Coin Report #25: 0xBitcoin

AD: Before I begin this post, I’d like to briefly mention Bitcoin.Live, who are sponsoring my blog.

Bitcoin.Live offers regular, detailed content on their free-to-access blog, created by a panel of analysts (including Peter Brandt), and covering all manner of market-related topics. I found both the video material and the blog posts to be genuinely insightful, with many differing analytical perspectives available for viewers and readers. The platform also offers premium content for paying subscribers who find value in the free material, with daily videos, alerts and support provided. Check it out and bookmark the blog.


N.B: In the spirit of full transparency, the following Coin Report on 0xBitcoin is a Sponsored Post.

Welcome to the 25th Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of 0xBitcoin. This will comprise of an analysis of a number of significant metrics, an evaluation of the project’s community and development and an overview of its price-history. The report will conclude with a grading out of 10. I hope you enjoy the read!

Introduction

0xBitcoin isn’t a project I’d heard of prior to researching this report, and even the inclusion of Bitcoin in its name made me a little dubious to begin with, if I’m honest. More often than not, any project that attempts to leverage Bitcoin in its name turns out to be at least somewhat suspect, if not an outright scam. However, I was pleased to find that this was absolutely not the case here, as you shall discover. In fact, this was one of the most interesting and unique small projects I’ve had the pleasure to research, though it is not without its faults, by any means.

I hope this report will prove objective where it must be and fair on more subjective matters. For those who’d like to learn a little more about 0xBitcoin prior to reading this report, here are some primary links:


Fundamental

General:

Name: 0xBitcoin

Ticker: 0xBTC

Algorithm: Keccak256 (Proof-of-Work)

Sector: Decentralised Mineable ERC-20

Exchanges: Hotbit, Mercatox, IDEX, ForkDelta, Uniswap, Enclaves, Ethex and CoinExchange

Launch Overview

0xBitcoin was created in February 2018 as the first mineable ERC-20 token, effectively operating as Bitcoin itself on the Ethereum blockchain.

It utilises Proof-of-Work for its token emission on the Keccak256 hashing algorithm, with an identical coin specification to that of Bitcoin, albeit with transaction speed of Ethereum.

Upon creation, there was no premine or ICO and no centralisation of any kind, be it in the form of project leadership or token distribution.

Price-History Overview

As 0xBitcoin has only been in existence for a little over a year – and on exchanges for a little under a year – there isn’t a great deal of price-history available for analysis. That said, there are numerous short-term market cycles that have played out, which I shall delve into in the Technical section of this report. For now, it will suffice to say that 0xBitcoin formed its all-time high against Bitcoin at around 65k satoshis, shortly after being listed on exchanges. Price has since been massacred, having fallen to its all-time low of 1600 satoshis last month.

Project Overview

The purpose of 0xBitcoin is very much clear and direct, which I love. There are no grandiose technological claims made nor a multitude of use-cases put forth. Rather, 0xBitcoin seeks to function as a fully decentralised currency with the scarcity and consensus solution of Bitcoin combined with the transactional advantages and smart contracts compatibility of Ethereum.

As stated in its whitepaper:

“As an implementation of the original Bitcoin software as an Ethereum Smart Contract, 0xBitcoin (or 0xBTC) combines advantages from both Bitcoin and Ethereum.

The asset is decentralized, permissionless, mined and scarce just like Bitcoin, which means it shares all of Bitcoin’s use-cases and properties as a transparent and permanent digital record of value. However, above Bitcoin, 0xBitcoin has the speed and scalability of the Ethereum network and is compatible with all ERC20 token services. This means it can be stored in any Ethereum wallet, is as secure as Ethereum, and can act as ‘the bitcoin’ for the Ethereum ecosystem.

This is important because Bitcoin is not able to communicate with or interact with the Ethereum smart contract ecosystem. With 0xBitcoin, the Ethereum network is now effectively upgraded with the ability to interface with a commodity which shares all of the same properties as Bitcoin. Now, all Ethereum smart contracts can hold, transfer, and trade bitcoin-like tokens permissionlessly and can do so based on immutable rules set forth using their own computer code.”

There is a purity of purpose that I already resonate with, but how is 0xBitcoin operating at present? What has the project accomplished?

Let’s begin with some Metric Analysis:


Metric Analysis:

Below are listed a number of important metrics, all of which are accurate as of 15th June 2019. For anyone reading this who has yet to read a Coin Report, it might be worth reading this section of the first report, where any potentially unfamiliar terms are explained. For any terms or metrics specific to this post, I will provide explanations besides the figures.

Metrics:

General:

Price: $0.225 (2591 satoshis)

Circulating Supply: 4,544,800 0xBTC

Total Supply: 4,544,800 0xBTC

Exchange Volume: $1.064mn

Network Value: $1.022mn (117.76 BTC)

Maximum Supply: 20,999,984 0xBTC

% of Max. Supply Minted: 21.64%

Network Value at Max. Supply: $4.722mn

Exchange Volume-to-Network Value: 104.1%

Category: Microcap

Average Price (30-Day): $0.188

Average Exchange Volume (30-Day): $1.159mn

Average Network Value (30-Day): $844,750

Average Exchange Volume (30-Day)-to-Network Value: 137.21%

Volatility* (30-Day): -0.04345

Average Daily On-Chain Transactions (7-Day): 164

Average Daily Transactional Value** (7-Day): $3,070 (source)

NVT*** (7-Day): 332.9

% Price Change USD (30-Day): +24.3%

% Price Change USD (1-Year): -88.9%

USD All-Time High: $4.54

% From USD All-Time High: -95.4%

Premine % of Max. Supply: 0%

Premine Location: N/A

Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 0.538 BTC

Liquidity-to-Network Value %: 0.46%

Supply Available on Exchanges: 135,851 0xBTC

% of Circulating Supply Available on Exchanges: 2.99%

*Volatility is calculated by taking the average price over the given time-period, calculating the difference between it and the highest price and it and the lowest price over that same time-period, and multiplying those figures together. The closer to 0, the less volatility during that period, and vice-versa. Read this for more on volatility.

