Market Outlook #15

Market Outlook #15 (9th December 2018)

Welcome to the fifteenth instalment of the Market Outlook series. We’ve had some noteworthy price-action over the past week across-the-board, with some short-term reversals looking imminent after a period of prolonged bleeding. In today’s post, I’ll be covering Bitcoin, Monero, Ethereum and ZCash.

On with the show:

Bitcoin:

Price: $3628

Market Cap: $63.18bn

Thoughts: I have opted to only post the hourly chart for BTC/USD this week, as this is where all of the action is taking place. Price broke below the support at ~$3750 and made new lows, bottoming out at a little below $3300; all the while, it continued to respect the short-term trendline resistance that had formed. Since finding a local bottom, price has experienced significant volume on two buyups that have caused a series of higher lows and higher highs to form on this time-frame. The local resistance at $3476 has now become support as Bitcoin attempts a breakout from the trendline resistance. All that being said, there is still major resistance ahead at $3750 – an area which remained resistance on the most recent test. What I am looking for is more volume to come in and carry price above this significant pivot level. If we can get a higher time-frame close above $3750, that would open up the likelihood of a move back towards $4400 to target the old range highs that are sitting there. This is a big if, but if it plays out, we could well see a short-term reversal, which I would imagine will bring the rest of the market up with Bitcoin. One supporting factor to this scenario is that peak selling volume occured on the initial drop to $3750 back in late November – Bitfinex has since not experienced such a high level of sell pressure. However, failure to crack the ~$3750 resistance would undoubtedly see price trading below $3200 over the coming days.


Monero:

XMR/BTC

Price: $48.10 (0.01326 BTC)

Market Cap: $800.138mn (220,545 BTC)

Thoughts: XMR/BTC recently swept the local low that had held firm for ~3 months previously, but it refused to close the daily candle below that low. Price continues to trade below the trendline resistance, but, when the hourly chart is taken into consideration, it seems as though a bottom is forming at this critical support. Price bounced hard after sweeping the low but ran straight into the level of prior support now turned resistance; it refused to give way. Since, price has formed a higher low and looks to be ready to retest that resistance.


Ethereum:

ETH/BTC

Price: $97.19 (0.02679 BTC)

Market Cap: $10.078bn (2,778,028 BTC)

Thoughts: ETH/BTC has played out very similarly to XMR/BTC over the past week, with price break below the short-term range support and experiencing a significant dump below the local low from September. Unlike Monero, Ethereum did close a daily candle below this low; but, sure enough, the following candle reclaimed the critical support level. Again like Monero, price continues to trade below short-term trendline resistance, but has formed a series of higher highs and higher lows on the hourly chart. ETH/BTC recently traded into the mitigation block at 0.0255 BTC, and looks poised to move back into the range above 0.028 BTC. A higher-time frame close within the range would indicate further upside and a reversal underway.


ZCash:

ZEC/BTC

Price: $61.53 (0.01696 BTC)

Market Cap: $333.091mn (91,811 BTC)

Thoughts: This past week, ZCash did what ZCash does best: fuck bulls and bears up in equal measure. On the news of a Coinbase Pro listing, ZCash jumped, moving above range resistance briefly before being swatted down again; but not before forming an equal ‘double top’ around 0.0223 BTC. Price then dumped straight back into the range and further, making a new all-time low against Bitcoin. This move swept the equal ‘double bottom’ that had formed at 0.016 BTC, but the daily candle closed bullish. Price has since formed a short-term uptrend. It remains to be seen whether that move was a stop-hunt or the beginnings of further downside, as price has yet to retest the support turned resistance at 0.01806 BTC. If ZCash can close the daily above this level, I believe new highs will be seen soon after.

That concludes this fifteenth Market Outlook. I hope you’ve enjoyed the read. Let’s cross our fingers for the bullish price-action that seems overdue over the next week.


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Coin Report #7: Bismuth

N.B: In the spirit of full transparency, the following Coin Report is the third Sponsored Post on my blog. The Bismuth team recently contacted me with a request to write up a Coin Report on the project. After they had agreed to my sole stipulation that this report would conform to the rigour of the previous reports, with all strengths and weaknesses being explored and evaluated, I agreed to write the report. Regarding future Sponsored Posts, I have 2 spots open before the end of January 2019. If you would like a Coin Report written for a project, please ask the team to get in touch. Further, next week’s Coin Report will be selected via community choice: vote here to choose which altcoin you want featured.

Welcome to the seventh Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of Bismuth. 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. (These reports were previously graded out of 5.) I have also included a spreadsheet with any significant figures and metrics from previous reports at the end of this one for cross-comparative purposes. The previous reports will have a grading out of 10 assigned, too. I hope you enjoy the read!

Introduction

Bismuth is a project that has been on my radar for quite a while now for a multitude of reasons that I’m sure we’ll delve into later. The primary reason, however, is that it is one of the rare cryptocurrencies that has been entirely written from scratch, and one of even fewer cryptocurrencies that is truly innovative in its form.

Having now completed my research for this report, there is much I am excited about and much I would like to address regarding where I think the project is falling short. I believe this report will serve to illuminate what I feel is strong development, in particular, that is flying under the radar, and weak marketing, as we’ll discover. Overall, I hope it will prove objective concerning the facts and fair with regards to more subjective aspects of the report.

If you’d like to find out a little more about Bismuth prior to reading on, here are some primary links:


Fundamental

General:

Name: Bismuth

Ticker: BIS

Algorithm: SHA224

Sector: Decentralised Applications Foundry

Exchanges: Cryptopia, Qtrade & TradeSatoshi

Bismuth was launched in May 2017 with no ICO and no premine, and was written from scratch in Python; the first cryptocurrency of its kind. The coin operates on a Proof-of-Work consensus mechanism under the SHA224 algorithm, with Hypernodes that operate on a separate, secondary blockchain under a Proof-of-Stake consensus mechanism. The Proof-of-Work phase will last ~13.5 years post-launch. Much like Dero, from the previous Coin Report, Bismuth has a progressively diminishing block reward. We’ll get into how this affects supply emission in the following section.

