providing legal protection from any loss of funds. One use case for such economies is where salaries are paid in TrueUSD, if adopted this has the potential to circumvent government issued funds altogether, allowing TUSD to become a prominent medium of exchange for countries in desperate need of currency stability.

Perhaps what is more foreseeable in the immediate future, however, is the role that TrueUSD could play in the tokenization of real-world assets. An increasingly growing market in desperate need of a reliable store of value, TrueUSD has the potential to become the medium of choice for those looking to tokenize real-world assets such as real estate, fine art, and commodities such as gold. With the infrastructure in place to provide a safe store of value with full collateral, regular third-party audits and legal compensation for bad actors, the potential for TrueUSD to capitalize on this market is certainly present. Alongside becoming the stablecoin of choice for cryptocurrency exchanges globally, the tokenization of real-world assets appears to be the next best application for TUSD. Ultimately, if TrueUSD can dominate this market before others then the success of their stablecoin could substantially surpass Tether’s current market capitalization, as $256 trillion dollar market awaits.

Catalysts

Tackling Tether: Up until recently the market dominance of Tether has truly outweighed all stablecoins that have chosen to challenge, as no fully encompassing solution could be found to tackle the broad inadequacies faced. TrueUSD is fully collateralized, consistently audited by trusted third parties and a legally backed stablecoin that directly tackles the untrustworthiness of the Tether project. As the market for stablecoins continues to fracture it will not be long before a new pegged currency becomes the stablecoin of choice in the market. Many exchanges are now disserting Tether as their sole stablecoin and introducing others, for example, BBOD will be accepting deposits in TrueUSD offering futures trading on 16 different cryptocurrencies trading pairs against TUSD.

Emerging Markets: During the cryptocurrency bull run of 2017, stablecoins were seen merely as a way for traders to hedge their portfolio to avoid any negative market downturns. As the market has developed, however, it has become clear that there are multiple other use cases for stablecoins. Perhaps the most poignant is the $256 trillion market for tokenization of real-world assets into digital assets. In order for this to occur on a mass scale a trusted stablecoin most be available for those seeking to place large amounts of value onto the blockchain. TrueUSD appears poised to appeal to this market if achieved TUSD will outpace the market capitalization of Tether in an instant.

Risk Factors

Market Saturation: As in any market, when an opportunity as large as the demise of the monopoly force comes into existence, many firms are willing to throw extortionate amounts of money at the issue to ensure that they become the next market leader. Such an opportunity is too big to miss and so many firms have now entered the market to become the stablecoin of choice in the industry. Thus far, TrueUSD is achieving well in third place at the time of writing by market capitalization against strong competition such as USDC (owned by Coinbase and Circle) and Tether. If TrueUSD wishes to become the stablecoin of choice moving forward then they will have to pick their market segment carefully to ensure they are best in class, the age of the all-encompassing stablecoin is over. For TrueUSD, tokenization of real-world assets alongside exchange integration appears to be their best bets.

Conclusion

The Tether scandal should leave individuals questioning how they wish to store their funds in times where speculation is unprofitable and stability is necessary. TrueUSD provides a fully collateralized, third-party audited and legally backed stablecoin that utilizes a distributed network of trusted escrow accounts to ensure user funds are safe at all times. Such advantages may be utilized by traders looking to hedge their portfolio, those wishing to tokenize their assets or individuals looking to escape corrupt regimes is up to the individual. Now that such secure alternatives are available perhaps it is time for market participants to consider their options in an increasingly saturated stablecoin market and only strive to use the best. At current, TrueUSD appears to be just that, the most trusted stablecoin available in the market.


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Disclaimer : BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis. This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold an asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

Fundamental Pick: Decred (DCR)

BBOD Rating [10/12/2018]

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

Overview

Currency Code DCR
Transaction Start Date 06/02/2016
Total Supply 21,000,000
Circulating Supply 8,954,731
Protocol Type Blockchain Platform
Base Protocol DCR
Where To Buy/Trade BBOD, Binance, Bittrex, Poloniex, Huobi

Problem to Solve


Decred is an open-source decentralised cryptocurrency that is primarily concerned with ensuring community input is consistently valued by utilising an open governance model which is supported by sustainable financing for project development. Such a philosophy was born out of Bitcoin pioneers, specifically the engineers of the widely adopted btcsuite, becoming frustrated with the inefficient and unfair means by which updates to the Bitcoin protocol were being implemented. The Decred founders saw weakness in this approach and believed it could be improved upon by creating a level playing field for both miners and users in order to mutually benefit the network. Thus, Decred is an immutable currency which aims to be a store of value or medium of exchange, much like Bitcoin, whilst placing decentralisation of governance to community participants above the influence of centralised mining corporations and key developers.

Governance

The formation of Decred was a direct consequence of early Bitcoin developers experience with the governance model which was ingrained into the Bitcoin network from its inception. Such a system was designed in a way that placed Bitcoin Core developers and Proof of Work (PoW) miners at the centre of the ecosystem, assigning the majority of power to these large actors, who then had the ability to veto any change to the consensus rules they deemed unprofitable or that did not fit with their vision of the distributed network. Essentially, this gives minimal to no influence to smaller network participants who wish to implement changes they believe to be beneficial to the wider community or the Bitcoin protocol itself. Whilst some might argue that placing power in the hands of the wider community could lead to a dilution of ideas to less experienced parties, the ultimate purpose of a decentralised network is to serve each and every member of its community. Bitcoin has proved otherwise with prolonged disputes occurring between powerful centralised parties whilst ignoring the opinions of the actual users of the network, notably resulting in a contentious chain split which many network participants fundamentally disagreed with as such a move ultimately dilutes the network.

Funding

Bitcoin was funded entirely by donations up until 2014 and today there are no such rewards for developing the open-source protocol. This leaves early developers who likely profited from the exponential price increase of Bitcoin with the freedom to work on the project without the need for financial means, whilst excluding others developers who were late to the ecosystem. There is no system in place where a developer can claim expenses for contributing to the Bitcoin project and thus this excludes a large proportion of highly qualified developers from participating, centralising the power of decision making once more.

Mining

Although the PoW protocol implemented to mint Bitcoin has proven to be incredibly robust over the years, with no majority network takeovers occurring since the project was launched, as the mathematical problems become increasingly more complex the situation may change. This is the result of continuously needing to improve upon already incredibly expensive computational hardware in order to keep pace with mining competitors. In recent years we have seen this effect start to take place, with large centralised corporations such as Bitmain mining a large proportion of the Bitcoin network. As such large corporations continue to profit and grow, making the possibility for over 51% of the network to be mined by one centralised party increasingly more apparent. Ultimately, if achieved this would allow such a centralised authority to censor and implement updates to the bitcoin protocol as they see fit, completely going against the idea of a decentralised, censorship-resistant, immutable currency.

