Coin Report #3: Covesting

Welcome to the third Coin Report. In today’s report, I’ll be examining in exhaustive detail the fundamental and technical strengths and weaknesses of Covesting, concluding with a grading of the project and its upside potential. And when I say ‘exhaustive’, I mean it. The previous two reports on GeoCoin and ALQO ran for ~4,000 words and ~5,000 words, respectively; this report may run for 6,000. I hope you’ll find some degree of insight in it.

Let’s crack on.


Introduction

Covesting is one of only three ICOs I have ever invested in. The entire concept of an ICO has always felt a little worrying to me as a speculator, and this was particularly the case during the ICO boom of summer 2017. Projects were raising hundreds of millions of dollars with no working products, dubious credentials and little-to-no innovation or viable use-case. And when you’ve raised $100m or more, where is the incentive to work? That was the primary reason for me steering well clear of ICOs and sticking to the near-zero or zero premine Proof-of-Work and Proof-of-Stake projects for the majority of 2017. Further, a lot of the ideas conceptualised and developed by ICO projects were also being explored by non-ICO projects, so there seemed to me to be no real advantage for the purposes of speculation; the reward-to-risk was greater for the more traditional coin launches.

However, in late November or early December 2017, I came across www.covesting.io. On the website, I found details of an imminent ICO for a copy-trading platform by the name of Covesting. Up until this point, I was unaware of any copy-trading platform for cryptocurrencies, but I knew that many in the space (myself included) used 1Broker for copy-trading BTC/USD, forex and commodities. There was a clear gap in the market, and I had been waiting for something similar to 1Broker to come along for altcoins, specifically. What I gleaned in my first impressions of Covesting was the potential for a far superior and more comprehensive, feature-rich platform than that of 1Broker. The thing that worried me was the ICO; but I knew that non-ICO projects weren’t working on copy-trading, possibly because of the capital-intensive nature of building a trading platform. Anyway, I was interested, and so I read the whitepaper to get some more details on the ICO (details I will go into later in the report). Long story short, Covesting was only looking to raise a maximum of ~$12.5mn at the time, with a 25,000 ETH hard cap. This was significantly lower than the vast majority of the ICOs I had seen, and the fact that only 13% of the tokens created were going to the team cemented my confidence in the project. There were Proof-of-Work coins launching with larger premines than 13%, and most ICOs were dishing out 25% or more of tokens to their founders. So, I bought the ICO at what worked out at roughly 5000 satoshis per COV, and I’ve been buying more over the past two months.

That’s enough back-story. Covesting as a project has innumerable points-of-interest for those of us looking for low risk, high reward opportunities in this space, and I hope that this report proves thorough and objective in establishing the project’s strengths and weaknesses.

For those that would like to learn a little about Covesting prior to reading the report, here are some important links;


Fundamental

General:

Name: Covesting

Ticker: COV

Algorithm: ERC-20

Sector: Exchange Platform + Social Trading

Exchanges: KuCoin, IDEX and HitBTC

Covesting was launched in November 2017, with its ICO selling out in its entirety on December 31st 2017. It launched, as with the vast majority of ICOs, as an ERC-20 token, and happened to get its first exchange listing when the entire market peaked in January, and, as such, has suffered a downtrend in price for the best part of its existence. We’ll dive into the limited price-history in more depth in the Technical section, but for now it is important to note that Covesting is yet to experience a full market cycle.

The project seeks to be the leading social trading platform in the cryptosphere, and a one-stop point-of-reference for all traders and investors in the space. At launch, there were no other similar, established projects. However, there have since been a number of potential competitors introduced: Blockport, Genesis Vision and Qobit come to mind. I am of the opinion that competition isn’t necessarily a disadvantage for those of us looking to capitalise on innovation in this space, as there is undoubtedly enough volume to be shared amongst a handful of social trading platforms; but it does put the onus on Covesting to deliver and surpass its promises in a consistent manner. I’ll evaluate their strengths in this regard a little later…

Regardless, the ambition is great, and the use-case is novel. Let’s see if Covesting is hitting the mark:

 


Metric Analysis:

Below are listed a number of significant metrics that will be analysed at the end of this section. Firstly, it is important to note that metrics are dynamic, and this information is accurate as of 4th November 2018. Secondly, if any of the recurring terms in these reports are unfamiliar, you can find brief explanations in the opening paragraph of this section on the first Coin Report I wrote. Lastly, the rich-list was examined using https://etherscan.io/token/0xe2fb6529ef566a080e6d23de0bd351311087d567#balances.

Metrics:

General:

Price: 13130 satoshis ($0.84)

Exchange Volume: $93, 476

Circulating Supply: 17,500,000

Total Supply: 20,000,000

Maximum Supply: 20,000,000

% of Max. Supply Minted: 100%

Network Value: 2297.75 BTC ($14.616mn)

Network Value at Max. Supply: $16.704mn

Category: Midcap

Exchange Volume-to-Network Value: 0.64%

Average Price (30-Day): $0.70

Average Exchange Volume (30-Day): $52,522

Average Exchange Volume (30-Day)-to-Network Value: 0.36%

Transactional Volume (24H): $40,486

Transaction Count (24H): 30

NVT: 361.03

Average Transactional Volume (7-Day): $7,498

Average NVT (7-Day): 1949.43

Transactional Volume-to-Exchange Volume %: 43.31%

% Price Change USD (30-Day): +47.9%

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

USD All-Time High: $2.38

% From USD All-Time High: -63.10%

Founders’ Tokens % of Max. Supply: 12.5%

Founders’ Token Location: https://etherscan.io/address/0x25ed4f0d260d5e5218d95390036bc8815ff38262

Liquidity (calculated as the sum of BTC in the buy-side within 10% of current price across all exchanges): 4.61 BTC

Liquidity-to-Network Value %: 0.2%

Supply Emission & Inflation:

Block Reward Schedule: No further supply emission

Annual Inflation Rate: 0%

Distribution:

Address Count: 10189

Supply Held By Top 10 Addresses: 33.08%

Supply Held By Top 20 Addresses: 38.79%

Supply Held By Top 100 Addresses: 54.21%

Inactive Address Count in Top 20 (30 Days of No Activity): 12

Analysis:

Though the lack of staking or masternode functionality, and the fact that the maximum supply has already been minted, means that this section is a little less stacked than that of ALQO, there is still a lot of important information to look at. The Covesting whitepaper states that COV will serve as the fuel for the Covesting platform, making it, in essence, a utility token. In doing so, its value will be tied to demand for use of the platform. As such, which of the above metrics are most significant? Well, the greatest metric to determine the strength of COV would be the volume being traded on the Covesting platform, but, until the fully-functional public release comes out later this year, we’ve little to go on. There are, however, many points-of-interest for those of us looking to turn a profit on COV, particularly at its present price.