Having been launched over 18 months ago, Bismuth has a little more meat to its price-history than many of the coin I’ve recently written reports for. It has experienced a full market cycle, finding its peak of ~64k satoshis in January 2018, as the vast majority of alts did. Bismuth has since followed the trajectory of the entire market and experienced a slow bleed from those highs to the prices we see today. More on this a little later…

As a project, Bismuth seems very much focused on attracting the more technical users in the space, at least for the time being, as I’m sure you’ll agree as we traverse through this report. In their own words, “Bismuth is trying to be the blockchain lego… Bismuth is trying to be modular, extensible and as simple as possible with only about 2400 lines of code.” This is a developer’s dream, one would imagine, but it does come with some difficulties for the layman, as we’ll discover. Let us take a look at just how well Bismuth is doing after ~18 months in existence:


Metric Analysis:

Below are listed a number of important metrics, all of which are accurate as of 4th December 2018. 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: 6906 satoshis ($0.28)

Exchange Volume (24H): $18,197

Circulating Supply: 14,124,968 BIS

Total Supply: 14,838,112 BIS

Maximum Supply (After PoW phase excluding 10% Dev Fund rewards): 63,922,918 BIS

% of Max. Supply Minted: 23.21%

Network Value: 975.47 BTC ($3.925mn)

Network Value at Max. Supply: $17.764mn

Category: Midcap

Exchange Volume-to-Network Value: 0.46%

Average Price (30-Day): $0.47

Average Exchange Volume (30-Day): $15,388

Average Network Value: $6.533mn

Average Exchange Volume-to-Average Network Value: 0.24%

% Price Change USD (30-Day): -49.6%

% Price Change USD (1-Year): –73%

USD All-Time High: $8.94

% From USD All-Time High: -96.8%

Premine % of Max. Supply: 0 (10% Dev Fund Rewards)

Premine Location: 4edadac9093d9326ee4b17f869b14f1a2534f96f9c5d7b48dc9acaed 

Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 0.753 BTC

Liquidity-to-Network Value %: 0.08%

Amount Available on Exchanges: 693,273 BIS

% of Circulating Supply Available on Exchanges: 4.91%

Staking & Masternodes:

Note: Bismuth masternodes are referred to as Hypernodes, and are available with collateral of 10k BIS, 20k BIS or 30k BIS. For the purposes of these metrics, I am using 10k BIS collateral for the calculations. Further, I have used https://hypernodes.bismuth.live/?page_id=21 for masternode data. For more info on Hypernodes, see https://github.com/bismuthfoundation/Bismuth-FAQ/blob/master/Hypernodes/HyperNodes_FAQ.md.

Masternode Price: $2,779.03

Masternode Collateral Size: 10,000 BIS

Masternode Count: ~430

Masternode ROI (Annual): ~9.78%*

Masternode Reward / Block Reward: Rewards proportional to collateral. 0.8 BIS per block attributed to Hypernodes. 1152 BIS per day.

Supply Locked in Masternodes: ~4,300,000 BIS

Masternode Network Value: $1.194mn

MNV / Network Value: 30.44%

*To calculate minimum annual ROI for Hypernodes: Annual Hypernodes Emission / Supply Locked in Hypernodes = 420,480 / 4,300,000 = -.09778 = 9.78%

Supply Emission & Inflation:

Note: I have used https://github.com/hclivess/Bismuth/blob/master/bismuth-supply.md for supply emission information. Bismuth supply emission is quite unclear across different sources but this was provided to me by the team as the most updated source. The table at the bottom of the link is useful.

Block Reward Schedule: Diminishing block rewards from 15 at block 1 to 0 at block 7,100,000. Current block reward is ~12.32. Total supply from PoW phase = ~63.9mn BIS + 10% for Dev Fund = 10.371 BIS average block reward during PoW. 0.8 BIS reward per block for Hypernodes, starting at block 800,000 and taken from PoW block reward. 420k BIS per year emission post-block 10,000,000.

Average Block Time: 60 seconds

Current Block Height: 936575

Annual Supply Emission: using the current block reward of 12.32 BIS to provide a maximum annual supply emission: 12.32 * 1440 (blocks per day) * 365 = 6,475,392 BIS (447.19 BTC at current prices). Note that this is a maximum figure for emission, as rewards decrease with each block.

Annual Inflation Rate: 45.84%

Circulating Supply in 365 Days: 20,600,360 BIS

Note: below are printed two inflation curves sourced from the Bismuth Bitcointalk ANN:

Distribution:

Address Count: 2566

Supply Held By Top 10 Addresses: 49.11% (the top address is Cryptopia)

Supply Held By Top 10 (minus Cryptopia): 16.44%

Supply Held By Top 20 Addresses:  53.96%

Supply Held By Top 100 Addresses: 71.27%

Inactive Address Count in Top 20 (30 Days of No Activity): 14

Analysis:

Now, there’s a lot to get through here, and much that is more difficult to untangle than in previous reports. As stated in the section on Staking and Masternodes, Bismuth operates using its own custom-built Hypernodes, which vary in collateral. As such, I have used a 10,000 BIS collateral-equivalent for the purposes of metric calculation. Further, Bismuth is particularly difficult to find clear and updated supply emission information for, as they have recently reduced inflation plus some sources are out-dated.

All the above being said, there is a lot of interesting data here to unpack. I’ll work my way through the metrics from General, before moving onto Staking and Masternodes, followed by Supply Emission and Inflation and I’ll conclude with some rich-list analysis:

To begin, let’s take a look at Bismuth’s recent volume-related data and how it relates to Network Value. Bismuth is currently trading at a Network Value of ~975 BTC or $3.925mn, but experienced a little over $18,000-worth of Exchange Volume over the past 24 hours. This gives Bismuth an Exchange Volume-to-Network Value of 0.46%. This is lower than I tend to like to see, as frequent readers of these reports will know; but, when the current market uncertainty and general environment of low volume is taken into consideration, it’s not too bad at all.

The Average Exchange Volume for the past month has been $15,388 daily, which equates to 0.24% of the Average Network Value for the past month of $6.533mn. Now, there are a couple of things to note here: firstly, it is during market conditions like this that I wish I could determine these values using Bitcoin-based data rather than Dollar-based data, as the rapid decline in BTC/USD over the past couple of weeks is undoubtedly skewing these calculations; secondly, the fact that Average EVNV is a little over half that of EVNV suggests that interesting is perhaps picking up recently at current prices.

That being said, we must do some cross-comparison for further clarification: Bismuth’s EVNV of 0.46% places it in the middle of the pack, relative to previous coins reported on – it is higher than ALQO, GeoCoin and Bulwark but lower than Covesting, Stakenet and Dero. Bismuth’s Average EVNV of 0.24% is a little weaker than this, with it beating out GeoCoin and ALQO but not the others. Overall, the market interest in Bismuth seems moderate.

Now, another point-of-interest to note from the General metrics is everything related to price. Current prices of $0.28 or ~6900 satoshis are almost 97% below the all-time high of $8.94. This presents almost 3200% of upside potential if Bismuth was to ever set a new high. We’ll dive into more on this when we look at the chart later.

Lastly, from the General section, let’s look at Liquidity and the supply that is currently sitting on exchanges. Bismuth has Liquidity of around 0.08%. This is low, but likely a symptom of the current market uncertainty as much as anything else. When comparing Bismuth with coins from previous reports, it actually has the lowest Liquidity of the seven coins. Further, there is around 4.91% of the circulating supply current available for purchase on exchanges. This is higher than all three coins (Stakenet, Bulwark and Dero) for which this metric was previously calculated. The reasoning behind this may simply be that there is less incentive to hold Bismuth than Stakenet or Bulwark at present because of the higher returns offered by their masternodes. Regardless, it does seem that Bismuth is less attractive to buyers right now than other coins I have written reports on, for whatever reason. Of course, this can be a sign of undervaluation and thus a potentially profitable opportunity may be presenting itself; but this can only be confirmed once the fundamentals and technicals have been fully evaluated, and once we know what so-called ‘smart-money’ is doing with Bismuth.