Solution


Governance

In stark contrast to Bitcoin, Decred ensures all stakeholders have the ability to influence decisions regarding the project by allowing them to vote on specific agendas and proposals that will be implemented to the Decred Blockchain. In order to become a Decred stakeholder one must simply own their native token DCR. Such decisions include aspects such as whether the development team should start working on a specific feature or not, whether to deploy a feature which has already been completed and even how to fairly split the development subsidies provided. This governance model allows for an entirely decentralised approach which ensures that no party has considerable influence over any other in the ecosystem. Miners and key developers must respect the decisions made by the stakeholders as they do not possess a majority share of the project. This allows for a more organic growth strategy which is inclusive of all parties constructive concerns and needs. As a result, Decred became the first cryptocurrency to implement changes to their Blockchain based on an automatic user voting approval in June 2017. Moreover, utilising this community-driven approach has allowed Decred to implement consensus changes much quicker than most other Blockchains, specifically Bitcoin’s, supporting the Lightning Network before Bitcoin and allowing a transaction to expire after a set period of time in order to keep avoid Blockchain bloat. Ultimately, Decred’s governance model is far more just than Bitcoin’s, allowing all stakeholders to have their voices heard and not ignored, creating a fairer ecosystem where everyone who is invested in the project can participate or affect the direction of future developments.

Funding

Uniquely, Decred’s Blockchain assigns a portion of miner fees to a development treasury which is distributed accordingly to those who wish to contribute to the project. This decentralised funding model allows anyone with an idea to contribute to the project by simply submitting a proposal and then if that idea is implemented they will be rewarded for their work. Such an approach is fundamentally different from most open-source projects, such as Bitcoin, which allow users to submit proposals but do not compensate them for their hard work. Instead, simply allowing one to build prestige in the developer community off the back of successful work. This opens the doors to a much larger pool of talent than possible with most unpaid open-source projects which simply cost those who do not have the means to work for free out of the market. Moreover, individuals can produce work which is not necessarily computer science-based, instead, they can apply more general skills such as marketing to help the project flourish and still receive compensation for work. Ultimately, business decisions will be decentralised amongst the wider community who support the project, distributing the power of decision making to a diverse set of individuals, avoiding centralisation of authority at all costs.

Mining

From the offset, Decred insured that their innovative hybridised consensus system was fair for both miners and stakeholders. This why they choose to implement Proof of Activity (PoA), likely influenced by Mackenzie’s (2013) whitepaper which proposed a PoA consensus mechanism. PoA involves a balance between both Proof of Work (PoW) and Proof of Stake (PoS) consensus algorithms. To this end, they have allocated 60% of the block reward to PoW miners, who serve the same purpose as in Bitcoin, 30% of the block reward for PoS voters, who keep check of PoW miners and can vote on important decisions and 10% to the treasury to incentivise the community to participate in project development. Typically PoW miners need to have spent a considerable amount of money on computational infrastructure and exert extreme control over a network, by introducing PoS additionally, network participants with much less financial means are able to keep a check on the work that the PoW miners are carrying out. This dilutes power from the PoW miners to PoS workers and decreases the likelihood of any network takeovers occurring as a result. Ultimately, Decred ensures that via a distributed mining consensus mechanism those who usually yield considerable power by owning expensive infrastructure cannot take over the majority of the network, whilst allowing individuals to participate in the project without needing excessive funds.

Catalysts


Community-Driven: The underlying strength of Decred lies in its commitment to ensuring the community has a strong influence over all aspects of the development of the project, whether that be allowing all stakeholders to vote on implementations to the protocol or supporting those in the community who wish to promote the project. This strategy ensures a diverse set of opinions are accounted for, and that a few large actors cannot control the direction of project development.

Team Of Pioneers: The team behind the project were the engineers behind btcsuite, a well regarded open-source project made for Bitcoin which has now been adopted by many other cryptocurrency projects. As some of the key members in the development of Bitcoin, they possess a true understanding of the successes and failures of the project. Thus, Decred takes a unique community-driven approach to achieve true decentralisation rarely seen elsewhere in the industry.

Risk Factors


Competing With A Titan: Ultimately, if Decred wants to see wide adoption then it has to draw from the community of Bitcoin, this is no easy task but may become easier with time as people begin to realise how centralised the decision making of Bitcoin has become since it’s inception. A large-scale event such as Bitmain taking over more than 51% of the Bitcoin mining activity could spark this realisation.

Belief In Your Community: As decred is community driven, the ultimate direction of the project is driven by who participates. This cannot be controlled, stopped or censored which is the essence of decentralisation. Whilst this is appealing to many early adopters within the cryptocurrency ecosystem, those who invest in the project moving forward must have belief in their fellow community members as well as the underlying fundamentals of the project itself. Despite this, it is difficult to question the direction the community has driven the project so far.

Conclusion


In a market where centralisation of power seems to be becoming an ever more prevalent force, Decred appears to be one of the few cryptocurrencies that continues to uphold the decentralised nature of the initial idea. By allowing members of the community to participate in the project in various ways including voting, mining and paid work contributions, Decred has created a vibrant community of incredibly knowledgeable and talented individuals avoiding the need for a centralised decision maker. Such a diverse set of opinions has allowed the project to quietly flourish, implementing changes to the Decred protocol much quicker than when centralised actors determine the direction of a project. This is true decentralisation in action. Thus, if the project can continue on its current trajectory whilst Bitcoin continues to become more centralised, it could become a direct competitor. Certainly, one to watch as the market matures.

Trade! Go Long or Short with leverage on Decred/TUSD


BBOD Rating Standard


BUY: A low-risk buying opportunity

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

HOLD: Maintain current levels of position until further research is published

SELL: Investment is associated with the potential of losing capital


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Disclaimer : BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis. This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold an asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

Fundamental Pick: Elastos (ELA)

BBOD Rating [10/10/2018]


SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

Overview


Currency Code ELA
Transaction Start Date 01/02/2018
Total Supply 33,647,865
Circulating Supply 7,722,239
Protocol Type Blockchain Platform
Base Protocol ELA
Where To Buy LBank, Huobi, CoinEgg, Kucoin

Problem To Solve


Since the inception of the Internet, it has become impossible for content creators to claim individual ownership of their works and to ensure such original creators receive the monetary benefits from their creative outputs. This is the result of the Internet’s inability to provide unique content which cannot be copied by individuals and spread freely over its vast distributed network. With over 3 billion individuals having access to the Internet, who all possess the ability to copy original content with ease, trying to stop the flow of illegal content between parties is simply impossible. Moreover, it is not only individual actors who take advantage of the ability to stream content globally, well-known centralised digital content providers such as Spotify, Youtube and Netflix all profit substantially from monetising digital content which is not of their own creation. Ultimately, this process often leaves original content creators with a tiny fraction of the actual profit they should be receiving for their creative endeavours and large corporations with the majority.