Let’s begin with the General metrics, before moving on to discuss the lack of supply emission and the distribution of the token. One of the primary means of determining interest is studying the volume traded, both Exchange Volume and Transactional Volume. Covesting traded ~$93k in the last 24 hours, or 0.64% of its Network Value. As expressed in my article on Picking Out Microcaps, I tend to prefer when Exchange Volume-to-Network Value is above 1%, as a sign of smart-money interest, but given that we are currently in a bear market, such figures are unlikely to be the norm. (Also, Covesting is not a microcap; it’s a midcap.) In my previous two reports, these figures were 0.24% and 0.28% for ALQO and GeoCoin, respectively. Covesting is trading at well over double these levels. Promising. Now, if we take a look at the Average Exchange Volume, which is measured over the course of a month, we get a lower figure of ~$52k, or 0.36% AVNV. Comparing this with ALQO’s 0.18% and Geocoin’s 0.13%, we once again find relative strength in COV. However, given that Covesting is listed on KuCoin and HitBTC (two of the larger exchanges in the space), I am a little disappointed that it isn’t hitting ~0.5% or greater AVNV. But, all things considered, there certainly seems to be some interest, and this is something we will later confirm in analysis of the rich-list. Now, if we turn to Average Price, we find that COV has traded at an average of $0.70 for the past 30 days, and is currently trading ~20% above that. This tells us that Covesting was possibly being accumulated around $0.70, and that the uptick in volume recently has brought with it the beginnings of a reversal.

Perhaps the strongest figure amongst that list of metrics is that of % Max. Supply Minted. Covesting being an ERC-20 token that launched with an ICO, this figure is 100%. That means zero supply emission post-launch, and thus zero inflation. One of the most common pitfalls I see in the space is the complete disregard of inflation when considering the price at which one should enter a position. Too often do you find faux-opportunities where everything is lined up technically for an entry, but the price you think you’re paying isn’t really the price you pay. This is due to excessive short-term supply emission – a high inflation rate – that generates strong headwinds to push back price growth. Just look at ZCash, for example. The one advantage that the majority of ERC-20 ICOs have for us, as speculators, is that they have zero inflation post-launch. No need to worry about mass supply being dumped on the market on a daily basis with potentially too little demand to maintain current prices. Returning to COV, what this also allows us to determine is the level of demand. As there is no more COV coming onto the market, if the current level of volume traded was unable to sustain prices, we would know that this is due to falling speculative interest; not because miners or stakers are dumping their rewards. In Covesting’s case, not only has price been maintained over the previous month, but it is beginning to pick up. Further, if we look at the Liquidity figure of 4.61 BTC, or 0.2% of Network Value, we find that demand at current prices seems to be greater than that of ALQO and GeoCoin, which exhibited 0.12% and 0.18% Liqudity, respectively.

Concerning NVT, Covesting scores 361.03, with ~$40k of Transactional Volume in the past day. Over the past week, Covesting has an Average NVT of 1949.43, with Average Transactional Volume of $7,498. Now, until copy-trading launches on the Covesting platform and COV begins to be transacted for its primary purpose and to its full extent, these figures are to be taken with a pinch of salt. However, it is interesting that in the past 24 hours, COV has experienced over 5x greater Transactional Volume than it has averaged over the past week. With that greater Transactional Volume, we have seen increased prices. Perhaps a sign of things to come when the platform is publically launched and COV takes on the function of its design?

Moving onto the last couple of points-of-interest in the General metrics, I found it intriguing that Covesting is currently trading around -63% from its all-time high of $2.38 (according to CoinGecko). This has both positive and negative connotations regarding profit potential. Firstly, the vast majority of altcoins are trading well below -90% of their all-time highs at present, even with the recent signs of reversal. At its lowest, Covesting traded at -76% of its all-time high. This shows strength via the genuine demand for the token, even at the deepest, bloodiest period of the current bear market; even when Ethereum itself had lost 78% of its value against BTC. Very promising. However, the risk that this brings with it is that we pay a higher price for entry, and calculable upside potential (a move back to the all-time high) is diminished. What is great about buying coins at 96% below their all-time highs is that the reward-to-risk is so high, providing the fundamentals are sound. With Covesting, we find genuine demand for the token at the worst of times, but for that we must risk paying more.

How I think this plays out, however, drawing back to something I said earlier about the limited price-history, is that there is a great deal of price discovery to be experienced above and beyond the all-time high, particularly upon successful launch of the platform and the arrival of a new bull cycle for the market. That being said, calculable upside potential puts us at around 130% given an entry at current prices. Price is currently 47% above the all-time low. This gives a calculable reward-to-risk ratio (if the position was to be sold at break of the all-time low) of 2.76. It could be better, it could be worse. Personally, I believe the upside potential to be much greater than that which we can view from Covesting’s price-history, for reasons that I’ll delve into in later sections.

Before we get onto more abstract fundamentals, let’s do some distribution analysis. Covesting currently has 10189 holders. If all of those end up users of the platform, we could be in for a treat. For comparitive purposes, Genesis Vision and Blockport (two potential competitors) have 7237 and 11849 holders, respectively. Covesting is well ahead of Genesis Vision – despite COV having a Network Value of around a third of GVT – and around 17% below Blockport, despite having a Network Value around 2.5x that of BPT. Based on this comparison alone, this would place Genesis Vision as highly overvalued, Covesting as reasonably valued, and Blockport as undervalued.

Returning to analysis of Covesting, specifically, the supply seems fairly well distributed, if you account for the founders’ 12.5% (essentially a premine). Not accounting for that 12.5%, the distribution is as follows: 33.08% of COV held by the top 10; 38.79% held by the top 20; and 54.21% held by the top 100. You can just subtract 12.5% from those figures if you want distribution figures accounting for the founders’ reward. Either way, it’s not poorly distributed. There are certainly signs of accumulation amongst the top 10 and top 20, as they control around a third of the supply, but a little under half the supply is distributed outside of the top 100 addresses.

Let’s dig a little deeper:

Of the top 20 addresses, 12 have been inactive for the past 30 days; they are neither accumulating or distributing COV at present. Of the other 8 addresses, only the 12th-richest is distributing, and the distribution over the past 30 days accounts for less than 1% of the total balance. The rest are primarily micro-buying. Further, the 12.5% founders’ reward remains untouched. This, to me, indicates that the majority of the top 20 are content with their positions, though there is some active accumulation at current prices from a few. I look forward to monitoring any changes as price rises.

That concludes my analysis of the metrics. Onto the Covesting 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 five main platforms to examine: Twitter, Facebook, Telegram, Discord and Slack.

Covesting doesn’t have Slack or Discord, but is present on the other three. To begin, let’s look at the various social metrics that I calculated from the Covesting Twitter and Facebook accounts:

Twitter Followers: 9159

Tweets: 363

Average Twitter Engagement (30-Day): 0.79%

Facebook Likes: 20885

Facebook Posts (30-Day): 27

Average Facebook Engagement (30-Day): 0.16%

In the previous two reports, I referred to RivalIQ’s social engagement benchmarks. Let’s look at how Covesting fares in this regard: firstly, Covesting’s Average Twitter Engagement is 0.79%. This is 17x greater than the average engagement rate across industries, and almost 61x greater than that of the Media industry. Going back to previous reports, Covesting has an average engagement rate on Twitter around two-thirds of that of ALQO but over 4x greater than that of GeoCoin. Where both those coins failed, however, was on Facebook. Covesting has no such failure, publishing at a rate of almost a post a day for the past month, with 20,885 Likes and an Average Facebook Engagement rate of 0.16%. This is the exact average engagement rate across industries for 2018, and double the average engagement rate of the Media industry.