Now, let’s move onto the Hypernodes. The first point to consider is the annual ROI for running a Hypernode, which I calculated to be around 9.78% using 10,000 BIS collateral. This is, as mentioned above, a lower annual return than some of the other masternode coins I’ve written about: ALQO had an ROI of 53.15%; Bulwark of 59.39%; and Stakenet of 21.32%. This lower return for running a Hypernode may, however, manifest as a positive for inflation.

Next, let’s consider the strength of the Hypernode network: there are ~430 10,000 BIS-equivalent Hypernodes online, equating to 4.3mn BIS locked in the network. This works out as $1.194mn for the Masternode Network Value, which equals 30.44% of the Network Value. This is a moderately strong figure, and is greater than that of Stakenet but lower than that of ALQO or Bulwark. Overall, the Hypernode network seems stable but with plenty of room for growth. This may also be a symptom of the fact that Hypernodes have only been integrated for a little over 3 months, as we’ll discuss at length in the Development section.

Moving onto Supply Emission and Inflation, I find it quite interesting that Bismuth has progressively-diminishing block reward, like Dero, meaning that its inflation rate drops incrementally with each new block. The current block reward is ~12.32 and the reward will taper off to 0 at block 7,100,000. I have used the current block reward to determine maximum supply emission and inflation figures, as, of course, these rewards are not static. Using the current reward of 12.32, around 6.475mn BIS will be minted at most over the next year, which equates to 447.19 BTC at current prices. This gives Bismuth a maximum annual inflation rate of 45.84%. This is lower than that of Bulwark and Dero but greater than that of Stakenet, ALQO, Covesting (an ICO token with 0 inflation) and GeoCoin. Once again, this is a moderate level of inflation, though actual annual inflation will be lower than what I’ve calculated for Bismuth.

Let’s see how this amount of supply emission relates to Bismuth’s volume-related metrics: 447.19 BTC of annual supply emission at current prices equates to 1.225 BTC of daily supply emission, on average (or ~$4,929). Bismuth’s Exchange Volume covers this ~369%, and its Average Exchange Volume covers this by ~312%, indicating that there is ample trading volume to sustain current prices despite the daily supply emission.

To conclude this lengthy section, let’s talk about Distribution. Bismuth has 2566 holders. Of these, the top 10% control 49.11% of the supply, though the richest address is Cryptopia and so we may discount that from our calculations. The top 10% minus Cryptopia control 16.44%, with the 2nd-richest address being Development Funds. This is greater decentralisation of supply than Covesting or Stakenet but weaker than ALQO or Bulwark.

More importantly than that, however, is the activity of the richest addresses. Of the top 20 richest addresses, 14 have been inactive for the past month, implying that those holders are content with their position sizes and are not actively accumulating or distributing at current prices. The 5th-richest address has been inactive for the past month also but distributed 100,000 BIS in October. The 7th-richest has distributed 60,000 BIS in the past 6 weeks. The 11th-richest has distributed 11,000 BIS recently and the 18th-richest is in active accumulation. Overall, it seems that the majority of the largest holders are quite happy with their holdings.

That concludes this section on Metric Analysis. Onto the Bismuth 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.

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

Twitter Followers: 7140

Tweets: 3361

Average Twitter Engagement: 0.68%

Facebook Likes: 630

Facebook Posts (30-Day): 20

Average Facebook Engagement: 0.68%

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

Bismuth is very active on Twitter, with 3x more tweets than the 2nd-most active coin from my previous reports, Stakenet. Its Average Twitter Engagement rate is also quite strong at 0.68%: this is almost 5x greater than that of GeoCoin and a little over 50% greater than that of Bulwark, but is lower than Covesting, ALQO, Stakenet and Dero. It is also 14.78x greater than the average across all industries, according to RivalIQ’s report, and ~52x greater than that of the Media industry.

Further, Bismuth seems committed to having a cross-platform audience, smaller though it may be on Facebook. They tend to post at least once every other day and, strangely enough, have an equivalent engangement rate to that of their Twitter page. This engagement rate of 0.68% is greater than that of GeoCoin and Covesting but weaker than Bulwark and Stakenet. It is also 425% greater than the engagement across all industries and 850% greater than that of the Media industry. Promising.

Now, onto the Bismuth Discord: the group has 2895 members, which is moderate in size. There are plenty of channels for relevant topics. Of these, the News channel is generally updated every other day, whilst Links contains a list of useful resources for newbies. As tends to be the way, General is where the vast majority of discussion takes place: there seems to be some sort of conversation on a daily basis, though some days are a little sparse; there are around 30 members of the group actively involved in discussion, which is around 1.04% engagement; and there’s a little support-focused back-and-forth with promptly answered queries, but much of the conversation centred on Hypernodes, which is useful in highlighting the benefits of buying and holding Bismuth for new users. It was also great to see a question about Bismuth’s utility answered with lots of insightful points about its codebase and out-of-the-box DApps.

In general, much of the conversation I saw was focused on more technical aspects of the project; there was little-to-nothing on marketing Bismuth or on the future direction of the project. I’d like to see more content like the Hypernode explanation video, as this is critical in growing a project’s user-base. Speaking of Hypernodes, the dedicated channel for these is rather active, with lots of users getting swift support in setting up their nodes. Exchanges highlights a recent listing on TradeSatoshi, whilst the most interesting channel – Suggestions – is not active enough, though it’s good to see the community getting involved in the development process and the team being receptive. More of this would be great. Overall, it’s a solid Discord group.

Moving onto Telegram, Bismuth doesn’t fare so well here. There are 333 members, with 7 new members in the past week, which is around 2.1% growth. This isn’t so bad. The problem is that there have been less than 50 messages across those 7 days, and the majority of those are about the Discord group. I’m guessing the Telegram group isn’t of much importance.

BitcoinTalk:

The Bismuth Bitcointalk thread was created on May 1st, 2017, and has since generated 2742 posts across 138 pages, with an average of 4.71 posts per day. Further, there have been 155 posts in the past 90 days via 39 individual posters.

Regarding the content of the thread, there does seem to be quite a lot of excitement about the launch of Hypernodes and general interest in the future of Bismuth. The community are also quite happy to answer any questions from newbies swiftly and informatively. There are regular, succinct updates on the thread from the team, and the roadmap is visible in recent posts; all of this serves to improve  userbase growth, as those new to the project can see exactly what is going on and the consistency of development. Further, there was an issue flagged with false positives on antivirus software and this was quickly resolved by the team. Overall, the thread is highly informative and fairly active.

That concludes the section on Community. Onto 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:

Concerning project leadership, there are 10 core members listed on the website. This is a larger core team than that of most of the coins I’ve previously written about. This team is comprised of 2 advisors with experience in programming and cryptography; 1 member who is focused on design; 1 who has experience in service operations; 1 in engineering; 1 in tool development; 1 in research and development; 1 in testing; and 2 core developers. There is a lot of strength and breadth here in development, but little in marketing, which explains why Bismuth isn’t as popular as it perhaps should be. This is another similarity shared with Dero, though they are two very different coins; a concerted effort in developing a great product but no specialists in the team to capitalise on it and push it to the largest userbase possible.