On the opposite side of this dilemma, individuals themselves no longer physically own much of the digital content they consume. People simply pay for subscription services and become drip fed by whichever corporation they choose to worship. Many may argue that, in fact, this is not an issue for the individual, as digital content has never been so easy to consume, yet is convenience necessarily a good thing without rights to ownership? In the past, individuals collected physical possessions over the period of their lifetime, such as books, records and photo albums, which could then be passed down to their family. This not only acted as a memoir of deceased loved ones but also a mechanism of passing value down through generations. Today, little of what we consume is actually ours and consequently, we cannot monetise our possessions when needed for ourselves or our children.

The Solution


In order to tackle the dissemination of creator content, Elastos [ELA] proposes a unique Blockchain design philosophy which detaches original content from the internet itself and runs separately on what Elastos has coined the ‘Smartweb’. Here creators content will not be uploaded to the internet that we know today, rather, it will be placed on a decentralised application on Elastos ‘Runtime’ software. ‘Runtime’ will enable individuals to store, view and exchange original content peer-to-peer on their personal smartphones or computers without connecting to the internet itself. Instead, Elastos will utilise the Blockchain only to confirm transactions between parties and verify their identity without needing a third party.

Thus, creators using the system will have the ability to attach their personal identity to their unique content on the Blockchain, allowing them to track exactly how many individuals are consuming their content, ensuring all revenue is sent directly to the original artist rather than unnecessary intermediaries. Moreover, Content creators will have the ability to introduce the concept of digital scarcity to their work, limiting the amount of digital content that can be bought by consumers to a fixed number. As in all markets, scarcity often creates increased incentives for individuals to purchase an item in a specific timeframe whilst supply remains fixed, increasing adoption and price over time. Such mechanisms should allow creators to reek the financial rewards they deserve for digital content, unlike in the current status quo.

Additionally, the Elastos ‘Runtime’ ecosystem will benefit consumers of the network, by allowing them access to original content which they will digitally own, verified by their Blockchain Identity. Unlike in today’s markets where one merely owns the right to use a product for a specified amount of time via a subscription service, consumers of Elastos ‘Runtime’ network will have unconditional ownership of their digital assets. Much like in the physical content world before the era of the internet, this will allow individuals to generate future revenue if they decide to sell some of their digital content. For instance, perhaps, due to the scarcity of the digital content when first purchased, such an asset has now significantly increased in price as there is now huge demand and virtually no supply, one could benefit akin to selling a rare piece of art. This mechanism creates an entirely new smart economy by allowing anyone to participate in wealth generation through peer to peer free markets without the interference of costly and unnecessary third parties.

Summary


Ultimately, Elastos allows digital content to be stored, viewed and traded in a secure and transparent manner. Without the need for third parties, creators are guaranteed to be rewarded with fair compensation for their creative output whilst consumers can benefit from their digital content ownership. Within this closed environment, the projects native ELA token will be used to pay for access to content that individuals desire. ELA can then be spent within the Elastos ecosystem itself or transferred to any other financial network.

Catalysts


  • Rewarding Content Creators: Since the introduction of the internet, content creators have lost out significantly as they have no means of stopping the dissemination of their artistic works. Moreover, unnecessary intermediaries have profited substantially by providing user-friendly interfaces which consumers have gravitated towards due to their ease of use. This is only set to continue as more individuals have access to the internet and product offerings become more sophisticated. Elastos provides a way out of the traditional content economy that allows creators to become the sole beneficiaries of their work, an idea that would not be possible without Blockchain technology and certainly appealing to creators themselves.
  • A Universally Beneficial Ecosystem: Not only does Elastos benefit content creators, but it also allows consumers themselves to take back the ownership of their digital content. This should attract individuals who are fed up with paying for subscription services that have the right to remove content at any time. Elastos allows consumers to benefit from the financial rewards of having exclusive ownership of digital content by exchanging such content in a peer-to-peer manner. Individuals can also feel confident that their purchase decisions are directly affecting the lives of the artists they admire.
  • Longevity and Strength of The Elastos Team: CEO Rong Chen began work on Elastos after leaving a senior role at Microsoft in 2000. Over time, the project has evolved in line with the pace of technology to now include Blockchain technology, which now allows it to function. The foresight and longevity of the project suggest the team is certainly in this for the long haul. Elastos now comprises of over 52 team members, with well-respected Blockchain advisors including Jihan Wu (CEO of Bitmain) and Hongfei Da (Founder & CEO of NEO).

Risk Factors


  • Challenging Traditional Oligopolies: The market for content streaming services is fierce, with a few key playing dominating the space, such as Spotify, Youtube and Netflix. If Elastos is to overcome the huge amounts capital these companies have at their disposal, they are going to need to pursue aggressive marketing strategies in order to establish themselves as an alternative competing brand. Despite this, the overwhelming benefits for content creators who utilise the platform should push the market forward, if they decide to limit content exclusively outside of the traditional system.
  • Copying Copyright Material: Although digital content will be detached from the Internet on the Elastos ‘Runtime’ software, this does not stop consumers from screen-capturing videos, text or rerecording audio. Individuals desire to find content for free will prevail if they search hard enough. Regardless, individuals who choose to do this will only receive knock-off versions of an original file of lesser quality, unlike today where original files can easily be copied and disseminated.
  • Verification: Elastos have failed to state how they will verify content is uploaded by the original creator. Although a Blockchain ID will be assigned to each piece of digital content, there is nothing stopping someone else uploading a file to the ‘Runtime’ system and claiming it as their own. In order for this to occur, however, the fake uploader would have to possess the original file and upload it before the original content creator, a rare circumstance.