Moving onto Covesting’s Telegram group, the project boasts 7661 members (around 5x ALQO’s group size). Having spent some time evaluating the level and depth of discussion occuring, there seems to be hundreds of daily messages between members, with the group conversing almost 24/7. Much of he conversation centres around excitement for the public release of the platform, which is good to see, and the remainder comprises of support questions being swiftly answered. 5 out of 5.

BitcoinTalk:

The BitcoinTalk thread was created December 28th, 2017; a few days before the conclusion of the ICO. It has since generated 42 pages of discussion, and 822 individual posts. Over the past 90 days, there have been 64 posts by 23 individual posters; a post-to-poster ratio of 2.78. There is less recent discussion on the thread than in the ALQO or GeoCoin threads, which generated 140 and 94 posts for the preceding 90-day period from which those reports were published. However, the discussion is inquisitive, and queries are responded to quickly and informatively. There are a lot of consistent development updates being pushed out, also, with relevant links to lengthier, more thorough updates via the Covesting Medium blog. One thing I did spot that was a little fishy was the appearance of multiple posts with similar messages, all from new accounts. This is likely someone invested who is attempting to articificially generate enthusiasm about the project.

All-in-all, my impression of the Covesting community is that it is a large one with genuine interest towards the future of the project, in particular the release of the platform. Many seem to be itching to copy-trade altcoins.


Development:

For the following Development analysis, I will be evaluating project leadership, the website, the roadmap, the whitepaper and finally providing a general overview. No wallet evaluation is required as Covesting is an ERC-20 token, and can be stored in the plethora of Ethereum wallets.

Project Leadership:

The Covesting team is potentially the greatest asset to the project, and certainly one of its fundamental strengths. The executive team comprises of 3 heavily-experienced professionals: Dmitrij Pruglo – an ex-Saxo Bank trader and Covesting’s CEO; Tim Voronin – an early adopter of Bitcoin, a prop trader with over a decade of experience and Covesting’s COO; and Kurt Carlsson – an ex-Executive Director of Saxo Bank with over 25 years of experience and Covesting’s CCO. The executive team certainly has the experience and credibility required for the successful development and launch of a copy-trading platform. Further, there are 18 employees listed on Covesting’s LinkedIn, though 25+ employees are reported to be on the team on the website. 40+ employees are reported to be on the team in the October Review published by Covesting recently. Lastly, there are 8 vacancies listed on the website in an array of roles. I really like that the Covesting team continues to expand; and the depth and breadth of knowledge and experience seems sufficient for the ambitions of the project. Very promising.

Website:

Covesting.io is informative and easy to navigate. I particularly like that there is a dedicated blog with regular, long-form updates. The Crypto Intelligence portal is very useful, acting as, as stated in the whitepaper, a “Bloomberg terminal” for cryptocurrencies. There are social features, an altcoin screener, integrated TradingView charts and a regularly updated newsfeed. Further, there are free courses on trading for beginners and blockchain basics in their Academy. This all serves, in my opinion, to increase accessibility and ultimately the utility of the project for end-users. The platform itself (ref link, if you’d care to use it), though not fully launched yet, is smooth and well-designed. It is feature-rich, providing reports of all sorts, messaging and chat functionality, a dashboard with easy portfolio tracking and performance measurement and integrated TradingView charts for the exchange. I very much look forward to trying it out when it is fully-functional.

Roadmap:

There is no dedicated and permanent roadmap to be found on the Covesting website, but there are abstract forms of one that appear in blog updates and in the whitepaper itself. In this recent post, you can find a run-through of present and future goals. It seems the project was running a little late on deadlines, but this can be forgiven as much of the roadmap hinged on the issuance of a DLT License. This license was recently issued, around Covesting’s 1st birthday. Looking at the roadmap provided, the Beta launch of the platform was achieved on time, and the trading competition they hosted recently ended. Further, KYC integration is complete. A referral program has recently been launched with the imminent arrival of the public release of this platform. (You can sign up either using my ref link or via https://covesting.io/exchange.) According to the roadmap, this launch will be followed by initialisation of copy-trading functionality a month later, so that there is some trading history. Lastly, the buy-back program (which we’ll discuss at length later) will be launching this quarter alongside fiat gateways. Overall, the actual goals and targets of the roadmap are excellent, and they create a great deal of excitement about the potential of the project. However, I would have liked to have seen a dedicated roadmap on the website with specific and clearly delineated goals in a visually appealling manner. The website is the first point-of-reference for many new users, and this would ensure ease-of-access.

Whitepaper:

Here is a link to the Covesting whitepaper, for those that would like to read it prior to this section: https://covesting.io/static/Covesting_White_Paper.pdf

The Covesting whitepaper seems to be written a little like an Annual Report by a publicly-traded company, minus the balance sheets. It’s no surprise given the background of the team. The material is mostly professional but there are grammatical errors here and there; proofreading should have been done to a greater degree. However, this doesn’t detract from the jargon-and-buzzword-free prose that pervades most ICO whitepapers.

The first point-of-interest for me comes in the clear explanation of the benefits of aggregrated liquidity, which will be a feature of the Covesting platform. Aggregated liquidity will ensure the best possible prices for traders and will remove the necessity for multiple exchange accounts. That’s a plus in my book. Next, the whitepaper states that the Covesting platform will provide 24/7 live support. This, for me, is a big tick, as exchange support in this space is notoriously poor. If Covesting can deliver on this promise, that alone would distinguish the platform from the competition. Moving on, I like that the goal of the project is clearly depicted: Covesting, in essence, would like to be a one-stop comprehensive ecosystem for crypto-traders.

The value proposition for the platform is that it will allow traders
to increase earnings via “success fees”. It will also users to safely and securely follow the trades of those traders based on historical performance and their own goals, without ever having to give their funds
to others directly. Fully peer-to-peer. The financials for copy-trading break down as follows: 18% of followers’ profits are given to traders (this is the success fee); the platform takes 10% as commission; end-users take the remaining 72% as their profits. All profits are given in COV.

Concerning the ICO, the details are made transparent: 12.5% of 20mn COV tokens (2.5mn) go to the team; 75% is distributed via public ICO; and the remainder is distributed via pre-ICO, marketing, bounties and advisors. One point to highlight is that, for an ICO, this is a very small portion of tokens being given to the team. Further, proceeds of the ICO are stated to be distributed as follows: 40% to R&D; 25% to marketing and acquisition; 30% to capital expenses; and 5% to legal fees. You can find further info in the document.

Lastly, the use-cases clearly of the token itself are outlined: COV is used to copy-trade and any profits are returned in COV. 50% of revenue generated by the Covesting platform will then perpetually be used in a buy-back-and-burn mechanism, reducing the circulating supply over time. We will go into more detail on how I think this plays out in a later section.

Overall, the whitepaper is highly detailed and thorough, with visuals that ensure accessibility, but perhaps it needs an update given the past twelve months of progress and change. 5 out of 5 (just about – I’m forgiving the grammatical errors).