Website:

www.bismuth.cz

The website isn’t particularly great, with relatively poor UI/UX. That being said, it is very informative and comprehensive in its detail on the project itself. What I would like to see is stronger branding, cleaner web design and resources that are clearly linked or segmented; for example, the wallets are linked under the Projects tab, which isn’t intuitive. Overall, I think the website just needs updating and redesigning.

The explorer, however, is very useful and highly functional, which speaks to the focus on utility and development rather than marketing and growing the userbase.

The website is the first point-of-reference for many, so this does need more attention. Ideally, I’d like to see a dedicated, regularly-updated blog.

Roadmap:

https://bismuth.cz/roadmap/

The Bismuth roadmap is great on many counts and not so great on a few counts. I really like that there is a complete history of the project provided, as well as a visually appealing roadmap for present and future endeavours.

Beginning with the historical roadmap, I’m not so keen on the lack of a visual representation for the information but it is still very informative and clearly segmented. May 2017 saw the successful launch of Bismuth; support for messaging (encrypted and unencrypted); and the launch of a mining pool. September 2017 saw a decentralised token layer integrated. From November 2017, Bismuth saw an expansion of the development team; a period of refining the codebase; and proof-of-concept development for Hypernodes. Beginning in February 2018, the project implemented codebase modularity; exchange compatibility; a tiered mempool; more focus on graphic design; a html wallet and cold storage; and continued to develop Hypernodes. At this point of reading the roadmap, I felt that the project is very much targeted at highly technical users that have some familiarity with programming terminology rather than layman. It would be useful for those new to cryptocurrency to have some sort of brief explanation of these developments provided in jargon-free prose.

In September 2018, Bismuth published a roadmap update in the form of a more accesible visual graphic. This is far more useful. H2 2018 (the second half of the year) saw a new logo designed; more exchange listings; the Proof-of-Stake chain initialised for Hypernodes; the code released for Hypernodes; a reduction of inflation; the launch of Hypernodes and shared hosting for them. H1 2019 will see Hypernodes moved to a sidechain and decentralised file storage based on Hypernodes. H2 2019 will see how-to guides and tutorials written and published; a new mining pool and GPU miner; seed wallets and more paper wallets released; and development of DApps.

Whitepaper:

There is no consolidated whitepaper written for the layman. There are several highly technical academic papers that can be found here. These are beyond me, so I won’t even attempt to assess their strengths or weaknesses here.

Wallets:

With regards to wallets, there are Windows, Linux and Mac local wallets, a paper wallet generator and a third-party web wallet.

General:

In general, Bismuth is undoubtedly a development-focused project. It is innovative at its core in that it is the first blockchain written in Python, and thus the team must know their coin inside out and be committed enough to the project to write any additional features for it from scratch. I like that they have custom built their Hypernodes and that these will serve as a base for decentralised file storage in the future. I also like that the project makes it easy for developers to test out new concepts. What I worry about is that it is not yet a fully accessible coin for a layman user: those with limited prior experience with cryptocurrencies will find Bismuth less accessible than, for example, a Bitcoin clone, where those more well-versed with programming may find it more accessible.

With regards to funding, the Bismuth team receives 10% of block rewards for development purposes, which is not included in their circulation supply calculations. This seems ample for the purposes of growing and developing the coin, and I like that it was not premined, so that the rewards are always in line with the supply being emitted, rather than the team controlling a significant amount of the supply, as is often the case.


Technical

The Bismuth chart is a beauty. Price has experienced a full market cycle, with a peak forming in early 2018 at ~65k satoshis and subsequent price-action taking Bismuth down towards the all-time low of 4600 satoshis. Price formed a bottom above this all-time low at ~5700 satoshis in mid-September, bouncing from there to a level of prior support turned resistance at ~15k satoshis. Price has since retraced on low volume towards the accumulation range that was established below 7k in Autumn. As such, current prices are only ~17% below the local lows that formed in September and ~33% above the all-time low. Upside potential is over 1000% against Bitcoin, and far more against the Dollar; as such, this would seem like a low-risk, high-reward play at current prices.


Conclusion

This report is now approaching 5,000 words, and it is time to draw it to a close.

My final grading for Bismuth is 7 out of 10. It is quite clear that Bismuth has a strong case to be made for it regarding its approach to development, and current prices seem relatively cheap, but there’s no hiding from the fact that the project is falling short of where it should be because of a lacklustre approach to growing its userbase and incentivising market participants to buy and (preferably) hold Bismuth. There is much to like and much room for improvement.

Further, 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 #14

Market Outlook #14 (2nd December 2018)

Welcome to the fourteenth Market Outlook. In today’s post, I’ll be covering the past week’s price-action in Bitcoin, Monero and Ethereum, as usual, as well as taking a look at Waves. I hope you enjoy the read!

Bitcoin:

Price: $4166.42

Market Cap: $72.51bn

Thoughts: In last week’s Market Outlook, I expected a relief rally to $4200. This past week has seen the recent Bitcoin capitulation come to a momentary pause. Price found a bottom above $3600, and has since formed a short-term range between that bottom and $4450. The Daily chart shows that we have seen the most volume on Bitfinex since February, with price also refusing to close inside the Daily bullish orderblock. Further, looking back at the prior two weeks of price-action, there is a an area of illiquid movement between $5-5.4k; an upside breakout from this range would lead to that inefficiency being filled in, I would imagine. Now, looking at the 4H chart, we can see that price has broken above the short-term trendline resistance on significant volume. The range of price-action now has several swing-highs and swing-lows yet untouched, thus providing no clear indication of direction. The decreasing volume recently would suggest that the short-term bullish momentum may soon end and price may dip below $3940 back into the orderblock. However, whilst price remains above this level, I would expect the multitude of untouched swing-highs above $4450 to be the next point-of-interest.


Monero:

XMR/USD

XMR/BTC

Price: $59.83 (0.01437 BTC)

Market Cap: $994.14mn (238,793 BTC)

Thoughts: Monero’s Daily charts against both Bitcoin and the Dollar are rather simple and telling. Looking at XMR/USD, price has traded into an area of prior resistance from last summer, with it looking as though it has turned support. To deal with the bearish scenario firstly, a break of the low that has formed at $59 would see price swiftly reach for support at ~$46. That being said, if this current low can hold, I can see a move back towards ~$83 to test the support now turned resistance. The XMR/BTC Daily chart reinforces this potential footpath for price, as we can see price has traded into a Daily bullish orderblock and is currently failing to close above short-term trendline resistance. A close above this resistance on significant volume would indicate that the bottom is in. Further confirmation of this would come with a Daily close above the pivot area. However, if price continues to trade below this trendline, the lows at 0.013 BTC would be in play. I’m sure we’ll find out soon enough…


Ethereum:

ETH/USD

ETH/BTC

Price: $117.28 (0.0281 BTC)

Market Cap: $12.144bn (2,917,195 BTC)

Thoughts: ETH/USD on the Daily time-frame has one particular point-of-interest from the past couple of weeks: a period of the highest-ever traded volume on Bitfinex. Such significant volume is usually indicative of the height (or depth) of capitulation; and thus the level of prior resistance at ~$100 from May 2017 seems to have become a short-term bottom, at the very least. Looking at ETH/BTC on the 4H chart, it does seem as though this theory holds true. Volume has been decreasing for the past two weeks despite price dropping into the 4H bullish orderblock. I would expect a bounce soon and an attempt at closing the 4H above 0.0293 BTC – this would confirm a short-term bullish reversal.