**Transactional Value in $ is calculated by taking the daily transactional value in 0xBTC and multiplying it by price.

***NVT is calculated by dividing the Network Value by the Average Daily Transactional Value. See here for more on NVT.

Supply Emission & Inflation:

Block Reward Schedule: The current reward is 50 0xBTC per block. The reward halves every time half the remaining supply is mined, with the first halvening at ~10.5mn supply.

Average Block Time: ~10 minutes

Current Block Height: 7,962,538 (ETH block count)

Annual Supply Emission: 2,628,000 0xBTC (~68.09 BTC)

Annual Inflation Rate: 57.82%

Circulating Supply in 365 Days: 7,172,800 0xBTC

Distribution:

Address Count: 5,289

Supply Held By Top 10 Addresses: 4.73%

Supply Held By Top 20 Addresses: 6.59%

Supply Held By Top 100 Addresses: 13.24%

Inactive Address Count in Top 20 (30 Days of No Activity): 9

Analysis:

Given 0xBitcoin’s primary purpose of being used as a decentralised currency on the Ethereum network, there are two metrics that I believe will be most insightful as to whether this purpose is being fulfilled. The first is transactional volume (and its related metrics), which I shall cover next, and the second is distribution of supply, which will be covered at the end of this section.

So, using 7 days of data from Etherscan, I calculated that 0xBitcoin has an average of 164 on-chain transactions per day, amounting to $3,070 of Average Daily Transactional Volume. This gives 0xBitcoin a 7-day NVT of 332.9; around 15x higher than that of Bitcoin. Though not abysmal, this is indicative of a low degree of demand for 0xBTC as a means-of-payment, even for a small and relatively new project.

Moving onto the remaining General metrics, let’s first take a look at Volatility, which I calculated to be -0.04345 across the past 30 days. This places 0xBitcoin towards the lower end of the range amongst coins previously reported on, suggesting that, at least in its value against the Dollar, it is possibly in accumulation at present.

Next, let’s take a look at the metrics related to liquidity:

Regarding 0xBitcoin’s buy-side Liquidity, I calculated there to be 0.54 BTC of buy support within 10% of current prices across listed exchanges, equating to 0.46% of its Network Value. Now, this, though the nominal figure of liquidity seems low, actually places 0xBitcoin 4th amongst coins from previous reports for Liquidity-to-Network Value. Of course, this is more common for smaller projects, as their Network Values are much lower and thus it doesn’t take a great deal of buy support to have relatively strong Liquidity. Nonetheless, this is promising.

Now, with regards to its sell-side Liquidity, I calculated there to be 135,851 0xBTC available for purchase on listed exchanges. This equates to 2.99% of its circulating supply; the 5th-highest figure amongst previous reports. Thus, whilst there is decent demand for the token at current prices, there is a relatively low desire to hold the token. This suggests that the store-of-value function is not yet being fulfilled, and that the means-of-payment function – where one might expect there to be a higher percentage of circulating supply on exchanges (and higher token velocity) – is the more prominent use.

Moving onto 0xBitcoin’s volume-related metrics, I found that its 24h Exchange Volume came in at $1.064mn, equating to an unbelievable 104.1% of its Network Value. Further, calculated its Average Daily Exchange Volume to be $1.159mn across the past 30 days, equating to 137.21% of its Average Network Value for the same period. At face value, these are by far the highest volume-to-network value ratios ever written about in these reports, but there is an extremely high likelihood that much of the volume is a result of wash-trading on exchanges like Mercatox and Hotbit.

Given the token’s identical block reward structure to Bitcoin, I was curious to look into its supply emission metrics:

Using the current reward of 50 0xBTC per block, with 10-minute block times and no halvening for another couple of years, I calculated the Annual Supply Emission to be 2.628mn 0xBTC, equating to 68.09 BTC at current prices. This gives 0xBitcoin an Annual Inflation Rate of 57.82%; not so attractive for the prospects of price growth.

However, it is the relationship between supply emission and traded volume that is more important to uncover. Unfortunately, the figures I have for traded volume are likely inaccurate due to heavy wash-trading (through no fault of the project itself, but rather the exchange).

Nonetheless, we can work out that the Average Daily Supply Emission for 0xBitcoin is 7,200 0xBTC, or 0.186 BTC at current prices. This equates to $1,620. Using the data that I have, 0xBitcoin’s Exchange Volume covers this supply emission by 657x and its Average Exchange Volume covers it by 715x. As I say, the real figure for traded volume is likely lower and yet still very much likely sufficient to sustain current prices. More importantly, 0xBitcoin’s Liquidity of 0.54 BTC is almost 3x greater than its Average Daily Supply Emission.

Finally, let’s take a look at how 0xBitcoin is fulfilling its purpose of being fully decentralised:

I found that there are currently 5,289 holders of 0xBTC, with the top 10 addresses controlling only 4.73% of circulating supply; the top 20 controlling 6.59%; and the top 100 controlling 13.24%. This is seriously impressive decentralisation of supply. More impressive still is the fact that 3 of the top 10 addresses are exchange-owned, thus, discounting these, the circulating supply is decentralised to an even greater degree.

Regarding the activity of the top 20 richest addresses, I found that 9 have been inactive for the past 30 days, 3 are owned by Mercatox, EtherDelta (ForkDelta) and IDEX, and only 1 of the remaining 8 addresses has net distributed from their balance over the past month. This was the 14th-richest address, which distributed 500 0xBTC. The 7 other addresses from the top 20 cumulatively added 125k 0xBTC to their balances during this period.

That concludes this section. Onto the 0xBitcoin Community:


Community:

There are two primary aspects of community analysis: social media presence and Bitcointalk threads. I’ll begin with the former before moving on to the latter.

Social Media:

Concerning social media presence, there are four main platforms to examine: Twitter, Facebook, Telegram and Discord.

0xBitcoin is present on all four platforms. To begin, let’s look at the various social metrics that I calculated from the 0xBitcoin Twitter and Facebook accounts:

Twitter Followers: 178

Tweets: 98

Average Twitter Engagement: 11.52%

Facebook Likes: 50

Facebook Posts (30-Day): 0

Average Facebook Engagement: N/A

As usual, I will be using RivalIQ‘s social benchmark report for evaluation purposes.

Twitter:

The 0xBitcoin Twitter account has the smallest audience of any coin previously reported on. Further (and likely a factor in the audience size), there are only a couple of tweets posted per month.