General:

Generally speaking, there is a lot going on at the present time for Covesting. They’ve recently achieved some of their significant goals, such as the Beta release of the platform, hosting their trading competition, the launch of their iOS app, and, most critically, the issuance of their DLT License. Moving forward, if Covesting can maintain this professional approach, it can only get better. They have their public platform release this quarter, which will bring with it copy-trading functionality and the buy-back-and-burn scheme. Also, they’re planning on an Android app release soon. Looking much further ahead, the goals don’t get any smaller: there is talk of derivatives being launched; algorithmic trading; and a global marketing campaign focused on institutional investment.

I mean, the distingushing feature of the project is, of course, the DLT License. This is what sets Covesting apart from its competitors. Perhaps there is good reason why the 1st result on Google for a search of “crypto copy-trading” is the Covesting website. I look forward to seeing the next few months unfold.

Regarding the funding structure of the whole project, it seems to me their revenue is presently set to comprise of trading fees, deposit fees and copy-trading commission. There is also talk of introducing binary options as another future revenue stream, as well as generating commissions on the trading terminal.

Other:

Now for some final thoughts on Covesting’s fundamentals, and, more importantly for us, the value of the COV token.

So, the main point-of-interest regarding the value of COV is that of the buy-back mechanism. Let’s look at how this may play out in the future with some examples:

If the Covesting platform becomes a top 100 exchange by volume on Coinmarketcap, it will trade, on average, $1.5mn daily. This would equate to $45mn of monthly volume, which would equal $90,000 in trading fees at a 0.2% average fee. 50% of these fees will be used to perpetually buy and burn COV, which would equate to $45,000-worth. At the current price of $0.84, this equals ~53,500 COV bought and burnt monthly, or 0.3% of the circulating supply.

If Covesting ends up in the top 50, it will trade, on average, $20mn daily, or $600mn monthly. This would equate to $1.2mn in trading fees at a 0.2% average fee, which would equal $600k in monthly buy-backs. At the current price, this is ~715k COV bought and burnt monthly, or 4.08% of circulating supply.

If Covesting ends up a top 20 exchange by trading volume, it will trade $95mn daily. This is $2.85bn of monthly volume, which equals $5.7mn in trading fees at a 0.2% average fee. That equates to $2.85mn monthly buy-backs, which is around 3.39mn COV at current prices, or 19.38% of circulating supply.

Now, there are several caveats. Firstly, this is only accounting for trading fees generated; not copy-trading commissions or deposit fees. Secondly, this thought experiment assumes a constant price irrespective of the volume of buy-backs. In practice, this wouldn’t happen, and the liquidity would not be there for such a volume of buy-backs without significantly raising the price of COV.

Regardless, it is easy to see how a successful launch of the platform and a future marketing campaign for user acquisition could lead to a dramatically higher value for COV based on buy-backs alone.

That concludes my fundamental analysis of Covesting. Onto the technicals.


Technical

As I mentioned earlier, there is limited price-history for Covesting, as it has only been in existence for a year, and has only been traded for ~10 months. That being said, there are numerous points-of-interest on the chart. Firstly the all-time high was one of the first prices ever traded for COV, which implies a huge amount of potential price discovery were a new bull cycle to begin. Secondly, the 3-month downtrend was recently broken in explosive fashion on announcement of the DLT License being issued. Price had previously traded back into an area of former accumulation, right at the all-time low. Price has since sustained the breakout, and has consolidated above a significant pivot level (a level that has shifted from support to resistance numerous times) at ~10k satoshis. There is significant long-term resistance around ~15k satoshis, and a close on the Daily above that level would indicate that new highs are incoming. As stated earlier, calculable reward-to-risk of an entry at current prices is 2.76, but I certainly won’t be selling my position at the break of the all-time high.


Conclusion

I believe I’ve covered quite a lot of ground in this report, and, having now garnered a better idea of the experience of the team behind Covesting, I’m eagerly anticipating future developments.

My final grading for Covesting is a solid 4 out of 5. There is so much fundamental strength that it would be easy for me to grade Covesting a 5, but I am reminded that this is not merely a fundamental report; we are speculators, and thus the technicals, and specifically the reward-to-risk, become a key factor.

Please let me know if you’ve enjoyed this third Coin Report; which sections you found most valuable; where you’d like me to develop further/refine/improve etc. And feel free to leave any questions in the Comments section and I’ll get back to you. Oh, and sign up for the mailing list if you want these delivered direct to your inbox!

Lastly, I know I mentioned it earlier, but I’d really appreciate it if, if you’re interested in the Covesting platform, you could sign up using my ref link: https://www.covesting.io/?ref=42416. Of course, there’s no obligation to do so, and I hope you’ve enjoyed the report!


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 #2: ALQO

Welcome to the second Coin Report. This report provides an extensive examination of the fundamental and technical strength of ALQO. If you missed the first Coin Report, which covered GeoCoin, you can find it here. In that first report, I spent some time introducing and explaining the framework for this series of posts, so new readers may find it useful to at least take a quick look at those opening paragraphs to get an idea of what they can expect from the lengthy report that follows.

The first Coin Report was incredibly well-received, and the process of writing it was not only invaluable to myself but also seems to have been rather informative to many of you. I hope this report on ALQO lives up to scratch. Enjoy.


Introduction

ALQO (A Liquid Object) has long been an altcoin of some repute among those of us that value old-school, no ICO, Proof-of-Work/Proof-of-Stake low-caps. I first found out about it early this year, but found that the project was a little too expensive to get involved in, and thus my interest in it faded and I forgot about it for many months. Then, July came around, and I noticed that ALQO had dropped off towards pre-euphoria levels (much like the rest of the market), and so I picked up my first few. In hindsight, a ~3500 satoshi entry was a little early, but it certainly felt more reasonably priced than when I first glanced at the chart earlier in the year.

Fast-forward to today, and I am still buying. I had done my usual amount of fundamental research and I knew I loved the chart; but, having learnt a lot about GeoCoin that I was previously unaware of after writing my first Coin Report, I figured that it would be useful to do a deep-dive on ALQO, and garner as full an understanding as I possibly could about an altcoin I thought showed huge upside potential.

There is, indeed, much to talk about concerning ALQO, given its grand ambitions and the extensive portfolio of current and future developments. I hope the following report will prove as exhaustive as that first report, if not more so.

If you’d like to find out more about the coin, prior to reading the report, here are some of ALQO’s primary links:


Fundamental

General:

Name: ALQO

Ticker: XLQ

Sector: Financial & Cloud Services

Exchanges: CoinExchange and CryptoBridge

ALQO was launched in November 2017, and, as such, has only experienced one full market cycle, with the peak coming in mid-January. I’ll discuss where I think price is at regarding the current market cycle more extensively in the Technical section, a little later; but, almost twelve months on from its launch and subsequent run-up, ALQO is once again showing signs of life.

The project began with a Proof-of-Work consensus mechanism, no ICO and a small premine of 100,000 XLQ (about 0.16% of the maximum supply), much like the altcoins of 2014/15. This premine, as stated in ALQO’s whitepaper, was used exclusively for the purposes of setting up a network of masternodes off-the-bat, and it is scheduled to be burned on November 1st (a week from now). Further, the initial Proof-of-Work stage has recently ended, with a transition to Proof-of-Stake occuring around 80,000 blocks ago. This transition has brought with it further incentive for the speculator to begin to build a position, as we’ll discuss later when examining supply emission and inflation rates.