Waves:

WAVES/BTC

Price: $1.51 (36246 satoshis)

Market Cap: $150.9mn (36,246 BTC)

Thoughts: Waves is a beautiful sight to behold. The dowtrend on near-zero volume culminated in a spring and breakout on high volume. Price has since continued to climb and is making its way towards short-term resistance at ~41k satoshis. A close on the Daily above this level would open up further upside towards the significant support turned resistance at 50k satoshis. A reversal is certainly well underway…

I hope this fourteenth Market Outlook has proved somewhat useful. Feel free to leave any questions in the Comments section and I’ll get back to you 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.

Christmas Altcoin Wishlist

Merry December! The festive month is here and what better way to celebrate than with a Christmas Altcoin Wishlist.

Below are listed 50 altcoins that I’m either currently buying or will be looking to buy for the coming year. I’ve also provided prices below which I’m happy buying. I hope it serves as a reference point from which to start your own research for a 2019 portfolio:

  • Ethereum (ETH): <0.03 BTC
  • Litecoin (LTC): <0.01 BTC
  • Monero (XMR): <0.015 BTC
  • Zcash (ZEC): <0.02 BTC
  • Qtum (QTUM): <0.00052 BTC
  • Waves (WAVES): <0.0003 BTC
  • Siacoin (SC): <90 satoshis
  • Stratis (STRAT): <0.00022 BTC
  • Komodo (KMD): <0.0002 BTC
  • Ardor (ARDR): <1800 satoshis
  • Ark (ARK): <0.00014 BTC
  • Horizen (ZEN): <0.002 BTC
  • Dragonchain (DRGN): <4000 satoshis
  • SALT (SALT): <8000 satoshis
  • Gifto (GTO): <1000 satoshis
  • Vertcoin (VTC): <0.0001 BTC
  • Ubiq (UBQ): <0.0001 BTC
  • Wings (WINGS): <3000 satoshis
  • Blocknet (BLOCK): <0.0005 BTC
  • Stakenet (XSN): <3000 satoshis
  • GINcoin (GIN): <0.0004 BTC
  • Covesting (COV): <0.00012 BTC
  • Counterparty (XCP): <0.00085 BTC
  • ALQO (XLQ): <3000 satoshis
  • Dero (DERO): <0.00015 BTC
  • Bulwark (BWK): <0.0001 BTC
  • Mothership (MSP): <1400 satoshis
  • Aeron (ARN): <9500 satoshis
  • Bismuth (BIS): <0.0001 BTC
  • Shift (SHIFT): <0.0001 BTC
  • BitTube (TUBE): <1000 satoshis
  • XEL (XEL): <1450 satoshis
  • Phore (PHR): <7000 satoshis
  • DADI (DADI): <1150 satoshis
  • BlackCoin (BLK): <1500 satoshis
  • GridCoin (GRC): <180 satoshis
  • DotCoin (DOT): <160 satoshis
  • Synereo/HyperSpace (AMP): <500 satoshis
  • Musicoin (MUSIC): <40 satoshis
  • Solaris (XLR): <o.00028 BTC
  • Stellite (XTL): <6 satoshis
  • SHIELD (XSH): <75 satoshis
  • GeoCoin (GEO): <0.0001 BTC
  • FoldingCoin (FLDC): <50 satoshis
  • Arionum (ARO): <300 satoshis
  • PinkCoin (PINK): <75 satoshis
  • Kore (KORE): <0.0001 BTC
  • Ryo (RYO): <2000 satoshis
  • Denarius (D): <4000 satoshis
  • MORE (MORE): <4000 satoshis

That completes the list, in market-cap order, pretty much. Do with it what you will. These are the coins I’m especially interested over the coming 12 months for the purposes of profitable speculation.

Oh, and as ever, do your own research!

Coin Report #6: Dero

N.B: In the spirit of full transparency, the following Coin Report is the second Sponsored Post on my blog. The Dero team recently contacted me with a request to write up a Coin Report on the project. After they had agreed to my sole stipulation that this report would conform to the rigour of the previous reports, with all strengths and weaknesses being explored and evaluated, I agreed to write the report. Regarding future Sponsored Posts, I have 3 spots open before the end of January 2019. If you would like a Coin Report written for a project, please ask the team to get in touch.

Welcome to the sixth Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of Dero. 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 5. I hope you enjoy the read!


Introduction

Prior to receiving a request to write this report, I had never heard of Dero. I had no idea what the coin did; where it traded; or what its goals were.

Having now completed my research, I am very much intrigued by the project, and I believe this report will be insightful as to the privacy development flying under the radar at present. There is quite a lot to get through, and I will do my best to accurately and fairly assess the various strengths and weaknesses that I perceive. Overall, I hope this report will prove particularly useful for those interested in lesser-known privacy coins.

If you’d like to find out a little more about Dero prior to reading on, here are some primary links:

 


Fundamental

General:

Name: Dero

Ticker: DERO

Algorithm: CryptoNote

Sector: Private Smart Contracts

Exchanges: TradeOgre, STEX, SouthXchange, Crex24 & Tokok

Dero was launched in December 2017 – as the market began its ascent to the January highs – with a 2,000,000 DERO premine (~10.87%). 1mn of this premine is unlocked and 1mn is released over the course of four years. Dero operates using a Proof-of-Work consensus mechanism under the CryptoNote algorithm, and has done so since launch. There was no ICO.

Though we’ll delve into the details of supply emission a little later, it is important to note that Dero has a progressively diminishing block reward, and, as such, the inflation rate decreases incrementally with every new block minted. Dero will operate under its Proof-of-Work consensus mechanism indefinitely, with the diminishing block reward tapering off to a static reward approximately 8 years post-launch.

As Dero was only launched a little under a year ago, and as it has only been available on exchanges since March, there is very little price-history; price did, however, find a peak of $5.23 (~62k satoshis) on May 21st, 2018. It then experienced a prolonged decline into the autumn period but has recently reversed, as we’ll discuss in the Technical section.

Dero, as a project, seems solely concerned with innovating privacy technology and improving on existing solutions. There are no masternodes, as is common practice with privacy coins, and all development efforts are directed at improving the overall security and anonymity of the coin. As you’ll all know, privacy is the hot-topic in this space and deservedly so; it is integral to the community and has been since the very beginning. As such, there are a plethora of projects all working on privacy tech, many of which are just junk clones of other, more established privacy coins. Let us discover whether Dero is one of those junk clones or not… (spoiler: it isn’t)

Firstly, let’s take a look at some important metrics:


Metric Analysis:

Below are listed a number of important metrics, all of which are accurate as of 26th November 2018. 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. Also, Transactional Volume, NVT and Network Staking Weight have been omitted due to lack of functionality of the block explorer (and integrated privacy, obviously) for such calculations. Further, another symptom of integrated privacy is that distribution cannot be determined; as such, there is no rich-list analysis.