Conclusion


Elastos provides an innovative alternative ecosystem for content creators and consumers to maintain full control of their digital assets and monetise them without the need for unnecessary intermediaries. The projects key strength is the ability to create a marketplace for digital content detached from the internet itself, Elastos ‘Runtime’, utilising the Blockchain only to verify the identification of content creators and to implement trustless peer-to-peer transactions. This has the potential to create an environment outside of the traditional corporate structure that will allow consumers to truly own their digital content and content creators to be rightfully rewarded for their creative endeavours. If Elastos can market their brand effectively, content creators could start transitioning exclusively over to the platform, leaving consumers no alternative but to adopt the system if they wish to enjoy their favourite artists. With support from cryptocurrency giants such as Bitmain and NEO and a dedicated team of 18 years, Elastos seem capable of successfully implementing their idea. Thus, as the mainstream begins to adopt decentralised applications, Elastos is certainly one to watch.

BBOD Rating Standard


BUY: A low-risk buying opportunity

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

HOLD: Maintain current levels of position until further research is published

SELL: Investment is associated with the potential of losing capital

Disclaimer


BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis.

This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold any asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

Fundamental Pick: Binance Coin (BNB)

Image result for binance coin

 

BBOD Rating [10/10/2018]


BUY: A low-risk buying opportunity

 

Overview


 

Currency Code BNB
Transaction Start Date 25/07/2017
Total Supply 192,443,301
Circulating Supply 117,443,301
Protocol Type Cryptocurrency Exchange
Base Protocol BNB
Where To Buy Binance, HitBTC
Go Long/Short BBOD

Binance Exchange Overview


Binance began trading as a little known Chinese cryptocurrency exchange in July 2017, during a boom time for the marketplace as a whole. Utilising the fortunate timing of their project and an aggressive marketing strategy the company became the highest traded spot exchange by daily volume a mere six months after inception. This rise to fame was unprecedented and something competitors such as Bittrex and Poloniex certainly did not anticipate. Binance achieved such success by significantly beating competitors on tradings fees with 0.10% per trade as opposed to 0.25%. Additionally, they employed an extremely liberal coin listing policy, growing their community at an exponential rate by attracting traders from a wide pool of already well-established cryptocurrency projects. Today, the platform lists 280 active trading pairs with an average of 1 billion trading volume daily and over 9 million active users.

 

Binance Coin [BNB] Overview


In order to raise money for the platform, Binance launched their ICO for Binance Token [BNB] on July 2nd. Due to the substantial bull market of the time and their solid project, Binance sold the entirety of their 100 million BNB tokens within several minutes of availability. The token sold for an average price of 0.11 USD, equating to approximately 11 million USD total funds raised during their ICO. BNB is an ERC20 token based on the Ethereum blockchain with a max supply of 200 million, after which no more coins will be created. Although BNB is now widely acknowledged as a utility token for use on the platform, the value of the token also corresponds to the equivalent of a traditional stock, with holders owning a proportional share in Binance that will likely appreciate proportionally with the growth of the exchange. This is a particularly rare phenomenon in the cryptocurrency space, where the majority of coins do not have such a substantial functioning product supporting them.

 

The Utility of Binance Coin [BNB]  


Discount

Currently, the main use case of BNB token stems from its ability to be used to decrease trading fees on the Binance Platform. Users can choose to pay for fees using BNB instead of utilising the cryptocurrency they are trading. If one chooses to do so they can expect 50% trading fees in their first year of membership, which decreases by half every year of subscription, until year five, where a discount no longer applies. In essence, BNB becomes the fuel for the Binance ecosystem, providing real-world utility to the token, unlike many other cryptocurrency projects whose promise of utility stems from the future success of yet to be released product. The reduction in fees is hugely significant to frequent traders as the platform itself currently undercuts any other exchange on the market without even employing the token discount, at 0.1% per trade. Combine this with the lowered fees when BNB is implemented to trade with and the exchange substantially undercuts its competitors on trading fees. For example Huobi and Bitfinex both employ trading fees of 0.2%. The oversight of Binance competitors higher fees is likely what drew many to the platform from in the first place.

 

Token Burn

In order to counteract the decreasing value of the BNB fee discount over the period of five years, Binance has employed a quarterly coin burn for their tokens. Essentially, Binance will buy back BNB tokens from the market and send them to a public address whose private keys are unobtainable, effectively destroying the tokens. This decreases the supply of BNB in circulation with demand remaining the same, usually resulting in an increase in price as the token becomes more scarce. This ingenious tactic has gained much publicity and succeeded in its aim thus far, with prices increasing substantially before coin burns that have occurred in the past. Binance aims to do this every financial quarter with 20% of their profits. So far they have met their promise, with 986,000 BNB burned in their first quarter, 1,821,586 BNB in the second and 2,220,314 BNB in the third, approximately 30 million USD at the time. The process will continue until half of their total supply remains, 100 million BNB. Such a mechanism has captured the attention of investors who will likely hold onto BNB for speculation purposes once users fees no longer decrease by utilising the token for trading fees. With increased visibility into the valuation of the BNB due to its direct correlation to the success of the exchange, no doubt prices will increase if the business continues on its current trajectory.

 

ICO Launchpad

Continuing their effort to provide BNB with meaningful value, the Binance Launchpad program allows individuals to invest in certain cryptocurrencies that are in the process of being listed on the platform using BNB. This furthers the tokens use case and creates a seamless marketplace between available ICOs and the exchange itself. Additional add-ons such as the Launchpad program increase the utility of the token and hence its demand, potentially leading to an increase in price. Continuing the process of frequently improving the usability of BNB will likely be key to the tokens success going forward. Such efforts thus far include Monaco adding BNB to their cryptocurrency Visa Card/App and the ability to buy virtual gifts on Uplive using the token.  

 

Future Applications


Decentralised Exchange

Looking to the future, Binance plan to build a decentralised cryptocurrency exchange (DEX) which will utilise the BNB token as the primary base asset and gas to be spent. Binance has coined this project Binance Chain, although it is still in the stages of development, admittedly aiming to outsource the underlying technology by providing a 1 million USD bounty and a job at Binance to an individual with a successful proposal. Although, if Binance Chain is as successful as Binance itself, BNB will gain significant value from a substantial increase in demand for the token for investors to utilise on the DEX platform. Moreover, they would mitigate regulatory risks of their current centralised exchange, as decentralised exchanges are inherently impossible to shut down. Despite this, the current DEX environment has largely suffered from a lack of usability, functionality and liquidity. Thus, pulling off a decentralised exchange successfully at this moment in time would be no easy feat.

 

BNB Catalysts


Organic Growth Through Reputation: Binance’s significant success in the cryptocurrency spot exchange market thus far has gained them substantial brand recognition in the marketplace. Couple this success with an ever-expanding user base and this could translate into sustainable long-term growth for the BNB token.