That said, in RivalIQ’s report, we find that the average Twitter engagement rate across all industries is 0.048%, which means that 0xBitcoin’s engagement rate is currently 240x greater. Further, the average engagement rate for the Media industry (the most relevant in the report) is 0.009%, thus 0xBitcoin’s is 1280x greater. Of course, this is largely due to the size of 0xBitcoin’s audience, which hugely inflates its engagement rate.

Relative to other coins from previous reports, 0xBitcoin’s engagement is the highest by some margin; though positive, this is simply a mathematical likelihood based on the 178 followers that the account has rather than a true show of strong engagement. Even with this being a community-led project with no central authority or team, I would expect a community member (or group) with an inclination towards social media to make a concerted effort to grow 0xBitcoin’s userbase on these platforms.

Facebook:

Despite the Facebook page having 50 Likes, it has 0 posts in the past 90 days and thus is likely abandoned; another lack of commitment to strengthening and growing the community by leveraging available platforms.

Discord:

The 0xBitcoin Discord group is world’s away from all other social platforms, with 3,216 members; a relatively large community when compared to their Facebook, Twitter and Telegram channels). Further, the group has seen huge weekly growth, with 115 new members added in the past week.

The Announcements channel has not been used since April, nor have any of the other channels in the Information menu since before that time, though Useful Links remains relevant as it contains all relevant resources for new users.

In the General menu, the 0xBitcoin channel is the most frequently used, with near-constant daily discussion; far more activity than can be found on any other platform. Regarding the content of the past week’s discussion, I found that there was a great deal of mining talk, as would be expected given the nature of the project, alongside much general chit-chat about the space, overall.

Regarding 0xBitcoin itself, the discussion focused around the future of Ethereum and its scalability issues and potential solutions, as well as the simplicity of 0xBTC; with its primary purpose being a token that functions exactly like Bitcoin except with the ‘upgrade’ advantages of being native to the Ethereum network.

Further, I found that 0xBitcoin will have support on MerkleX (a decentralised exchange), that there has been recent growth in the number of active wallets and that CoinMarketCap has just decided to remove Mercatox from the volume figures, confirming my earlier suspicions on wash-trading. The new volume figures bring 0xBTC’s Volume-to-Network Value closer to 6%, not including volume on unlisted decentralised exchanges, which is a much more reasonable and yet strong figure, indicative of speculative interest.

In Development, I found that a 0xBitcoin DEX has been released and is being actively developed, with no gas used for order placement. Also, developers are creating a means by which Chainlink Oracles can be paid in 0xBTC, as well as actively pursuing interoperability. In Marketing, I found infographics created in multiple languages and a recent Beaxy listing submission. Other channels remain largely unused.

Overall, it’s great to see more activity than on other platforms, though I didn’t learn a great deal about any plans to grow the 0xBTC transactional userbase, which, given the project’s purpose, is critical.

Telegram:

The 0xBitcoin Telegram group has 278 members.

There are only a handful of messages a day, and the group is far smaller than the Discord. It is also comprised primarily of bot messages rather than actual discussion. There is some discussion of wash-trading occurring on Mercatox and of the first-mover advantage of 0xBTC as the first mineable token, given its unbroken lead in hashrate of all ERC-20 tokens. Other than this, there is little of note here.

BitcoinTalk:

The 0xBitcoin BitcoinTalk thread was created on 28th February, 2018, and has since generated 138 posts spanning 7 pages in 472 days. This equates to 0.29 posts per day, on average. However, in the past 90 days, the thread has had only 1 post; another social platform seemingly abandoned.

That concludes this section. Let’s take a look at Development:


Development:

For the following Development analysis, I will be evaluating project leadership, the website, the roadmap, the whitepaper, the wallets and finally providing a general overview:

Project Leadership:

There is no central authority or team behind the project; as such, there is no team information listed on the website. There are 2 Github contributors and 10 members of the 0xBitcoin Foundation, which is a board of individuals contributing to 0xBitcoin in various ways. It would be great to have a little more detail on each of these members, their roles and their vision for the project, however.

Website:

https://0xbitcoin.org/

The 0xBitcoin website is really quite good for a small project with no premine or ICO funding and no central authority leading it forward. All relevant resources are easy to find, though there are some links missing from the Community menu (perhaps partly why the Twitter account is so small). There are also a few missing exchanges in the Exchanges menu. Other than that, navigation is generally smooth and clear. The branding remains consistent to Bitcoin and the tagline for the homepage reads Pure Mined Currency: For Ethereum Applications, which nails the simplicity of its purpose. As a miner-focused project, a number of useful mining statistics are accessible. There is also an informative introductory video front-and-centre. Wallets are all linked further down the homepage, as are a number of tutorials in multiple formats for mining 0xBTC.

Overall, concise and informative, whilst remaining engaging and easy to navigate.

Roadmap:

There is no roadmap available.

Whitepaper:

https://github.com/0xbitcoin/white-paper

There is no PDF copy of the whitepaper available, but it can be found on Github. As such, it is very concise, taking only a few minutes to read. The document begins with an abstract that discusses the general trend of ERC-20 tokens being distributed as securities and that 0xBTC will be the
first such token to utilise Proof-of-Work to decentralise its distribution from the outset; thus operating as Bitcoin on the Ethereum network.

The document states that there is no corporation or official team, and that this is a community-led project with no ICO or premine. 0xBitcoin derives its name from its Bitcoin-like nature combined with its existence as an ERC-20 token. Moving on through the document, it is the case that full distribution of the token will occur through Proof-of-Work to ensure decentralisation of supply (as can be verified by the rich-list analysis from earlier)

There is some discussion of use-cases, with its primary  use-case being a token with the decentralised, scarce and permissionless nature of Bitcoin but with the advantages of transaction speed and smart contract compatibility. The document discusses how Ether itself is not designed as a currency but rather the means of securing the Ethereum network; thus 0xBTC is a better currency for the network. It states,“0xBitcoin intends to be the primary medium of exchange and store of value for the Ethereum network.
This will allow Ether to fulfill its original intended function to secure the network at scale and to be the lifeblood of the Ethereum network.