Metrics:

General:

Price: 26288 satoshis ($1.05)

Exchange Volume (24H): $49,312

Circulating Supply: 4,727,576 DERO (1mn of which is unlocked premine funds)

Total Supply: 5,727,576 DERO

Maximum Supply: 18,400,000 DERO (calculated as supply ~8 years post-launch, prior to static block rewards)

% of Max. Supply Minted: 31.13%

Network Value: 1242.79 BTC ($4.960mn)

Network Value at Max. Supply: $19.304mn

Category: Midcap

Exchange Volume-to-Network Value: 0.99%

Average Price (30-Day): $1.69

Average Exchange Volume (30-Day): $75,917

Average Network Value (30-Day): $9.393mn

Average Exchange Volume (30-Day)-to-Average Network Value: 0.81%

% Price Change USD (30-Day): -39.9%

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

USD All-Time High: $5.23

% From USD All-Time High: -79.7%

Premine % of Max. Supply: 10.87%

Premine Location:

Devs premine second year wallet viewkey:
fabe3d21316fc1c9a1fdd3526dc3be2c1e4c3da4faa72b280bf07500481222792e2237737d01c6a1cd9147afdb3552c84e016ce06d08bd68e66ff27353a7530f

Wallet viewkey of third and fourth year:
4685a4f7d86ecd6f2493291fdb26329f97ea5e7af48629c120dcb175df7c62ac09dd096278efec8df52c531298f5cf73aa9d6ee722d64521efdf97c f69172505

(the above two are directly copied from the whitepaper)

Premine viewkey: f221cf4f77d11f0061f3e4c9615540cbc2d2d532ac2f08c623d2a72ad0145d702b7e5941737e041 6eebaba30c3c30b517a14db1efa9aa13b119e31c380313603

(the above is copied from the Bitcointalk ANN)

Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 2.568 BTC

Liquidity-to-Network Value %: 0.21%

Supply Available on Exchanges: 104,039 DERO

% of Circ. Supply Available on Exchanges: 2.2%

Supply Emission & Inflation:

Block Reward Schedule: 12-second block times = 7200 blocks minted daily on average. Smoothly-varying block rewards (progressively-diminishing) – currently ~1.34 DERO per block. After 8 years, the rewards become static with 157,000 DERO minted yearly.

Below is printed the supply emission curve:


Current Block Height: 1200411

Circulating Supply in 365 Days: ~8,000,000 DERO

Annual Supply Emission: Using the above printed supply emission curve (and the estimated circ. supply in 365 days) = 3,272,424 DERO (860.25BTC at current prices)

Annual Inflation Rate: 39.68%

Analysis:

Unlike the usual Metric Analysis sections in these reports, we have a mole-hill of metrics to delve into rather than a mountain. This is primarily due to the lack of staking/masternodes and the integrated privacy in Dero that renders distribution analysis impossible. That being said, there is plenty to get stuck into, so let’s crack on…

Firstly, let’s determine which of these metrics are most insightful. As ever, the most insightful metrics for coins like Dero, which seek to have high velocity with exceptionally secure, private transactions, are those that we cannot obtain due to their private nature; Transactional Volume and NVT. Nonetheless, the next-most important metrics are those concerning Exchange Volume, Liquidity and Supply Available on Exchanges, as all of those metrics relate to Dero’s supply and demand. We’ll begin by looking at Exchange Volume and its relationship with Supply Emission and Inflation:

Dero experienced ~$50k of Exchange Volume in the past 24 hours, and has averaged ~$76k of Exchange Volume daily for the past month. This equates to 0.99% and 0.81% of the Network Value and Average Network Value, respectively. Now, as I’ve mentioned before in these reports, I tend to look for 1% or greater Exchange Volume-to-Network Value, but, given the current market conditions (and, most promisingly, the fact that Dero is on zero prominent exchanges with significant volume), I think an average of 0.81% is perfectly reasonable as an indicator of sustained interest. Comparing these figures to those of other coins I’ve written reports on – all of which are traded on far larger exchanges – Dero looks strong: Stakenet is the only coin of the previous five Coin Report posts that beats Dero on the volume metrics. Promising.

Further, the relationship between Exchange Volume and the inflation metrics depicts more strength for Dero: as expressed above, Dero is likely to have around 8mn coins in circulation this time next year, which means there are around 3.3mn DERO to be minted in that time. This equates to 860.25 BTC of annual supply emission at current prices, or 2.35 BTC on average daily (~$9.4k). Dero’s Exchange Volume over the past 24 hours covers this supply emission by around 525%, and its Average Exchange Volume covers it by 800%. This is highly indicative of sustained demand at current prices. Relative to coins from previous reports, Dero’s volume metrics cover its average daily supply emission to a far greater degree than Bulwark or ALQO, but not quite to the same extent as Stakenet.

Next, let’s look at Dero’s Liquidity and supply-based metrics: across all of its listed exchanges, Dero has ~2.5 BTC of buy support within 10% of current prices, which equates to 0.21% of Network Value. This is weaker than Stakenet and Bulwark but stronger than ALQO, but I think it is important to again take into consideration the lack of highly liquid exchange listings for Dero. There is also a little over 100,000 DERO available in the orderbooks across all exchanges, which is 2.2% of the circulating supply. This is the exact same available supply as was calculated for Stakenet but more than Bulwark, and it is suggestive of moderate levels of demand. This is also despite the fact that Dero does not have masternodes, unlike the other two coins, so it is all the more impressive that there is relatively little available to buy on exchanges.

Now, before I move on to talk a little more on inflation to conclude this section, there are a couple of other metrics from the General section that need highlighting. Firstly, the ~11% premine is not something I like to see – there’s no way to get around that. However, I do appreciate the transparency via the viewkeys provided by the team. I am well aware that development cannot be funded from nothing; it’s just that I tend to prefer buying coins with premines lower than 5%. That being said, the fact that the entire premine is not made immediately available and instead will be unlocked over the coming years is a positive. More specifically, 1mn DERO is immediately available but will be used in conjunction with the community’s proposals (note: in future this will be via the Dero Foundation) and 1mn DERO will be unlocked over the course of four years. Secondly, I very much like that price is still ~80% below all-time highs against the Dollar. This suggests a possibility for a profitable entry at current prices, given that the fundamentals of the project are sound.