Continual Drive for Innovation: Since their inception, Binance has made continual strides to expand their product offering and overall ecosystem. For example, improving the functionality of the exchange itself, introducing the coin burn function and offering market participants the opportunity to invest in cryptocurrencies utilising BNB in their Launchpad program. Further efforts to improve the Binance ecosystem will not go unnoticed and will certainly affect the price of BNB.

Sustainable Growth During a Bearish Market: Although the fortunate timing of the implementation of the exchange can be seen as luck by many, Binance have not failed to increase their market dominance this year in a declining market (approx. -70% YTD). The consistency of trading volume, hovering around 1 Billion USD per day suggests that when the market decides to turn bullish, the number of individuals who utilise the platform and its token will increase.

 

BNB Risk Factors


Regulatory Environment: Since the success of BNB is entirely hinged on the success of the Binance exchange, the centralisation of the exchange may become an issue if regulators choose to crack down on cryptocurrency exchanges in general and make an example of them as a key figure in the industry. The platform has shown no interest in complying with regulators and so the way forward appears to be creating their decentralised exchange Binance Chain, which they are far from realising.

Market Saturation: Now that the market for exchanges is becoming incredibly saturated, firms with capital are employing aggressive strategies such as feeless spot exchanges, eradicating the need for BNB’s fee reduction utility. Despite this, none have diversified their market as much as Binance thus far and it will be hard to keep pace if the company pays attention.

Centralised Ownership: Ultimately Binance is a centralised exchange and thus decisions on what utility BNB should hold are made by management officials. This removes the right for token holders to collectively decide the fate of their token going forward. Although, so far, one would be stretched to challenge the decisions for BNB’s utility, as the strategies implemented seem to have largely paid off.

 

Conclusion


The initial incentive to buy BNB tokens was to gain discounted trading fees on the Binance platform, as doing so would substantially out-compete other spot exchanges on fees. Although this function is slowly being phased out over the period of five years, over time Binance has presented multiple other utilities for their token such as the ability to invest in ICOs to be launched on the Binance platform using BNB and the future hopes of utilising the token on Binance Chain, their decentralised exchange in the early stages of development. Couple this with token burning to slowly decrease the supply of BNB and Binance seem to know how to create sustainable long-term value for their BNB token. Hence, looking forward, as long as Binance can keep pace with the ever-evolving regulatory environment, BNB appears to have a bright future ahead of itself.

 

BBOD Rating Standard 


BUY: A low-risk buying opportunity

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

HOLD: Maintain current levels of position until further research is published

SELL: Investment is associated with the potential of losing capital


Disclaimer


BBOD Research is an independent cryptocurrency research-house and research arm of BBOD Exchange. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis.

This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold any asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

 

Fundamental Pick: Neo

 

Image result for neo logo

 

BUILDING THE INFRASTRUCTURE FOR A NEW INNOVATIVE SMART ECONOMY 

 

BBOD RATING [10/10/2018]


BUY: A low-risk buying opportunity

OVERVIEW


Currency Code NEO
Transaction Start Date 09/09/2016
Total Supply 100,000,000
Circulating Supply 65,000,000
Protocol Type Base Blockchain
Base Protocol NEO
Where To Buy Binance, HitBTC, Bitfinex, Bibox

 

THE NEO ECOSYSTEM


NEO is a non-profit, open source Blockchain platform which aims to build the infrastructure for an innovative new smart economy. The project was founded in 2014 by CEO Da Hongfei and CTO Erik Zhang, backed by their now notorious Chinese firm Onchain, which undergoes Blockchain research and development in Shanghai. The project started out as the first Blockchain platform in China coined Antshares, before the founders decided to rebrand to NEO in an effort to appeal to a more global market. NEO understands that community development is the most essential aspect of any efficient Blockchain ecosystem and so have placed a great amount of emphasis on expanding their global developer community at a rapid rate. The project now supports such a community with side projects including City of Zion (CoZ), NeoResearch and NEL, who aim to continuously develop the ecosystem to make NEO one of the best functioning Blockchain platforms in the world.

 

THE SMART ECONOMY


In order to achieve the vision of a new smart economy based on a distributed network, NEO aims to utilise Blockchain technology and digital identity to digitise assets, automating these digital assets using smart contracts. Thus, NEO aims to convert real-world assets such as property, vehicles and physical possessions into digital assets recorded on the NEO Blockchain in the form of smart contracts, that can be verified to unique individuals using their digital identity. As a result, such digital assets acquire the ability to be traded, transferred and registered (to name a few use cases) via a distributed network, allowing global peer-to-peer agreements to be made efficiently and with ease. Not only does this open up a global market for digital ownership of assets, but it also provides immutability not possible when often untrustworthy centralised intermediaries are involved, creating a digitalised, programmable and trustless economy. Whilst some might be suspect to such a drastic change to the status quo, NEO’s purpose is not to destroy traditional Chinese institutions. Instead, they aim to help gradually transfer the Chinese economy into the smart economy of the future.

 

NEO APPLICATIONS


DIGITAL ASSETS 

As previously mentioned, in order to facilitate their smart economy NEO aims to convert traditional assets into digital assets on the NEO Blockchain. Digital assets are programmable assets which represent a traditional asset in the form of a smart contract. By converting traditional assets to digital assets individuals no longer need unnecessary intermediaries to transfer ownership between parties, exchange value or register an asset to a particular individual. Instead, the inherent trust of NEO consensus algorithm allows assets to become fully decentralised, traceable and transparent. All of this is possible due to NEO’s digital identity system which connects individuals to physical assets via digital certificates placed on the NEO Blockchain. Ultimately, digitalising assets allows individuals from all over the world to exchange physical value seamlessly without the need for a third party. This eradicates traditional fees associated with centralised authorities and provides liquidity from a globalised market.

 

DIGITAL IDENTITY 

Digital Identity will allow NEO to accumulate the information of willing organisations, individuals and other entities in electronic form, to create a digital fingerprint for such parties in a highly secure manner stored on the NEO Blockchain. As a result, once they are baked into the Blockchain, the identity documents will become tamper-proof and impossible to destroy. Such digital identity will then be utilised by parties using highly secure multi-factor authentication methods such as fingerprints, voice and facial recognition in order to digitalise assets themselves and exchange value of existing assets. The concept of digital identity allows organisations and individuals to transact knowingly with one another without needing to trust them. Moreover, assets registered using NEO’s digital identity system can be protected by law due to the transparency of ownership. This innovative solution combining law with a trustless system ensures all digital assets are unconditionally verifiable to parties and cannot be seized.

 

SMART CONTRACTS: THE ETHEREUM OF CHINA?