Regarding mining 0xBitcoin, I discovered that it operates exactly like Bitcoin, where difficulty auto-adjusts every 1024 blocks with the hashrate and miners utilise the Keccak256 hashing algorithm, with 6 blocks minted per hour and a 50% reduction of the block reward each time that half of the remaining supply is mined. The first such halvening is a couple of years away. The total token supply is 21mn tokens and there was no premine or ICO. The mechanism of emission is one where the entire supply of tokens is locked up at genesis at dispensed with each newly minted block. The document also lays out the code for the smart contract, so there is a mixture of technical and non-technical prose.

The document does mention that the success of 0xBitcoin is tied to the success of the Ethereum network, which is important to remember. It concludes with an FAQ.

Wallets:

0xBitcoin is compatible with all Ethereum wallets that store ERC-20 tokens.


Technical

0xBTC/BTC

Daily:

0xBTCBTCDaily

Whilst there is relatively little price-history available for 0xBitcoin, there are numerous, clear short-term market cycles that have played out, as can be seen on the above chart. Further, it’s quite clear that each short-term cycle has seen successive lower peaks and lower troughs since September 2018.

Now, 0xBitcoin formed its all-time high upon first listing on exchanges in June 2018 at ~65k satoshis, but it has spent very little time above 15k satoshis. The vast majority of its price-history has occurred between its all-time low of 1600 satoshis from last month and its cyclical high of 14700 satoshis in late August 2018.

The analysis here is quite simple: 0xBitcoin is in a long-term downtrend, with short-term trendline resistance that was broken last month. Price has been capped by the 200-day moving average for its entire existence. What I would like to see to indicate a reversal, at least for another short-term cycle if not for the long term, is for price to break above support turned resistance at ~3k satoshis and close the Daily above the 200MA.

Those less risk-averse, like myself, could also look at this current range as the accumulation range for the next short-term market cycle, thus entries here would have downside risk of above 35% on a Daily close below 1600 satoshis. The first upside target would be the 200MA, which is currently around 4500 satoshis, thus offering around 80% of reward and a reward-to-risk ratio of a little over 2; not particularly attractive, however.


Conclusion

This report is now over 4,000 words, and it is time to draw it to a close.

My final grading for 0xBitcoin is 7 out of 10.

Here, you can find my grading framework, for reference.

Lastly, here is a link to a Google Sheets file with any significant data from previous reports compiled for cross-comparative purposes. I will keep this updated as I continue to write these reports.

I hope this report has proved insightful and that you’ve enjoyed the read! Please do feel free to leave any questions in the Comments, and I’ll answer them as best I can.


If you’ve enjoyed this post and want to receive new posts straight to your inbox, I’ve set up a RSS-to-Email feed that will be sent out weekly; every Monday, 12pm. Just submit your email and I’ll make sure you’re included in the list. Cheers.

Market Outlook #40

AD: Before I begin this post, I’d like to briefly mention Bitcoin.Live, who are sponsoring my blog.

Bitcoin.Live offers regular, detailed content on their free-to-access blog, created by a panel of analysts (including Peter Brandt), and covering all manner of market-related topics. I found both the video material and the blog posts to be genuinely insightful, with many differing analytical perspectives available for viewers and readers. The platform also offers premium content for paying subscribers who find value in the free material, with daily videos, alerts and support provided. Check it out and bookmark the blog.


Market Outlook #40 (16th June 2019)

Welcome to the 40th Market Outlook, and what a week it has been. I took a short holiday mid-week and returned to dynamic movements across-the-board. As such, in today’s post, I’ll be covering Bitcoin, Ethereum and Monero in depth, plus taking a look at Dash.

Bitcoin:

Daily:

BTCUSDDaily

4H:

BTCUSD4H

Price: $9284

Market Cap: $164.911bn

Thoughts: In last week’s Market Outlook, I outlined the short-term bearish outlook for Bitcoin, with bullish market structure having been broken. However, I also mentioned that a break above trendline resistance and horizontal resistance at ~$8250 would revert market structure back to bullish, and it didn’t take long for this to happen, cementing the bullish momentum for Bitcoin.

As can be seen on the Daily chart, the large period of consolidation between $7-9k was occurring on declining volume, as this recent ascent to new highs has also been doing. We are yet to see daily volume break its downtrend and yet the uptrend for price remains very strong. I have depicted where I expect the next area of short-term resistance to be found, which is the psychological and historically significant area around $10,000. However, looking at the equal highs marked out around $11,700, these seem ripe for picking, and I expect any move above $10k will be swiftly followed by a move up towards this area; there is also confluence here with the 1.618 extension of the current swing.

Now, looking at the 4H, we can actually see volume more accurately on this recent advance, with volume steadily rising as price broke above $9100. This advance also mirrors the advance occurring on the Daily timeframe, with the rally growing steeper with each move up. The next area of interest on this timeframe is that psychologically-relevant $10k spot… this is also where I expect news and media outlets to begin discussing Bitcoin again more frequently.


Ethereum:

ETH/USD

Daily:

ETHUSDDaily

4H:

ETHUSD4H

ETH/BTC

Daily:

ETHBTCDaily

Price: $276.12 (0.0297 BTC)

Market Cap: $29.409bn (3,167,871 BTC)

Thoughts: There is rather a lot going on with Ethereum at the moment on its various charts, but let’s begin by looking at ETH/USD on the Daily timeframe:

Here, we can see the strong rejection and continuation off the 360-day moving average; a sign that the bullish trend is very much still in play. Further, we can see that each successive peak in ETH/USD has occurred on rising volume, which is something I shall be looking for on the next leg up. RSI has also reset heavily on the retrace to $225, with plenty of room for price to move upwards towards the next area of resistance, which looks to be between $330-350.

Looking at the 4H ETH/USD chart, we can see that market structure turned bullish after a period of decline when $250 was reclaimed, following a break above and successful retest of trendline resistance. The 200MA is currently supporting price, alongside the strong uptrend that began last week. Volume is largely flat for now, but I expect this will change upon a break above $290. $333 is the 1.618 extension of this recent range, and thus likely where price will move towards over the coming weeks.