As a project, ALQO has ambition, to say the least. Unlike GeoCoin, which was very much focused on a micro-niche, ALQO is targeting on the grandest of scales; with the aim being global acceptance as a means of payment and the development of a comprehensive financial and cloud services ecosystem. Big dreams require equivalent talent, consistency and no small amount of luck. There are hundreds of altcoins with similar goals, but, as far as I can see, few of them (particularly in the low-to-midcap range) have delivered as much in so short a time, as we’ll discover in a short while.


Metric Analysis:

Below are listed numerous metrics of significance, which I will analyse and evaluate at the end of this section. Firstly, it is important to note that these metrics are accurate as of 24th October 2018. Secondly, if any of the terms or figures seem unfamiliar or confusing, there is a short passage with explanations of the following metrics in the Metric Analysis section of the GeoCoin report, which you can find here. Thirdly, because of the very limited functionality of the  ALQO explorer, it wasn’t possible to accurately determine Transactional Volume, so that and any relating metric has been omitted, including NVT. Further, it wasn’t possible to assess the rich-list due to this, so distribution analysis is limited. It is also not possible to find out the Network Staking Weight. In short, they need a more useful explorer or a wider range of explorers to choose from. Lastly, the masternode-related metrics are sourced from https://masternodes.online/currencies/XLQ/.

Metrics:

General:

Price: 3196 satoshis ($0.21)

Exchange Volume: $30,049

Circulating Supply: 59,291,514

Total Supply: 59,291,514

Maximum Supply (Reported): 63,816,840

% of Max. Supply Minted: 92.91

Network Value: 1894.96 BTC ($12.273mn)

Category: Midcap

Exchange Volume-to-Network Value: 0.24%

Average Price (30-Day): $0.19

Average Exchange Volume (30-Day): $19,298

Average Exchange Volume (30-Day)-to-Network Value: 0.18%

Network Value at Max. Supply: $13.210mn

% Price Change USD (30-Day): +3.6%

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

USD All-Time High: $2.94

% From USD All-Time High: -92.9%

Premine: 0.16%

Premine Allocation: https://explorer.alqo.org/block/00000644bf4c94d8f717f3ed31e6d28d96ce7e7ba321d69c54aceb4c60e3d77b

Liquidity (calculated as the sum of BTC in the buy-side within 10% of current price across all exchanges): 2.306 BTC

Liquidity-to-Network Value %: 0.12%

Staking & Masternodes:

Network Staking Weight: N/A  (the wallet and the explorer don’t provide this information)

Staking ROI (Annual): 65.9% (according to http://95.179.152.44/alqo/index.php)

Masternode Price: $2,070

Masternode Collateral Size: 10000 XLQ

Masternode Count: 2952

Masternode Count Growth (30-Day): +8.74%

Masternode ROI (Annual): 53.15%

Masternode Reward / Block Reward: Libra Effect dynamically increases or reduces the percentage according to the number of masternodes online. See: ALQO Whitepaper, or later sections discussing it.

Masternode Network Value: $6,110,640

MNV / Network Value: 49.79%

Supply Emission & Inflation:

Block Reward Schedule: 60-second blocks. 50 XLQ per block for next 30205 blocks (21 days). 25 XLQ per block for following 43199 blocks (30 days). 10 XLQ for 43199 blocks (30 days). 5 XLQ per block thereon (from Block 604801).

Remaining Days Before 5 XLQ Blocks (Block 604801): 81

Remaining Supply Emission Before 5 XLQ Blocks: 3,022,215 XLQ (96.59 BTC)

Inflation Rate (For Next 81 Days): 5.1%

Circulating Supply At Block 604801: 62,313,729 XLQ

Annual Supply Emission After Block 6048012,628,000 XLQ (83.99 BTC)

Annual Inflation Rate After Block 604801: 4.22%

Circulating Supply in 1 Year: 64,358,529 (different to reported max. supply)

Network Value in 1 Year at Current Price: $13.515mn

Distribution:

Supply Held By Top 25 Addresses: 10.23%

Supply Held By Top 50 Addresses: 13.1%

Supply Held By Top 100 Addresses: 15.77%

Analysis:

So, there’s a seemingly endless number of figures to wrap your heads around, but which are the most relevant and most significant? Given the goals of the ALQO project, one would have to say that one of the most insightful metrics (concerning means-of-payment) is unfortunately missing from the list. That is, of course, NVT and Average NVT. If ALQO seeks to be accepted as a global currency in the long-term, then Transactional Volume is more important than Exchange Volume. But given that this information is very difficult to determine due to the limited functionality of the sole ALQO block explorer, we must, regretably, move on. There is plenty to talk about.

Let’s start with the more general metrics: the first figure that stands out is the % of Max. Supply Minted. The fact that almost 93% of the supply is already in existence is a point-of-interest for any shrewd speculator. This, as should be evident, means that remaining supply emission is severely limited, and thus the headwinds for appreciation are barely noticeable. If you take another look at the collection of figures on Supply Emission & Inflation, notice how there are ~81 days (less than 3 months) remaining before ALQO block rewards decrease to their final (and lowest) stage of 5 XLQ per block. In that time, a little over 3 million XLQ are estimated to be minted; the equivalent of 96.59 BTC, or 5.1% of current circulating supply. That equates to an average daily supply emission of 1.19 BTC (for this remaining period. Now, let’s take a look at the Exchange Volume and Average Exchange Volume figures: the former is ~$30,000 and the latter is closer to $19,000. That means that the average daily volume over the past 30 days is ~240% greater than the supply currently being minted daily. This is a good sign of sustained demand, and especially when taken into consideration with the fact that price is up in $ over the past 30 days by 3.6%. This suggests that the current level of demand is very much likely to soak up the remaining 81 days-worth of supply prior to the final block reward stage beginning at block 604801. Now, if you thought 5.1% inflation for the next few months was impressive, take a look at the levels of supply emission post-block 604801: 4.22% annually (0.23 BTC per day at current prices… an amount that can be covered over 10 times with current Liquidity). This all speaks volumes for the upside potential of ALQO. As a speculator, I seek opportunities for maximal profit with minimal risk, usually over the course of many months, if not over a year. These figures present that opportunity, in my opinion.

Where I find some room for improvement, concerning the General metrics, is in the Volume-to-Network Value ratios. As with GeoCoin in the previous report, these figures are much lower than I generally like to see, but, given that we remain in a macro bear market (though signs of reversal are beginning to appear), this is somewhat forgiveable. Also, I believe this is at least in part due to ALQO only being listed on two relatively small exchanges in CryptoBridge and CoinExchange. Listing on more volume-heavy exchanges (perhaps KuCoin, LiveCoin or Mercatox?) would, I believe, bring these figures closer towards the 1% level that implies significant interest. And, before we move onto the metrics concerning masternodes, I think the 0.16% premine is noteworthy in its slightness. Rarely now do I come across launches with so small a premine, and, what’s more, with a clearly detailed justification for it plus a date for its burning. The 100,000 XLQ from the premine are scheduled to be burned in about a week, according to the whitepaper.