Whilst many have coined NEO ‘The Ethereum of China’ there are some key differences. Although both platforms provide similar functionality, allowing developers to build smart contracts on top of their existing platform in order to create dApps, NEO allows a much more diverse set of programming languages to be utilised. For instance, if one wishes to build a dApp on the Ethereum Blockchain, they will need to learn Solidarity, Ethereum’s unique programming language. Comparably, in order to create a dApp on the Neo Blockchain, one can utilise a variety of widely used coding languages including Javascript, C#, Python, Java, and Go. The ability for developers to code smart contracts without needing to learn a new coding language significantly reduces the high barriers to entry in the industry by eradicating the time it takes to learn a new distinct language. This opens up a global pool of talent who already have the ability to program smart contracts with ease. Looking forward, this should allow for many more dApps to be deployed than possible on the Ethereum network which should grow the NEO ecosystem exponentially.

 

CATALYSTS


Prominence Within China: The Chinese economy is growing at an exponential rate, with the Chinese government placing a strong emphasis on innovation within the financial-technology (FinTech) sector. Already meeting with government officials, NEO has placed itself at the forefront of this development. Other platforms such as Ethereum will incur high barriers to entry when seeking to penetrate the Chinese market, due to the inherent language barriers and cultural differences. Hence, a homegrown Chinese platform such as NEO has the potential to gain substantial market adoption within China, especially when they place a strong emphasis on respecting Chinese regulations alongside business and cultural norms.

Universal Programming Language Support: Many existing Blockchain platforms require developers to learn a unique programming language in order to build smart contracts on their platform. This excludes a wide number of businesses from developing dApps on their platforms, due to the obvious cost and time of learning an entirely new coding language. To the contrary, NEO affords developers the ability to program smart contracts using numerous traditional programming languages, substantially reducing the cost of implementing smart contracts into existing business practices. This removes the high barriers to entry for businesses looking to enter the Blockchain ecosystem, which could lead to widespread adoption.

International Partnerships: Despite being based in China, Neo has managed to garner support from international tech giants. For example, Microsoft Azure partnered with NEO in order to attract talented developers to the platform from a global community. Such large-scale partnerships are likely to further bolster their standing within China, drawing attention to the platform from other tech giants within the local Chinese business community.

 

RISK FACTORS


Chinese Regulation: Although China is keen to be at the forefront of the Fin-Tech revolution, with a strong focus on Blockchain for business purposes, they do impose strict regulations on cryptocurrencies. For example, in the past year, they banned ICO sales within the country alongside unregulated cryptocurrency exchanges. Despite this, NEO places a strong emphasis on ensuring they comply with all necessary government regulations and now appeal to a global market of developers, limiting internal risk and the ability for businesses outside of China to develop on their platform.

Keeping Pace: The environment for Blockchain platforms has grown exponentially over the past year as a result of the clear success of Ethereum’s platform. Global competition is now incredibly saturated and if NEO wishes to keep pace with other platforms they must ensure that they attract the best talent to their platform. Nonetheless, with an incredibly strong brand name, an increasingly global community, significant developer bounties and by utilising a universal known coding language, the platform looks set to compete with other well-known platforms within the Blockchain ecosystem.

 

CONCLUSION


The Neo platform has positioned itself to become the world-leading provider of smart contracts for the smart economy of the future. By allowing businesses and individuals to digitalise assets, verified by their digital identity, NEO has the potential to cut out unnecessary intermediaries in the transaction of value and ownership of physical assets between parties on a global scale. The ability to program smart contracts in a variety of traditional programming languages gives NEO a real edge over many large players within the industry who require developers to learn an entirely new language. As a result, the platform has the potential to see widespread adoption by businesses and individuals who simply do not have the time or funds to learn a new language. Thus, as the global community continues to grow, NEO looks set to have a bright future ahead of itself.

 

BBOD RATING STANDARD


BUY: A low-risk buying opportunity

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

HOLD: Maintain current levels of position until further research is published

SELL: Investment is associated with the potential of losing capital

 

DISCLAIMER


BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis.

This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold any asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date, and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

 

 

 

 

Fundamental Pick: Quantstamp

 

Image result for quantstamp logo

PROVIDING MUCH-NEEDED SECURITY AUDITS FOR SMART CONTRACTS

BBOD RATING (04-10-2018)


ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

 

OVERVIEW


Currency Code QSP
Transaction Start Date 21/11/2017
Total Supply 976,442,388
Circulating Supply 617,314,171
Protocol Type Application Protocol
Base Protocol Ethereum
Where To Buy Binance, Huobi, Kucoin, IDEX

 

PROBLEM TO SOLVE


Currently, the development of smart contracts is left solely in the hands of those who create a blockchain project. Although such contract creators are often highly skilled in their field, the potential for oversight of vulnerabilities in their code is highly possible as a result of a single point of failure, with only a few individuals ensuring optimal smart contract security.

The importance of auditing smart contracts efficiently cannot be understated. Without such a mechanism, projects that are backed by huge sums of investors money could be vulnerable to attack once deployed on the Ethereum network. For instance, Quantstamps whitepaper presents two notable hacks where $30 million and $55 million were respectively stolen, as a result of flaws in smart contract code. This is the exact scenario Quantstamp seeks to prevent. With the creation of new ERC-20 tokens being a continual process, and only set to increase in volume in the future, Quantstamp’s services are likely to be in high demand.

 

SOLUTION


Quantstamp aims to solve smart contract impenetrability by creating the leading decentralised protocol that will provide security auditing for smart contracts based on the Ethereum network. In essence, Quantstamp allows developers of smart contracts to submit their work to their protocol where numerous security auditors can review the contract, in order to receive QSP tokens as a bounty. The level of auditing required is set by the initial developer who pays such fees to any individual who identifies a problem within the smart contract.

As noted in Quantstamp’s whitepaper, traditional smart contract auditing is extremely expensive, costing on average $5000 and taking up to a week to complete. By spreading the workload amongst numerous security experts, Quantstamp aims to considerably lower the cost of auditing and substantially decrease the amount of time taken to complete

 

APPLICATIONS


When the project launches in Q2 2019, Quantstamp protocol will comprise of two main types of security audit. Firstly, their software verification system that is entirely automated will scan Solidity programs for bugs. The software is designed to become more intelligent over time as the result of artificial intelligence, allowing it to catch attacks of increasing sophistication. Secondly, Quantstamp will automatically provide a bounty to human participants in the form of QSP tokens who manage to find vulnerabilities in smart contract code. Human auditors receive compensation for their efforts and Quantstamps clients ensure the integrity of their cryptocurrency project.