Now, ETH/BTC is a different beast entirely, with it currently unsure on its relationship to BTC/USD. Sometimes, when Bitcoin rises, ETH/BTC is stagnant; sometimes it falls; sometimes when Bitcoin falls, ETH/BTC rises; and so on…

Thus, with such chop and change, it is important to retain a higher timeframe perspective, and the Daily chart shows a retrace from the highs of mid-May into the Daily Breaker on declining volume (accounting for one anomalous day). These are all signs of an impending bullish continuation. The one thing that looks rather bearish is the fact that ETH/BTC closed above its 200-day moving average on significant volume in May, but has lost it recently and is now being capped by it. However, as long as price remains inside or above the Daily Breaker, I am bullish on Ethereum, overall.


Monero:

XMR/BTC

4H:

XMRBTC4H

Price: $96.32 (0.01049 BTC)

Market Cap: $1.641bn (176,861 BTC)

Thoughts: Monero has formed a new range since finding its potential cyclical low in May at 0.01 BTC, with range resistance at 0.0117 BTC, local support at 0.0104 BTC (where it currently lingers) and the range pivot at 0.0108 BTC. This pivot was lost this past week when alts all dumped in harmony, with it now acting as short-term resistance. It is vital for Monero to hold this range (in particular, above 0.01 BTC), as this is critical historical support, with very few significant levels beneath it for a long way down. Until we break above 0.0117 BTC, however, there is no confirmation of a new bull cycle beginning.


Dash:

DASH/USD

Daily:

DASHUSDDaily

DASH/BTC

Daily:

DASHBTCDaily

Price: $160.03 (0.01724 BTC)

Market Cap: $1.419bn (152,892 BTC)

Thoughts: DASH/USD is in a very good position at the moment, similar to ETH/USD in its recent retest and continuation off the 360-day moving average. It also has a strong uptrend on the Daily timeframe, with the trendline support holding on several occasions. Volume is particularly high of late, with declining volume on retracements and increasing volume on rallies, indicating that the trend remains healthy. The 1.618 extension of the most recent swing would see prices at historical support turned resistance of $250.

This thesis is backed up when taking a look at DASH/BTC, which, though having declined towards its potential cyclical low of 0.0165 BTC this past week, seems to be rejecting a move below this level. Further, the decline since the highs of mid-May has occurred on decreasing volume, with the 200MA having capped price back then. Short-term support turned resistance is ahead at 0.0183 BTC and a move back above this level on significant volume would indicate that the cyclical low is indeed in for DASH/BTC.

And that concludes this week’s Market Outlook. I hope you’ve enjoyed the read!


If you’ve enjoyed this post and want to receive new posts straight to your inbox, I’ve set up a RSS-to-Email feed that will be sent out weekly; every Monday, 12pm. Just submit your email and I’ll make sure you’re included in the list. Cheers.

Coin Report #24: Quant

AD: Before I begin this post, I’d like to briefly mention Bitcoin.Live, who are sponsoring my blog.

Bitcoin.Live offers regular, detailed content on their free-to-access blog, created by a panel of analysts (including Peter Brandt), and covering all manner of market-related topics. I found both the video material and the blog posts to be genuinely insightful, with many differing analytical perspectives available for viewers and readers. The platform also offers premium content for paying subscribers who find value in the free material, with daily videos, alerts and support provided. Check it out and bookmark the blog.


N.B: The following Coin Report on Quant is community-selected.

Welcome to the 24th Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of Quant. This will comprise of an analysis of a number of significant metrics, an evaluation of the project’s community and development and an overview of its price-history. The report will conclude with a grading out of 10. I hope you enjoy the read!

Introduction

I think it’s important to begin by mentioning that Quant was not actually scheduled to have a report written, as it placed 3rd in the Q2 community poll, behind XDAG and Ryo.

However, having done preliminary research on XDAG for its report, I found there to be numerous gaps that would have necessitated a very low rating, despite potential fundamental soundness. In short , the project lacked any degree of liquidity or trade volume and was not listed on any recognised exchanges. As such, I decided to postpone that report until a later date, when these stipulations have been met, so that the report will be more substantial and reflect more fairly on the project itself.

Thus, the report will now be written on Quant; a project that has a great deal of support on Twitter but one that I, until completing my research, had little clue about.

I hope this report will prove objective where it must be and fair on more subjective matters. For those who’d like to learn a little more about Quant prior to reading this report, here are some primary links:


Fundamental

General:

Name: Quant

Ticker: QNT

Algorithm: ERC-20

Sector: Blockchain Operating System

Exchanges: Hotbit, IDEX, Upbit, Bittrex, FatBTC, CoinExchange and COSS

Launch Overview

Quant Network was incorporated in October 2017 in Switzerland, acting as the company overseeing the development of a technology named Overledger. Overledger was conceptualised in March 2017 as a blockchain operating system, facilitating communication between multiple blockchains.

The project itself launched with an ICO in Q1 2018, during which QNT – an ERC-20 token – was created. This ICO raised $11m and 9.7mn QNT of an available 31mn QNT were distributed to retail and institutional investors. Originally, the QNT token was set to have a maximum supply of 45.467mn QNT, but around 30mn QNT have been burned, comprising of unsold tokens from the ICO and a partial burning of founders’ funds amounting to 9.5mn QNT in September 2018. Thus, ~14.5mn QNT are in existence, with 4.5mn owned by the Quant Network team.

Price-History Overview

As the project was only launched a little over a year ago, and the token was first listed on exchanges in August 2018, there is only around 9 months of price-history available for QNT. Whilst I shall dive into the details of these 9 months a little later, for now it will suffice to say that QNT formed its all-time high of 160k satoshis in February 2019, which coincided with its all-time high against the Dollar of around $5.90.

Project Overview

Quant Network is seeking to utilise its Overledger technology to facilitate seamless communications between different DLTs, functioning as the world’s first blockchain operating system.

As stated in its Business Paper:

“Overledger is the blockchain Operating System (OS) of the future. It empowers applications to function across multiple blockchains. Overledger securely removes barriers prohibiting communication across multiple blockchains, providing endless possibilities for data and applications.”