To draw this lengthy section to a close, I’d like to discuss some more of the data pertaining to inflation. We’ve looked at supply emission and its relationship to average traded volumes, but what about the block reward schedule? Well, unlike the vast majority of coins that are programmed to have several block reward stages that incrementally decrease over time, Dero’s block reward decreases by a fraction every block. This produces a smooth supply emission curve that makes it somewhat difficult to accurately predict future circulating supply and inflation rates. Thus, I have included the coin’s supply emission graph from Dero website. Using this, we can see that in a year’s time, there will be roughly 8mn DERO in circulation, leaving a little under 3.3mn to be minted in that time. This equates to an annual inflation rate of 69.22%. This is higher than both Stakenet and Bulwark. Looking forward to the end of the curve, 157,000 DERO will be the static annual emission, which will equate to roughly 1% annual inflation.

Now, let’s take a look at the Dero 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.

Dero is present on all except Facebook. To begin, let’s look at the various social metrics that I calculated from the Dero Twitter accounts:

Twitter Followers: 2763

Tweets: 136

Average Twitter Engagement: 3.64%

At first glance, it is evident that less effort is focused on generating a social media presence than is ideal. ALQO and Bulwark are two coins from previous reports that were launched around the same time as Dero, and yet they have around 7,000 and 8,000 followers, respectively, and both have well over 500 tweets.

Dero does not have a large following on Twitter, but it certainly has an engaged one, which, in part, makes up for the smaller presence. Their Average Twitter Engagement rate is 3.64%. This is almost twice that of Stakenet, over 2.5x that of ALQO and 9x that of Bulwark. Using the RivalIQ benchmark report, as usual, we can see that this engagement rate is also 79x greater than the average across all industries, and a whopping 280x greater than that of the Media industry (the closest industry in the report). This is a very impressive level of engagement.

Moving onto the Dero Discord, there are 1796 members in the group, which, whilst smaller than other Discord groups from previous reports, is actually quite large given the overall small social media presence that Dero possesses. On average, the Announcements channel seems to be updated once or twice a week, and there is an FAQ channel containing a link with all relevant resources for new users. This could be streamlined by having the information native in the channel itself. Looking at the Joins channel, I can see that there are around 40 new members a week, which is ~2.2% weekly group growth. Consistency in growth is good – it means that there is sustained new interest in the coin.

There also appears to be quite a lot of activity in the General channel, which tends to be the most used, with near-constant back-and-forth between the team and the community. There is a lot of talk on price recently, which is expected given current market conditions. I would like to see more interest shown by the community in the project’s future, as this is a little scarce. There is, however, confirmed talk of an upcoming Cryptopia listing, which the community seem excited for. Moving onto the Technical channel, this seems to be the spot for discussion project development. One thing that does come up a lot is the Dero Virtual Machine (which I’ll dig into in the Development section) – this is promising as it highlights the aspects of Dero’s development that distinguish the project from others. There also seems to be fewer support queries than usual, which is a positive as there are evidently less problems that occur for the Dero community. Any support questions are swiftly answered.

Overall, there seem to be around 50 members in active discussion, which is a little shy of 3% of the group. This is quite promising and is in line with the engagement found on their Twitter. However, there is room for improvement in both engagement and, of course, community growth, and I think this can be achieved by incentivising the current community to be more vocal about Dero’s accomplishments. The Discord scores four out of five, just about.

Moving onto the Telegram group, we find much more strength here. Despite having only 824 members (less than half the size of the Discord), there is a lot going on here. 28 new members joined in the past week, giving the group 3.4% weekly growth. The conversation is  also even more constant than in the Discord. Promising.

Looking through recent conversation, I can see an update on the Cryptopia listing, with Cryptopia now beginning wallet integration; support queries on cold wallet offline transactions; far more discussion about Dero as a project rather than just price; back-and-forth about deroDAG and the new codebase etc. Overall, the conversation is much more focused on what makes Dero Dero. This serves to highlight the distinguishing features of the coin. As a new user, you’d immediately find out that Dero has 12-second blocktimes with no orphan blocks and, most importantly, is working on private smart contracts. Further, I found out that a Dero Convention was organised, which is great for brand awareness and community growth. There seems to be a genuine and active interest in helping find and develop solutions to present or anticipated future problems. There also seems to be more members involved in discussion than in the Discord, despite there being half the members. I saw around 60 individuals posting over the past week, which is 7.28% engagement. This is stronger than the engagement in any Telegram group of a coin I’ve previously written a report on. 5 out of 5.

BitcoinTalk:

The Dero BitcoinTalk announcement was created on December 5th, 2017. It has generated 4338 posts spanning 217 pages since then, equating to an average of 12.19 posts per day. There have been 183 posts in the past 90 days, however, which is a little over 2 posts per day on average. This indicates a dwindling of interest on the thread of late. This is reinforced by the fact that there have been only 4 posts in the past week. That being said, the thread did generate more posts over the past 90 days than the equivalent periods for ALQO and Bulwark, but less than Stakenet.

On the content of the thread, there seems to be some community input on the requirement for more effective marketing. The general consensus is that marketing for the project is weak but the development is very strong. There is also very little support-related discussion, which aligns with Discord, suggesting that fewer issues crop up than usual when using Dero. Also, there seems to be some excitement stirring around the current development of smart contracts. 4 out of 5 for the BitcoinTalk thread.

That concludes the section on Community. Onto 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:

Concerning project leadership, Dero has a small core team of 3 developers, all of whom remain anonymous. Each developer has, according to the Dero website, a decade of experience in cryptography. In addition to this core team, there is a Dero Community Advisory Board, which was appointed this summer. This comprises of 12 members of the community with experience in: computer science; marketing; Cloud migration; start-ups; systems engineering; software engineering; and senior management.

My suggestion would be to employ a marketing specialist as part of the core team so that there is better balance. After all, it’s all well and good having a unique and well-designed product, but if there is no effective marketing plan, it may be fruitless.

Website:

www.dero.io

The website is clean and informative and features a useful introductory video on the homepage. There is clear explanation of use-cases, what distinguishes Dero from other projects, the coin’s specs etc. and all relevant resources are clearly linked. I like that there is a dedicated forum for the community and it seems to be quite active. Monthly updates are provided at https://forum.dero.io/t/dero-monthly-update/446/5.

The website could do with stronger branding. The overall UI is a little unsophisticated but highly functional. This is also the case with the block explorer, which is functional but with zero branding whatsoever and quite primitive in design. It should be more user-friendly.

Overall, not bad but there are some simple things that need updating and improving. 3 out of 5.

Roadmap:

https://dero.io/#roadmap

Firstly, the roadmap is visually appealing and is presented in an easy-to-follow route from the coin’s launch through to the present day. However, at first glance, I can see that there is only detailed information up to August 2018.  We are now almost in December and there has been no update or additions to this roadmap since. As the first point-of-reference for many new users as to the direction of a project, this is essential to keep updated.

Other than that, the roadmap is decent: there are clearly segmented goals (most of which have been achieved now) with brief descriptions of the goal itself. I would have liked to see some sort of Show More or Further Info tab for these. Each set of goals is separated by months rather than quarters (as is usual), which is great as there is greater specificity and thus progress and development consistency can be more accurately judged.

However, post-August, we see “Q4 2018” for the rest of this year, which doesn’t have the same strong specificity as the rest of the roadmap.