This multifaceted approach combines the best of artificial and human intelligence to form a strong alliance to fight against any proposed security threats. Thus, clients of Quanstamp should feel much more confident in the overall strength of their network than if merely working as sole actors.

 

SUMMARY


Quantstamp seems to have uncovered a gap in the market that needs to be filled. The project has the potential to become the leading security auditing protocol. This could provide the level of trust the community needs to feel safe in investing substantial amounts of money, by confirming a project is safe from attacks that currently plague the industry. With support from Binance, already completing numerous security checks for ICO’s launched on their exchange, the project looks to have a great future ahead of itself and is certainly one to keep a close eye on.

 

CATALYSTS


  • Proven Ability: CEO Richard Ma and CTO Steven Stewart have extensive experience in software security testing and smart contract development
  • Academically Respected: The team as a whole has over 500 citations in Google Scholar regarding software security
  • Proof of Concept: Numerous successful audits have already been completed for Binance clients, indicating substantial interest in the project
  • Growing Interest: The expansion of mainstream interest in smart contracts will attract more security threats in the future that need to be addressed
  • Expanding Market: The continual introduction of new projects using smart contracts ensures an expanding target market

 

RISK FACTORS


  • Foresight: The Ethereum network may not always be the leading smart contract platform, the project could consider expanding to include Ethereum’s competitors
  • Low Supply of Able Workforce: Currently, the talent pool within the blockchain space is minimal, with demand far outstripping supply, finding enough auditors to become scalable could become an issue
  • Competition: Not the only project trying to lower the cost of smart contract development, although the projects rigorous emphasis on security is unique

 

EVENTS


  • 30th April 2019 (or earlier): Quantstamp audit network launch, as described in the whitepaper

 

CONCLUSION


In the continually evolving blockchain industry, unique problems to solve are always present yet often missed. Quantstamp’s vision to provide much-needed security to smart contracts is certainly a valid addition to the blockchain ecosystem. By decentralising auditing work and splitting traditionally expensive costs and knowledge amongst actors, Quantstamp could substantially improve the security of smart contracts moving forward, whilst providing a discounted price.

With numerous successful audits already completed for reputable firms on the Binance platform, the project has the potential to become the go-to protocol for contract creators seeking network security in years to come. As the market for smart contracts continues to grow, Quantstamp could become an incredibly lucrative endeavour for investors if this holds true. Certainly, one to keep on your radar.

 

BBOD RATING STANDARD

BUY: A low-risk buying opportunity

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

HOLD: Maintain current levels of position until further research is published

SELL: Investment is associated with the potential of losing capital

 

DISCLAIMER

BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis.

 

Fundamental Pick: Power Ledger

 

 

THE WORLD LEADING PEER-TO-PEER MARKETPLACE FOR RENEWABLE ENERGY

 

SYNOPSIS


It is no secret that global warming has been at the top of the world’s agenda over the past decade. However, whether such high-level conversations yield beneficial results is extremely questionable.

As a result, the energy sector has been of heavy interest in the business sector, with many firms trying to find solutions to provide for what will inevitably be a green future. Despite such efforts, one key party in the equation is clearly missing, the consumers who require the energy in the first place. Without empowering communities themselves to change their energy habits, demand for such green energy will remain low and ultimately the cost of respecting the planet will remain high.

Blockchain technology may provide one avenue to solve the world’s energy crisis, and Power Ledger (POWR) appear to have placed themselves at the forefront of this sustainable revolution.

POWR propose a decentralised model which cuts out middlemen and places the power in the hands of the consumers themselves. One might wonder why consumers would want such a responsibility, the answer lies in that they will be provided with the opportunity to profit from their own green habits. Users of the project will be able to buy and sell unused renewable energy utilising the Ethereum blockchain to record their consumption and production. Transactions will be made using the native POWR token which can be held for speculation, stored for future use or sold back to the users’ fiat currency of choice. All users of the network are required to install solar panels to produce such energy and as a result, the project promotes solely green energy.

The system works as follows, individuals produce energy to cater for their individual needs and if they have any surplus energy they can sell this energy peer-to-peer to another user who has not produced enough energy to cater for their household consumption. The privately generated energy can be transmitted through existing traditional infrastructure to consumers in need. This initiative allows consumers to manage their own energy and chose the destiny of their own fate. If they chose to provide additional energy by purchasing more solar panel units then they will likely profit long-term. Alternatively, if users cannot afford to buy many solar panel units or chose not to they will have energy slightly subsidised by what they own and buy the rest through the POWR marketplace.

Consequently, the POWR marketplace encourages users to be as green as possible by becoming efficient prosumers in order to reap the rewards of the system. This innovative economic approach to promoting the use of renewable energy is extremely unique compared to traditional models as a result of Blockchain technology allowing individuals to immutably trust each other and trade without needing to confirm energy will be sent or that payments will be made.

Ultimately, this should empower communities to go greener by placing a large emphasis on the economic returns of such a decision. As the world continues to overuse raw materials and abuse the earth, global warming is certain to stay at the forefront of global debate, consequently, unique solutions such as POWR certainly have the potential to become extremely popular in years to come.

For this reason, Power Ledger could see substantial growth if they achieve their goals and is certainly a project to keep an eye on long-term.

 

CATALYSTS


diverse team comprising of both blockchain specialists and conservation experts, Co-founder Dr Jemma Green has multiple PHDs from the University of Cambridge relating to renewable energy
Power Ledger have already completed trials of the project in Australia which allowed consumers access to cheaper renewable energy than available from large distributors and to profit from their surplus energy, a rare proof of concept not regularly seen in the Blockchain space
The consumer/prosumer economic model proposed will likely become more desirable as green energy turns mainstream as a result of global regulations and energy restrictions
Although the project is built on top of the Ethereum Blockchain it is highly adaptable and could be employed on any Blockchain platform if the market dynamics change in the future.

 

RISK FACTORS


The project is highly dependent on whether renewable energy becomes widely utilised by individuals in the future, although with strict UN regulations already in place and consumers becoming more conscious, this shift in the market already appears to be taking place
There are several other Blockchain firms trying to solve the energy crisis including Grid+ and WePower, although such projects are yet to have a proof of concept
Power Ledgers business model means that wealthy individuals will benefit the most as they have the purchasing power to buy more solar units initially, although even those who cannot afford solar panels should be able to benefit from cheaper prices as a result of intense peer-to-peer market competition

 

CONCLUSION


As individuals become more conscious of their carbon footprint and regulating bodies tighten energy use from non-renewable resources, renewable energy use is only set to become more prevalent in mainstream society. When this occurs, individuals will seek the most cost-efficient way to consume their energy. If Power Ledger can empower communities by helping them realise the economic and environmental benefits of such an application, they have the potential of becoming a market leader in the space. Thus, POWR should be on your long-term watchlist.