This is certainly a novel proposal and one that I had not yet come across; though I have found that there are a number of projects dealing with cross-chain interoperability of blockchain assets, I have not found one seeking to do quite what Quant is seeking to do. I am eager to discover the progress that has been made since its inception…

Let’s begin with some Metric Analysis:


Metric Analysis:

Below are listed a number of important metrics, all of which are accurate as of 10th June 2019. For anyone reading this who has yet to read a Coin Report, it might be worth reading this section of the first report, where any potentially unfamiliar terms are explained. For any terms or metrics specific to this post, I will provide explanations besides the figures.

Metrics:

General:

Price: $3.59 (46,378 satoshis)

Circulating Supply: 9,777,236 QNT

Total Supply: 14,612,493 QNT

Exchange Volume: $3.99mn

Network Value: $35.16mn (4534.39BTC)

Maximum Supply: 14,612,493 QNT

% of Max. Supply Minted: 100%

Network Value at Max. Supply: $52.548mn

Exchange Volume-to-Network Value: 11.38%

Category: Midcap

Average Price (30-Day): $2.44

Average Exchange Volume (30-Day): $2.7mn

Average Network Value (30-Day): $23.898mn

Average Exchange Volume (30-Day)-to-Network Value: 11.3%

Volatility* (30-Day): -0.1361

Average Daily On-Chain Transactions (7-Day): 347

Average Daily Transactional Value** (7-Day): $4.163mn (source)

NVT*** (7-Day): 8.44

% Price Change USD (30-Day): +86.6%

% Price Change USD (1-Year): N/A

USD All-Time High: $5.85

% From USD All-Time High: -38%

Premine % of Max. Supply: N/A

Premine Location: N/A

Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 6.55 BTC

Liquidity-to-Network Value %: 0.14%

Supply Available on Exchanges: 202,086 QNT

% of Circulating Supply Available on Exchanges: 2.07%

*Volatility is calculated by taking the average price over the given time-period, calculating the difference between it and the highest price and it and the lowest price over that same time-period, and multiplying those figures together. The closer to 0, the less volatility during that period, and vice-versa. Read this for more on volatility.

**Transactional Value in $ is calculated by taking the daily transactional value in Quant and multiplying it by price. This particular figure is skewed by the transactions that occurred on 8th June, as can be seen in CoinPaprika’s chart.

***NVT is calculated by dividing the Network Value by the Average Daily Transactional Value. See here for more on NVT.

Supply Emission & Inflation:

Block Reward Schedule: N/A

Average Block Time: N/A

Current Block Height: N/A

Annual Supply Emission: 0

Annual Inflation Rate: 0%

Circulating Supply in 365 Days: 9,777,236 QNT

Distribution:

Address Count: 3,591

Supply Held By Top 10 Addresses: 49.29%

Supply Held By Top 20 Addresses: 58.96%

Supply Held By Top 100 Addresses: 77.49%

Inactive Address Count in Top 20 (30 Days of No Activity): 10

ICO:

The following details were taken from this source and here.

ICO Token Sale: 19th March – 30th April 2018

Total Tokens: 45,467,000 QNT

Tokens Available For Sale: 31,000,000 QNT

Average ICO Price Per Token (including pre-sale): $1.13

Total Raised: $11,000,000

Tokens Sold: 9,777,236 QNT

Tokens Burned: 9,545,765 QNT (source)

Analysis:

There’s rather a lot to work through here, but I’d like to begin as this section often does; with a glance at the metrics most related to transactional activity, as this gives us an indication of the non-speculative demand for any given project.

Now, I’d like to mention, in case anyone missed the footnote in the relevant section above, that QNT’s on-chain transactional value has been skewed significantly by anomalous activity on the 8th June. Nonetheless, I have included this data within my calculations.

According to EtherScan, QNT experienced an average of 347 transactions per day for the past 7 days, amounting to Average Daily On-Chain Transactional Value of $4.163mn. Now, that is huge. So huge, in fact, that it gives QNT a 7-day NVT ratio of 8.44; indicative of serious undervaluation, even relative to Bitcoin, which currently has a NVT ratio of about 18. This is, as I mentioned, skewed by the unusually high transactional volume on the 8th June. If I discount that day of data, the Average Daily On-Chain Transactional Value amounts to a still-impressive $1.037mn, which would give QNT a NVT ratio of about 35. Clearly, there is a great deal of non-speculative interest in the project, at present.

Now, I’d like to work through the remaining General metrics, before taking a look at Quant’s (non-existent) Supply Emission and concluding this section with some Distribution analysis.

Firstly, let’s take a look at Quant’s Volatility, which came in particularly high. I calculated its 30-day figure to be -0.1361, which places Quant 3rd-highest amongst coins previously reported on, indicating to me that its accumulation period is now over and thus perhaps prime entries are passed. We shall delve into this in more detail in the Technical section.

Now, let’s take a look at the two Liquidity-related metrics:

For buy-side Liquidity, I calculated that there was 6.55 BTC of buy support within 10% of current prices across listed exchanges, equating to 0.14% of its Network Value. This is not particularly strong given that it is listed on one of the larger exchanges; Bittrex. Most coins that suffer from poor buy-side liquidity are those that remain on smaller exchanges. This places Quant 5th-from-bottom of coins previously reported on…

Looking at the sell-side, I calculated there to be 202,086 QNT available for purchase on the orderbooks, equating to 2.07% of the circulating supply. Whilst marginally better than its buy-side counterpart, this still places Quant 6th-highest for Circulating Supply Available on Exchanges, indicating that there is not an overwhelming desire to hold QNT at present.

Before I move on from the General metrics, let’s take a look at those related to volume:

Quant traded ~$4m of Exchange Volume over the past 24 hours, equating to 11.38% of its Network Value; a monumental figure. Further, its Average Daily Volume for the past 30 days was $2.7mn, equating to 11.3% of its Average Network Value for the same period. These are impressive figures and indicative of strong speculative interest; however, around half of the volume is likely a symptom of wash-trading on less reliable exchanges like FatBTC and Hotbit. Nonetheless, even with this wash volume accounted for, the figures are strong and the market is clearly interested in Quant.

With regards to Quant’s supply emission, in short, there is none, as tends to be the case with ICO’d ERC-20 tokens. Thus, annual inflation is a wonderful 0%; great for the speculator. This, in essence, means that there should be no real headwinds for price growth.