Okay, so the General metrics and the supply emission schedule seem to be pointing towards a promising opportunity, at least on the mathematical front if not the fundamental. But, given that ALQO has masternodes, the less useful market cap (or Network Value) figure can be disregarded in place of the Masternode Network Value, which I discuss at length in my blog post titled The Speculator’s Guide To Masternodes and Masternode Network Value. Where Network Value is often vague and sometimes useless in assessing value or determining demand, MNV gives you a more accurate overview. ALQO has an MNV of ~$6.11mn at current prices, which is the total value of all online masternodes. This represents just under 50% of the circulating supply of ALQO, and hence it must follow that almost 50% of the circulating supply has been purchased directly (not merely mined or minted in any other way). Whilst MNV doesn’t account for the various prices at which this supply may have been purchased at, it provides a clearer picture of demand for ALQO, with ~50% being a strong ratio of MNV / Network Value. Further, in the last 30 days, the Masternode Count has grown by almost 9%. This equates to roughly half a million dollars-worth of ALQO being bought in the previous month for the express purposes of running a masternode. Further signs of strength being exhibited here. However, where ALQO as a project continues to show weakness is in its explorer functionality… I was unable to determine network staking weight using either the local wallet, ALQO block explorer or the staking-specific (though very limited) explorer linked in the Discord group. As such, thorough staking analysis could not be undertaken and accurate staking ROI figures could not be calculated; I have used the annual % figure provided on the explorer.

Finally, we come to the Distribution metrics. My apologies for these being sparse, but, once again, the block explorer has let us down. Rich-lists are unavailable and the only distribution figures available are those concerning supply held by the top 100 addresses. I had a similar problem in the last report with (the lack of) rich-list analysis. Hopefully, in future reports this won’t be a recurring theme of otherwise strong altcoins. Anyway, let us make do with what we have, and what we have is as clear a picture of the definite decentralisation of ALQO as one could get. The top 100 addresses control a mere 15.77% of the circulating supply. This is about as low a figure as I’ve ever seen for an altcoin. They’ve certainly held up their promise of pushing the decentralisation of supply, but I do wish I could do an in-depth examination of  the activity of those top 20 addresses. Oh well.

That concludes my analysis of the metrics. Onto the ALQO 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 five main platforms to examine: Twitter, Facebook, Telegram, Discord and Slack.

ALQO doesn’t have Slack, but is present on the other four. Slack seems to be going out of favour with the crypto-community, in general. To begin, let’s look at the various social metrics that I calculated from the ALQO Twitter and Facebook accounts:

Twitter Followers: 7158

Tweets: 431

Average Twitter Engagement (30-Day): 1.3%

Facebook Likes: 204

Facebook Posts (90-Day): 1

Average Facebook Engagement (90-Day): 3.43%

As discussed in the GeoCoin Coin Report, RivalIQ release a yearly report on benchmark social metrics across various industries. ALQO’s 1.3% Average Twitter Engagement rate is exactly 100x greater than the average for the Media industry and 28x greater than the average across all industries. This is promising. What is less promising is the lack of commitment to Facebook, with the ALQO team having only posted once in the previous 90 days; a weakness that is evident from the 204 Facebook Likes compared to the 7158 Twitter Followers. For that single post, however, there was a 3.43% engagement rate… but there’s little than can be gathered from such a small sample size.

Moving on to Telegram, ALQO has a group containing 1575 members. This is a mid-sized group for altcoins, as there are many projects that have groups of well over 5000 members at a similar age and network value to ALQO. The discussion is primarily support-focused, with community questions and concerns being raised by over 50 individual members over the past week. These questions are promptly answered. I did also spot a little community input on future marketing campaigns, which was another promising sign. If I had to score the Telegram group out of 5, I’d give it a 4. The conversation is there but the scale isn’t.

The ALQO Discord, however, is a different beast entirely. With 6114 members, it towers over the ALQO Telegram and even over the Ubiq Discord, in which GeoCoin operates. There is clearly a very vocal community, and admins are incredibly responsive. The existence of numerous channels makes discussion flow constantly, seemingly 24/7, and allows for ease-of-use for any newbies. This clear delineation between topics of interest is a big plus; all too often do I see groups with three of four channels, commonly named General, Announcements, Trading and Miscellaneous. Not very useful that. There also appear to be a consistent stream of development updates and announcements, and project resources have their own channel for greater accessibility. I particularly liked seeing the existence of community-led updates, specifically video round-ups of the previous week’s ALQO news. Overall, thoroughly impressed. 5 out of 5.

BitcoinTalk:

After evaluation of the Discord group, it was always going to be difficult to find a similar level of constant engagement and discussion of ideas elsewhere, but the BitcoinTalk thread did well enough. Having launched in November 2017 (almost a year ago to-date), ALQO has generated 84 pages of conversation, with 1662 posts. More recently, there have been 140 posts by 52 individual posters in the past 90 days – a post-to-poster ratio of 2.69. Taking the entire history of the thread into account, ALQO generates an average of 138 posts per month; an average they have fallen under of late. However, what was more promising was the overt statement-of-intent by the team to refocus attention on BitcoinTalk. In general, conversation was community-led, focusing on support questions, as would be expected of a thread.

Overall impression of the ALQO community is one of evident commitment and genuine excitement towards the project.


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:

According to the website, there is a permanent team of 7, with 3 executives and 4 other members. Backgrounds seem strong across-the-board, particularly for the 3 leading members of the team. When taken into consideration with the strength and size of the community, I believe the project is in a strong position concerning leadership. Furthermore, it’s positive to see the CEO, COO and CTO all involving themselves in the community, answering questions and generally taking the time to seriously address the thoughts of community members on project direction. Regarding weaknesses, there doesn’t seem to be a marketing specialist on the team, so that would be an ideal area for expansion given the overall potential of the project.

Website:

The first thing I notice about the ALQO website is that it is well-branded, visually appealing and exhibits clean and responsive UI/UX. Those are undoubtedly the three traits that are integral to an altcoin’s website, as it serves as the first point-of-reference for the majority of new users and thus is inextricably linked to the community growth of the project. Regarding the content of the site, it is highly informative and clearly delineated, covering all possible topics of interest with links to further reading (such as the whitepaper).  There is also a native forum, but I was surprised not to find a native blog, especially for a project like this.

Roadmap:

The roadmap is certainly impressive relative to the roadmap we saw in the GeoCoin Coin Report. There is a history of goals and targets from the initial launch, and clearly defined, specific goals for the present and future. The whole roadmap is split by quarter, and short descriptions are provided for future developments alongside their project code-names to ensure user accessibility. The roadmap goes well over a year into the future and exhibits a number of ambitious goals, such as the current launch of the Liberio wallet; the nearing launch of the Bitfineon exchange; upcoming integration of Zerocoin for anonymity purposes; a new and improved whitepaper; a payment processor; a smart contracts system; and real-world partnerships with financial institutions. The team certainly seem to have hit all quarterly deadlines for historical goals, and with the imminent launch of both Liberio (with full-functionality) and Bitfineon, it seems they will continue to do so. However, there could be improvements made in the visuals/graphics area, and quarterly goals could be given greater specificity. Overall, a 4 out of 5.