As for the goals themselves: December 2017 was Dero’s launch; March 2018 was when CryptoNote was integrated in Golang (a first); in April, the mainnet migrated to Golang; June saw the development of Dero Atlantis; in July, Dero mainnet migrated to Atlantis (if I was a new user who hadn’t done any research on Dero, at this point I’d be wondering what Atlantis is, thus there should be some relevant links or further detail. Atlantis is a key part of what makes Dero unique – let users know from the outset); July also saw the integration of Rocket Bulletproofs; August was the month of marketing and targeted exchange listing; and Q4 (the current quarter) will  see Dero develop private smart contracts. There is also some vague language like “partnerships” and “marketing”. This needs to be more specific. The roadmap ends with smart contracts on the mainnet before 2019, which is solid.

Personally, I’d like to see more detail on the coming year; just seeing “keep on innovating” under the Future tab gives me no indication of what lies ahead for the project.

Overall, informative but lots of gaps to be filled for a new users. 4 out of 5. It was not quite as thorough and useful as Bulwark’s or Stakenet’s roadmaps but not as brief as Covesting’s or GeoCoin’s.

Whitepaper:

https://dero.io/Whitepaper.pdf

Right off the bat, I like that the document is 13 pages long. This is the perfect range for whitepaper length regardless of the project. It is long enough to be thorough but brief enough to remain concise and interesting to the reader. Further, an October 2nd release date means that it is very recent.

The whitepaper opens by stating that Dero is new in its composition (written in Golang from scratch) and that it is based on DAG (Directed Acyclic Graph) and CryptoNote. It also states that Dero’s primary goal is to create Private Smart Contracts. The content is comprised of jargon-free prose, which ensures reader accessibility, and any potentially unfamiliar terminology is concisely explained. The document explicitly mentions Dero’s unique use-case in private smart contract technology; something not available in other projects at the date of publishing. This is great as it serves to distinguish the project.

There is a brief section explaining potential issues with KYC/verification: Dero suggests the allowance of wallet signatures by publicly known authorities. It then moves on to discuss anonymous voting as a use-case. The following section is quite interesting as it discusses asset management;
assets managed on Dero’s blockchain would be both private and auditable via viewkeys. Further use-cases are then outlined, such as one-time password integration, which will allow for greater security for service users by obfuscating any public address information.

The next section is on Dero’s key features and consitutes the bulk of the document. There are clear and concise explanations of the following features: CryptoNote; SSL; scalability; smart contracts; atomic swaps; mobile/offline wallets; lightweight wallets; subaddresses; escrow on the blockchain; verification; and voting. Of these, it is important to emphasise that Dero is the first blockchain with SSL integrated in the P2P layer, which encrypts all network traffic. It is also the first CryptoNote-based coin with 75 tx/s without off-chain solutions or Lightning Network. Dero also has 12-second block times without orphaned blocks thanks to DAG, which was implemented in the Atlantis codebase. DAG is Directed Acyclic Graph. DeroDAG is a combination of traditional blockchain technology and DAG technology, allowing for the security of the blockchain with the scalability of DAG. As a technical Neanderthal, it would be a lie to suggest that I have anything beyond a surface-level understanding of how the tech works. You can read more about it in the whitepaper.

The whitepaper also highlights Dero’s immunity to 51% attacks: where, usually, a block is a single unit of computation, in Dero, a transaction is a single unit of computation; thus all blocks are accepted. There is then a section on Optimized Bulletproofs that is beyond me, but it is important to highlight that these bulletproofs operate nearly 10x faster than a regular bulletproof, and Dero has these already integrated.

The next section is titled Dero Virtual Machine: this explains how Dero’s smart contracts will operate; using a virtual machine environment. Perhaps this may have been a section for further elaboration as it is quite brief for such a significant and distinguishing feature of the project.

This is followed by a rudimentary roadmap and then Dero’s specs. The subsequent section is on future development, in which the premine of 2 million DERO is highlighted and viewkeys are provided for the funds. The justification is long-term development and marketing. These funds
are split 50/50: 1m for the devs to use for development, locked until they are unlocked each year for four years at a rate of 20%/20%/30%/30%; the other 1m is free to use for marketing purposes and general growth, but is utilised in conjunction with the wishes of the community. I like that none of this is hidden – transparency with premine funds is critical.

The final page is a list of areas for continued improvement and refinement for the project and a brief section on the Dero Project Foundation, which will be a future corporation used to expand the team and fund research and development.

Overall, one of the more useful (and certainly concise) whitepapers I’ve read, particularly amongst the coins I’ve written reports for. 5 out of 5.

Wallets:

Concerning wallet, there are Windows, Linux and Mac local wallets, though these are in pre-Alpha stage and thus are bare-bones with no branding. They are very limited in functionality and design. I expect more from future wallet releases.

The web wallet can be found at www.derowallet.io.

General:

In general, there is a lot going for Dero on the development-front. They seem super focused on creating the best possible privacy product, though often to the detriment of their marketing efforts. Of course, building the best product is more important than creating brand awareness, and at this task Dero excels. I like that the code was written from scratch, as there are too few projects with this level of commitment around. Further, DAG technology integrated with CryptoNote, Rocket Bulletproofs and 12-second block-times is quite an achievement given the short existence of the project and that everything was written from scratch. It is clear to see that the team are most concerned with innovating or improving exisiting technologies in the privacy sector. Looking forward, the obvious development goal to highlight is private smart contracts on the Dero Virtual Machine.

Regarding project funding, Dero is currently funded using the premine as well as community support, but will look to the Dero Foundation in the future. On this subject, I would perhaps suggest creating an avenue for revenue generation.

That concludes my fundamental analysis of Dero. Let’s take a look at its chart:


Technical

Whilst Dero hasn’t got all that much price-history to look at it, there does seem to be quite a lot going on. It set its all-time high in May, around 62,000 satoshis, and then bled out for several months, eventually forming an accumulation range between 4400-6200 satoshis in September. Price has since begun a new bull cycle, running 1200+% in less than 6 weeks, and setting a local high at ~42k satoshis. It then dropped off back to an area of prior support turned resistance once again turned support (around 25k satoshis), and it is now range-bound between key short-term support at 23k satoshis and range resistance at 33k satoshis. Given the recent run-up, I would certainly not enter a position in this spot, as the direction is unclear. Price could quite easily form a complacency shoulder here and break below that key support, triggering a decline back towards the 16k-satoshi area, or it could break above trendline resistance and range resistance and begin the next leg up to attack all-time highs.

For me, it would seem much more wise to wait for price to decide where it wants to move. I’d be buying 16k satoshis and below if price was to end its bull cycle here, or I’d buy a close of the Daily chart above 33k with a soft stop-loss below the key support at 23k.


Conclusion

This report is now around 5,000 words, and it is time to draw it to its conclusion.

My final grading for Dero is a 4 out of 5 (just about). It clearly excels on the development front but leaves much desired with regards to marketing. It does seem to have an engaged community, though it is a small one. Further, I cannot discount the fact that price has experienced a 1200% run from the lows recently, and thus is in a potentially precarious and currently unclear position.

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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