Let’s wrap up this section with a look at Distribution:

Looking at the Quant rich-list, I found that the top 10 addresses control 36.49% of the original maximum supply (not total nor circulating supply) of ~45.7mn QNT; the top 20 control 39.85%; and the top 100 control 45.94%.

Now, whilst it may seem rather concentrated within the top 10 and yet strangely decentralised amongst the top 100, the reason for this is simply that the #1 richest address is the burn address of the Quant team, equating to 9.5mn QNT. Further, Etherscan does not account for the change in supply to Quant’s current total supply of 14.6mn.

Thus, in reality, the figures are entirely different:

The top 10 control 49.29% of the current total supply of 14.6mn QNT; the top 20 control 58.96%; and the top 100 control 77.49%.

With regards to the activity of these large holders, 10 of the top 20 were inactive in the past 90 days, and the 4th and 8th-richest addresses belong to IDEX and Bittrex, respectively. Of the remaining addresses. the 2nd-richest added 2.6mn QNT in the past 3 days; the 3rd-richest added 1mn in the past 3 days; the 9th-richest added 4.5k; the 11th-richest added 70k; the 12th-richest distributed 1k; the 13th-richest distributed 2.5k; and the 14th-richest added 40k. Overall, there is clearly buying taking place amongst the larger holders.

Now, onto the Quant Community:


Community:

There are two primary aspects of community analysis: social media presence and Bitcointalk threads. I’ll begin with the former before moving on to the latter.

Social Media:

Concerning social media presence, there are four main platforms to examine: Twitter, Facebook, Telegram and Discord.

Quant is present on all platforms except Facebook and Discord. To begin, let’s look at the various social metrics that I calculated from the Quant Twitter account:

Twitter Followers: 7,131

Tweets: 705

Average Twitter Engagement: 2.33%

Facebook Likes: N/A

Facebook Posts (30-Day): N/A

Average Facebook Engagement: N/A

As usual, I will be using RivalIQ‘s social benchmark report for evaluation purposes.

Twitter:

Quant has a relatively small Twitter audience of 7,131, which places it 7th-bottom amongst coins previously reported on. However, it has exceptional engagement, with its average engagement rate at 2.33%. This is 48.5x greater than the average across all industries and 291x greater than the average of the Media industry. Further, it is the 4th-highest of all coins from prior reports. Very impressive. There is a palpable excitement around Quant on Twitter…

Telegram:

The Quant community Telegram group is comprised of 4,895 members, whilst its Announcements channel has 1,688 members. I shall be focusing on its community group here.

The pinned message contains all relevant resources for new users, with links to exchanges and the latest news, as well as social links and token information. It also mentions that the Quant team join the group once fortnightly to answer community questions.

Given the relatively small size of the group, the activity level is very impressive, as I failed to even keep up with the incoming messages as I scrolled through to discover more about the project. The discussion is truly 24/7, with the community clearly committed to the project and excited about its future.

Over the past week or so of discussion, I found that Quant has recently partnered with SIA to deliver interoperability to banks and financial institutions by integrating Overledger into their private infrastructure network connecting 570 banks. This is huge news for the legitimacy and longevity of the project and its technology. It is also huge for the value of the QNT token, as use of Overledger technology necessitates the purchase of QNT. There are also numerous press releases regarding the partnership posted to the Telegram.

Further, I found that Quant is currently in negotiations with top-tier exchanges; that Overledger usage will be paid for with various licensing fees at a fixed fiat rate, but that the equivalent QNT will be bought up by the Quant Treasury and locked up for the license period, thus reducing friction for financial institutions looking to utilise the technology; that the team is currently hiring; that there are currently over 200 private organisations developing on the platform; that QNT will remain an ERC-20 token, as it is perfect for utility purposes; that the Enterprise version of Overledger is already live and the Community version is likely going live this quarter; that QNT will be used as the means by which digital asset transfers between banks are signed and encrypted (interoperability); that the public SDK is currently being worked on; that a new office is in the process of being set up in another jurisdiction; and that, most signficantly, Overledger can be used to connect isolated networks, not just two differing DLTs.

Woah, there is a lot going on with Quant, clearly. In fact, there is almost too much for an individual to grasp without considerable hours spent researching; not a bad problem to have as a pioneering project, of course.

BitcoinTalk:

The Quant BitcoinTalk thread was created on March 26th, 2018, and has since generated 322 posts spanning 17 pages in 441 days. This equates to 0.73 posts per day, on average. However, in the past 90 days, the thread has had 15 posts via 7 individual posters, giving an average of 0.17 posts per day; a significant decline on an already low level of engagement.

Regarding the announcement itself, it revolves around Overledger and does not do much to incorporate Quant Network within it, describing the project as “the first Blockchain operating system that facilitates the development of multi-chain applications.” It also describes use-cases and features, such as connecting blockchains and connecting the Internet to the blockchain.
Most significantly, the problem being solved is emphasised, and that is the inability for blockchains to communicate with one another. The announcement asks the question, “Why can’t a smart contract executed on Ethereum be recognised by the Hyperledger blockchain?” Unfortunately, it doesn’t contain any basic information regarding the QNT token itself or the team, with no sign of any FAQ for potential new users.

Regarding recent content of the thread, in the past 90 days, Quant has been accepted into the Oracle ecosystem; listed on Upbit and CoinExchange; become an AWS partner; and been featured on Sky TV. Further, numerous AMAs have been pushed out, but there has been no engagement since early April.

Let’s move onto Quant’s Development:


Development:

For the following Development analysis, I will be evaluating project leadership, the website, the roadmap, the whitepaper, the wallets and finally providing a general overview:

Project Leadership:

There are 23 employees listed on LinkedIn and 3 listed on Github. There is no information regarding the team on the website.

It would be helpful as a potential new user or investor to have this information readily accessible. I did manage to find a little info on the team here.

Gilbert Verdian is Quant Network’s CEO, and is currently the chair of the UK’s national committee for Blockchain and DLT. He has over 20 years experience in information services. Colin Paterson is the company’s  CTO, and he co-founded Trudera, which has created patented technology that
will be implemented in Overledger. There is also a Chief Architect with 30 years of experience, plus 4 core developers. Lastly, Guy Dietrich, MD of Rockefeller Capital, was recently appointed to the board. The project also has numerous advisors with experience in information technology, DLT, business management, governance and compliance. They are currently hiring.