Whitepaper:

Here is a link to the ALQO whitepaper, if you’d like to give it a read: https://alqo.app/whitepaper.pdf

My first impression of the whitepaper was that it felt refreshing to read one that lacked all verbosity and unexplained technical jargon (fluff, essentially), and contained clear and concise material segmented by relevant chapters and sub-sections. This makes the whitepaper accessible to all, even the most tech-illiterate. Any potentially unfamiliar language and terminology is explained and visuals are included to further ensure accessibility. The document clearly describes the aims of the project but I am not surprised at the upcoming whitepaper update, as this original document is much less ambitious than the current state of the project. The goals set out are generic, primarily revolving around instant transactions with optional privacy; a far-cry from the present and future developments of a full financial and cloud services ecosystem, though inklings of these ambitions do exist in the whitepaper. There is  also some rather vague discussion of the future use of HyperSend (instant transactions) within commercial applications. it would help if this was more specific, but I would imagine we’ll see greater specificity in the new whitepaper now that the project is a year into its plans. Overall, the whitepaper is informative and comprehensive but simply out-dated. A solid 4 out of 5.

Wallets:

The current available wallets are three local (windows, Mac and Linux) and a limited version of Liberio. I believe the fully-functional version of Liberio, which will act as the central platform for the ALQO ecosystem, will be launched this quarter. The Windows wallet that I use is responsive, easy to use and requires minimal CPU.

General:

There is a lot going on regarding ALQO. They have several interesting projects and developments ongoing, but I believe Liberio and Bitfineon will be the two most important releases for the growth of the coin. Liberio’s one-click functionality will allow for greater user-base growth, whilst a successful launch of Bitfineon has the potential to make ALQO a top 100 altcoin. Why do I say this? Because, in a recent interview, CEO Jared Grey said this:

“Every significant interaction on the Bitfineon platform will have some touch point with ALQO, whether it’s to secure a project’s listing fees, secure its candidacy in an upcoming community vote, for users to vote for said coin(s), to receive trading fee discounts, loyalty and referral benefits and take part in Bitfineon’s SharePool, a revenue sharing program where 50% of all revenue generated on the platform is exclusively distributed to ALQO holders, and other related use cases.”

Now for some cross-comparative study: what Jared is essentially saying here is that, upon Bitfineon’s launch, ALQO will also function as an exchange token. This is significant for those of us concerned with price growth. I recently  compiled this list of exchange tokens and calculated some important metrics: https://docs.google.com/spreadsheets/d/1hG6Hy6XexnvJFHVAUBdF2Os12uDQujaTMoxouceYtUA/edit#gid=0

The average exchange token, according to that list, trades at a ~13.5x multiple of average 24H volume (30-day) of the native exchange. This, however, does not take into account the fact that most of these exchange tokens do not offer a share in revenue for holders. One coin that does, and that is very useful for our comparative purposes, is BridgeCoin; the exchange token for CryptoBridge. Holders of BCO receive a 75% share of revenues generated by the exchange, and the coin trades at a 22.5x multiple of CryptoBridge’s average 24H volume. ALQO holders will receive 50% of exchange revenue; a third less than BCO. Projecting that forward, it would not be a surprise to see ALQO trade at a 15x multiple of Bitfineon’s average 24H volume. This presents a world of opportunity for price discovery, based on this single value proposition, let alone any of the other use-cases the ALQO team are developing. Continuing with our BridgeCoin case, if we use CryptoBridge’s average 24H volume of $1.6mn as a starting point for a successful Bitfineon launch (though I think the potential is greater), that would put ALQO’s Network Value at $24mn; around 2x its current level. For fun, let us consider that in a year’s time, Bitfineon is trading $10mn daily… this would put ALQO at a potential $150mn. Entry into top 100 altcoins only requires ~$60mn currently.

The scope for growth is huge.


Technical

Now, let’s take a look at the ALQO chart. In Market Outlook #3, which was published around a month ago, I posted some analysis of the ALQO chart at the time, and relatively little movement has happened since that time. Considering the short price-history of ALQO, the only relevant chart is ALQO/BTC Daily.

This is about as textbook as it gets when it comes to a market cycle. We saw an explosive run-up to all-time highs shortly after ALQO’s launch, when the whole market was euphoric. This was followed by a Complacency shoulder that then led to this extended drop-off and current consolidation. Price seems to be slowly rising from the Depression range towards potential Disbelief. However, volume is still low, and I would like to see this pick up in the coming weeks to confirm the reversal and beginning of a new market cycle. As is evident, the reward-to-risk based purely on the technicals is huge. Price is still around 90% below the all-time high in BTC-denomination, let alone USD… an all-time high that came only two months after the coin’s launch. There is a lot of price discovery remaining going forward, I would imagine.


Conclusion

This report is fast drawing towards the 5,000-word mark, and I believe I’ve covered a lot of ground here. This research process has been even more fascinating than that of the first report, and my bullish outlook on ALQO has been cemented by the deeper scrutiny.

My final grading for ALQO has to be a 5 out of 5. GeoCoin scored a final grade of 4 for being strong in all the right areas, but ALQO has excelled in them. There is room for small improvements here and there, particularly concerning the lack of block explorer functionality for more thorough rich-list analysis, but overall this presents a very strong opportunity for maximal future profit with minimal risk.

Lastly, I’d like to quickly note that, concerning these gradings, it is improbable that you will see a 0 or a 1, as all of the coins being reported on are already in my watch-list (and thus have undergone at least some fundamental and technical analysis). It is also highly unlikely that there will be many 2s, as this would indicate a huge oversight on my part with the altcoins I’m primarily interested in, though I wouldn’t rule this out. Also, these reports take around 12-15 hours of work to publish, so it would be a waste of time for me to write them on altcoins I know are going to score poorly. I would get no valuable, actionable insight out of it, and neither would you. Thus, the majority of these reports will likely score either a 3, 4 or 5, though a 5 will be reserved for what I believe to be only the strongest opportunities.

Please do let me know if you’ve enjoyed this second Coin Report; which sections you found most valuable; where you’d like me to develop further/refine/improve etc. And feel free to leave any questions in the Comments section and I’ll get back to you. Oh, and sign up for the mailing list if you want these delivered direct to your inbox!


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Coin Report #1: GeoCoin

Welcome to a new series of posts entitled Coin Report: these will comprise of a precise, exhaustive and extensive analysis of specific altcoins, published periodically (as I get around to them). Ideally, I’ll be posting one report a week, but this first one has taken several hours to research and will probably take another two or three to write up and edit. So, one every fortnight may be more likely. The first of this series will feature GeoCoin, and the reports will be written according to the following framework:

General Framework:
  • Introduction: In this opening section, I’ll write a short description of the altcoin being analysed, with some general thoughts and important links.
  • Fundamental: This being the most detailed and lengthy section, I’ll break the material up into further sub-sections, such as: General; Metric Analysis; Community; Development; and Other. Here, I’ll be analysing and evaluating the various fundamental aspects of an altcoin according to the process I write about in my book. Further to the book, and, I think, significantly, I’ll be doing a microscopic metric analysis on data that I find useful for speculative purposes; similar to how one would approach value investing in equities, albeit without nearly as much critical data available as in that financial domain.
  • Technical: Here, I’ll provide a top-down analysis of the ALT/BTC and ALT/USD charts. This will be particularly useful in judging entry levels and highlighting potential smart-money accumulation.
  • Conclusion: In this final section, I’ll draw the analysis to a close, summarising the main points-of-interest, and, most importantly, awarding the altcoin a grading based on its overall strength and profit potential going forward. This grading will be on a scale of 1 to 5; 5 being the strongest.