Visit our website: https://bbod.io/

Start Trading Cryptocurrency and make money: https://live.bbod.io/bbod/

 

Fundamental Pick: Astronaut Capital

 

Image result for Astronaut capital crypto logo

 

ADDRESSING THE TRUST, ACCESSIBILITY AND MANAGEMENT ISSUES OF ICO’S BY PROVIDING A UNIQUE CRYPTOCURRENCY INDEX FUND

 

PROBLEM TO SOLVE


Since early 2017, the ICO market has grown exponentially as entrepreneurs begun to realise the potential of a new funding mechanism that could raise millions of dollars in a matter of minutes. For example, the ICO for a web browser, developed by the creator of Javascript managed to raise over $35 million dollars in under 30 seconds. Such an efficient funding vehicle had never been seen before, even in the world of venture capital. Both institutional and retail investors were invited to participate, finally allowing mom and pop to get in on the ground floor of what could be some of the most innovative blue-chip firms one shall see in their lifetime.

However, although many ICOs have genuinely good intentions and wish to use their funding to create innovative new products on the Blockchain, some saw this as an opportunity to quickly exploit individuals with a false promise and exit the market quickly. Hence, navigating this vast new ecosystem successfully and profiting from your findings is no easy feat for the average layman.

Additionally, the process of registering and applying for ICO crowd sales is tedious and time-consuming, with cumbersome KYC barriers often putting potential consumers off. Despite this, even if they do decide to make the purchase, management of numerous assets after the fact can become a difficult procedure, with many wallets only offering limited functionality for ICO coins.

Finally, although ICOs promise to accessible to all, whether this is actually the case is highly debatable. Prospective consumers must jump through hoops to find exactly where and how to buy the tokens until their funds are needed. This is often the result of a large majority of such assets being sold to large investors prior to them reaching the public market

 

SOLUTION


Astronaut aims to address the trust, accessibility and management issues of Initial Coin Offerings by providing their own ICO index fund token (ASTRO). Essentially, this allows investors to gain exposure to a varied basket of ICOs without needing to undergo the rigorous due diligence needed in order to profit from this emerging market. The index is carefully balanced by industry experts to ensure maximum profits can be acquired at any given time.

First, to address the point of trust, Astronaut works under the umbrella company Picolo Research. A well-respected cryptocurrency analysis firm with over 10,000 monthly subscribers. They strive to find the most appealing ICO offerings through in-depth fundamental analysis of notable up and coming firms by a team of highly trained professionals. Their articles are clear and concise as possible to help investors understand why a certain ICO has been added to their weighted index portfolio.

Second, in regards to accessibility, ASTRO breaks down industry barriers by buying in bulk from ICOs they wish to add to the index, allowing them to access pre ICO prices and most importantly having the contacts and information to successfully purchase popular projects. This takes the onus off the retail investor and places it in the hands of the well-versed Astronaut team. One merely has to purchase the ASTRO token to gain access to a well researched varied ICO portfolio that is weighted according to market conditions. This universal exposure is often what consumers desire yet simply do not have the time or the resources to pursue.

Finally, on the subject of asset management, Astronaut actively monitor their positions and are not afraid to exit them where a particular ICO has not met their projected expectations. This takes the need for investors to continuously monitor their positions out of the equation, which may be of particular interest to long-term holders or newbie investors who are simply not equipped to tackle this extremely volatile emerging market. Being able to quietly participate in a market using an index allows one to gain exposure to a clearly booming sector without all the associated risks.

 

APPLICATIONS


The ASTRO token provides two types of return for its investors. Firstly, users receive quarterly income distributions based on the amount they invest and their exit activity. Secondly, holders gain any token appreciation aligned with the Net Asset Value (NAV) of the index fund.

Access to the Astronaut index fund is simple for anyone who has invested in an alt-coin in the past, it can simply be bought online at an exchange under its prefix ASTRO. Whether one decides to include this as part of an already manageable portfolio, under the umbrella of ‘ICOs’ or if they wish to let the company manage the entirety of their portfolio, allocating all funds to ASTRO is completely up to the investor. The former is probably most appropriate with a mix of high cap names such as Bitcoin and Ethereum.

 

SUMMARY


Whilst the cryptocurrency market continues to evolve, opportunities to invest in ICOs can provide huge rewards for those who are willing to spend a considerable amount of time researching. Despite this, the risks associated with ICOs can leave naive investors wishing they never entered the market in the first place. For the latter Astronaut provides an easy way to gain access to a well-researched basket of cryptocurrencies without undergoing the due diligence. Definitely, one to consider for those who want to benefit from the ICO boom whilst remaining cautious.

 

CATALYSTS


First-Mover Advantage: Crypto index coins are a relatively new concept in the Blockchain ecosystem, currently ASTRO’s only competitors are Crypto20 and TaaS, this could give them the edge over future equivalent competitors who enter the market

Qualitative Approach: Unlike their competitors, ASTRO heavily focus on in-depth qualitative fundamental analysis to choose their picks and self-weight the portfolio according to the strength of projects, whilst many other index funds use an algorithmic equation to balance top coins against each other according to current market conditions

ICO Focus: Of the few crypto index funds available, most focus on top coins by market cap, whilst ASTRO have chosen ICO’s as their UPS, a much more challenging environment for consumers to invest in successfully

 

RISK FACTORS


Reliance: Whilst relying on experts who understand the ICO landscape extremely well may be more successful than investing personally, you are ultimately avoiding putting in the due diligence yourself, studying their methodology for allocating coins to your portfolio is highly advisable

Small-Cap: Currently the project is listed as 750 by Market Cap on coinmarketcap.com, hence the project has yet to gain large amounts of traction, there is certainly a need for the expansion of the number of exchanges that ASTRO is listed on

 

CONCLUSION


The ICO market has seen both the biggest winners and losers in the cryptocurrency marketplace to date, yet picking the winners is no easy feat. ASTRO may provide a safe haven for investors who seek to gain exposure to such a market without the undeniable risks associated. Relying on others to do research for you is often risky business, yet with a sound methodology centred around fundamental analysis and a well-regarded team, the project appears to have great promise. Besides, not all individuals have the time or knowledge to pursue such due diligence on a market which is certainly overwhelming and continuously expanding. For this reason, ASTRO is certainly one to watch as they grow.


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