There is a great deal of strength and professionalism here, and, having looked through their LinkedIn employees list, a balance that is rare for many projects in this space.

Website:

www.quant.network

The website is a little lacklustre, relative to the rest of my findings during this research process. Whilst there is some moderate sense of brand identity, it isn’t particularly strong, and the overall design of the site is unengaging. The navigation menu does link to important aspects of the project, such as the products offered (Overledger, Atlas and GoVerify), but it is a little muddled; for example, why is Careers in the sub-menu for About Us? And why does About Us not contain any pages relating to the team behind the tech?

The homepage itself does a great job of highlighting the numerous use-cases developed by Quant, with concise but informative sections on interoperability and its advantages; the seamlessness facilitated by Overledger; and the “future-proof” nature of this service. Further down the homepage, we can find a brief description of Overledger and its benefits, alongside a similar feature on GoVerify; a product of Quant’s that “allows people to verify and check that any email, SMS, letter of phone call received is legitimate”. I’m surprised that a description of Quant Atlas isn’t native to the homepage also, if the other two primary solutions offered by Quant are. Atlas, as can be found on its own separate page, is a solution to cross-border Open Banking, providing a means by which users can make seamless payments to international banks.

Further still down the homepage, we find a list of Quant’s prestigious partners, such as Oracle, Hyperledger, Nvidia, pay.uk and AWS. There is also a slideshow of recent news events to remain updated and links to the Quant whitepaper and business paper.

Social links are all found in the footer.

What I do like is that there is a native blog that is regularly updated with all manner of relevant information regarding the project. Most recent is the news that Quant is partnering with SIA.

Overall, the website is informative but there is much that could be done to improve it.

Roadmap:

The roadmap is found in section 6 of the Business Paper, linked in the next section. It is not available on the website.

It is provided in text form within the Business Paper, with a historical timeline of events since the project’s inception, along with an indication as to the future vision of the project. From a user perspective, this could be made more accessible and more informative by simply having the roadmap native to the website and providing some sort of progression measure, as well as links to further information.

The roadmap begins with Overledger’s inception in July 2015, but it wasn’t until March 2017 that the Overledger operating system was conceptualised and not until October 2017 until Quant Network AG became incorporated; thus this marks the beginning of Quant as a business.

November and December 2017 saw the prototype Overledger developed, as well as a patent filed. Q1 2018 initiated the private sale of tokens to institutions, with March-April launching the public sale. In Q2 2018, TrustTag beta was released (if the roadmap was standalone, we’d need more details on these kinds of events, as this tells us too little). In Q3 2018, the Quant SaaS product was set to be released, with some patents filed. In Q1 2019, there is a mention of the  Quant App Store, plus the Open Source SDK, but little else is mentioned. Finally, in Q3 2019, there is a mention of the Quant Enterprise Mapps (multi-chain applications) and Treaty Contracts.

Overall, this roadmap is very much bare-bones and insufficient. It needs more detail and to be standalone to ensure user accessibility.

Whitepaper:

A whitepaper is available for a more technical overview of development, but I’ll be evaluating the more concise Business Paper, as this should be more useful for the layman or speculator.

The document is 29 pages in length and begins with an Executive Summary:

It describes Overledger as the “blockchain Operating System of the future. It empowers applications to function across multiple blockchains.” The key takeaway here is that they are seeking to solve communications problems between networks by facilitating seamless cross-chain interaction. The three use-cases emphasises are multi-chain applications, unlimited access to vendors and cross-chain data transfers, with the ultimate vision being trustless communication.

The Business Model section of the document discusses the value of the QNT token, with revenue streams for the business coming from four primary sources: transaction fees; Quant SaaS products; Quant Enterprise and Middleware products; and Licensing of Quant IP. Further, there will be a Quant App Store for multi-chain applications, where developers can release free or paid applications, with QNT acting as a gateway for usage of specific applications. In the Quant SaaS section, there is discussion of the patented TrustTag technology that will be utilised for verification purposes (now employed within GoVerify).

Tokenomics is one of the meatier sections of the document, with details provided of the proposed token sale that took place in Q1 2018, as detailed earlier in this report. Here, readers can find the initial allocation figures, though these are outdated following the supply burn of September 2018.

Finally, as discussed in the above section, there is a brief roadmap, with the document concluding with an Appendix

Wallets:

QNT can be stored on all compatible ERC-20 wallets.


Technical

Daily:

QNTBTCDaily

Despite the fact that QNT only has around 8 months of price-history, the market cycle that has played out in that time is very much textbook, with the all-time high that formed at ~160k satoshis acting as QNT’s first euphoria, followed by a bear cycle that has led to a likely cyclical bottom being found at ~23k satoshis.

As can be seen on the chart, volume has been steadily rising since this bottom has been found, with price breaking the bearish market structure earlier this month, as it closed above 36k satoshis. Since then, price has struggled at the 200-day moving average, failing to close above the support turned resistance at ~46k satoshis. Nonetheless, it seems clear that a new cycle has begun, and that we are currently seeing the disbelief phase play out. The opportune entry for a cyclical position has, of course, passed, as the range between 23k-36k would have been the perfect buying opportunity. That said, those seeking to enter a position can do so here, with a stop-loss on a daily close below 36k satoshis (~20-25% of risk). More risk-averse speculators can enter with a stop at the 23k support level, though this presents 50% of downside risk.


Conclusion

This report is now over 4,000 words, and it is time to draw it to a close.

My final grading for Quant is 8 out of 10.*

* I really would love to give Quant a 9; in fact, it is deserving of a 9 simply for its developmental achievements thus far. However, my framework for grading necessitates greater liquidity for a 9 to be scored. I suspect that I shall have to update this score soon enough, as larger exchanges list the token.

Here, you can find my grading framework, for reference.

Lastly, here is a link to a Google Sheets file with any significant data from previous reports compiled for cross-comparative purposes. I will keep this updated as I continue to write these reports.

I hope this report has proved insightful and that you’ve enjoyed the read! Please do feel free to leave any questions in the Comments, and I’ll answer them as best I can.


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