Onto the inaugural Coin Report:


 Introduction

For this first Coin Report, I decided I’d take a look at GeoCoin. GeoCoin came onto my radar about six weeks ago (though I had traded the coin prior to that) because of its chart. The chart instigated a period of further research, particularly into the fundamentals of the coin at the present time (as the project is just shy of four years old), as well as a thorough analysis of its rich-list. Unfortunately, it seems the rich-list has been taken down from the Chainz explorer, and it isn’t available on the Ubiq explorer, so there won’t be any rich-list analysis in this report. Suffice to say, around a month ago, GeoCoin’s rich-list looked very positive, with a large majority of the top 20 addresses in accumulation.

The coin itself presents a number of points-of-interest, particularly because it is the only geocaching cryptocurrency I am aware of; it’s certainly the only succesful one.

If you’d like to find out more about GeoCoin, here are some links that I used in the process of writing this report:


Fundamental

General:

Name: GeoCoin

Ticker: GEO

Sector: Geocaching

Exchanges: Bittrex and Cryptopia

GeoCoin was launched in January 2015, and, as such, has experienced numerous market cycles; thus, price has developed a relatively reliable pattern of behaviour. We’ll delve into the price-history and it’s cyclical nature in the Technical section of this report, but I’d like to emphasise the utility to us, as speculators, of a near-four-year history: unlike the plethora of projects that were launched in 2017 and this current year, GeoCoin has experienced multiple bear markets. As such, we have a reliable roadmap to follow for judging the promise of an entry. This cannot be emphasised enough. The opportunity in all financial assets is dictated by the price you pay. Think about this in terms of a traditional asset, like equities: those that launched in the wake of the 2008 crisis have had 10 consecutive years of bull market fashioning their price-history. When the next recession comes, those equities will be far more difficult to judge a great entry on than those that have experienced a multitude of bear markets, as there is simply no reference point for how they behave in such times. A coin like GeoCoin gives us an advantage, insofar as we are able to map out the behaviour of price in previous bear markets, and use that, along with the following fundamental analysis, to figure out the optimal entry point for future profit.

Not only has GeoCoin experienced numerous price fluctuations, but it has also quite recently experienced a fundamental change. The project launched with a Proof-of-Work consensus mechanism, but transferred to life as an ERC-20 token on the Ubiq platform. This made a lot of sense; there was no need for GeoCoin to maintain its own blockchain, given that its primary aim is to operate as as a token of value rewarded to those via geocaching in its app. The old PoW chain was considered ‘developer abandoned’, and from that point the coin was no longer mineable – another advantage to us, which we’ll get into in the discussion of supply emission and inflation. The current consensus mechanism is a novel one, dubbed Proof-of-Location.


Metric Analysis:

Below, I’ve listed numerous significant and interesting metrics, but, prior to their analysis, there are a few important notes to consider:

Notes:
  • These were calculated on 9th October 2018.
  • To find the 30-day averages, I calculated the sum of the previous 30 days of data according to the sources I provide with the metric, and divided by 30.
  • For some metrics, I have provided both BTC and USD figures, but due to ease-of-access (most screener data is USD-only), some metrics are only USD. Further, the use of USD is helpful as more of these reports are published, as it will allow more readily for cross-comparison.
  • Network Value = Market Cap
  • If you would like to see more data or specific metrics that don’t appear below, please leave your feedback in the Comments section. Equally, any criticisms are welcome. I am aware that, unlike in equity analysis, the use of metrics in altcoins is currently an inexact art. There is much room for improvement and refinement, which I am sure to experience as I publish more reports.
  • Transactional Volume differs from Total Volume as it subtracts (or attempts to) speculative volume. For GeoCoin, this was calculated using the sum of GEO in transactions in a 24-hour period on https://ubiqscan.io/token/0x500684ce0d4f04abedff3e54fcf8acc5e6cfc4bd and multiplying the total by the current price of GEO in USD. Same process for Average Transactional Volume.
  • NVT is a ratio similar to P/E in equities, with transactional volume replacing earnings. For more info, go to http://charts.woobull.com/bitcoin-nvt-ratio/ and https://coinmetrics.io/nvt/#assets=btc
  • NVT is pretty useless for smaller coins with low transaction volume, but where its utility lies is in cross-comparison with other similar coins.
  • For Liqudity, I calculated the sum of BTC in the buy-side of the orderbooks on Bittrex and Cryptopia within 10% of current price.
Metrics:

Price: 8781 satoshis ($0.58)

Volume: $5,188

Circulating Supply: 3,180,551

Total Supply: 3,180,551

Maximum Supply: 4,000,000

% of Max. Supply Minted: 79.51%

Network Value: 279.28 BTC ($1.830mn)

Category: Midcap

Volume-to-Network Value: 0.28%

Average Price (30-Day): $0.56

Average Volume (30-Day): $2,432

Average Volume (30-Day)-to-Network Value: 0.13%

Transactional Volume: $2,805.90

Transaction Count: 4

Transactional Volume-to-Total Volume: 54.08%

Network Value-to-Transaction Volume: 652.23

Average Transactional Volume (30-Day): $594.95

Average NVT (30-Day): 3076.02

Average Transactional Volume-to-Average Volume: 24.46%

Network Value at Max. Supply: $2.301mn

% Price Change USD (30-Day): +10.8%

% Price Change USD (1-Year): -28.8%

USD All-Time High: $18.66

% From USD All-Time High: -96.9%

Premine: 0.85%

Premine Allocation: https://ubiqscan.io/address/0x3990e0f5aa5a413ed9ed6de357a437d06c57c17a

Liquidity: 0.51149 BTC

Liquidity-to-Network Value %: 0.18%

Annual Supply Emission: 50,000 GEO

Annual Supply Emission at Current Price: 4.3905 BTC

Annual Inflation Rate: 1.57%

Network Value in 1 Year at Current Price: $1.830mn

Analysis:

Well, that’s a lot of information to take in… and not all of it is supremely relevant to our purposes. Take, for example, the NVT numbers. These aren’t really all that useful as growing transactional volume is certainly not a fundamental aim of GeoCoin, unlike Bitcoin. It is no surprise that these numbers come out high or that Average Transactional Volume equates to less than 1/4 of Average Volume. If GeoCoin was aiming at becoming a primary medium-of-exchange, it would undoubtedly (given those figures) be failing. But that isn’t the goal. The goal is to provide value for its user-base in the form of tokens that (hopefully) accrue value over time, generating further incentive for those users to explore the locations in which GEO can be found, and ultimately grow the GeoCoin user-base because of that. In short, the goal is to be a playful store-of-value. So, why have I included irrelevant metrics? For the express purposes of cross-comparison. NVT may not be relevant to GeoCoin at its core, but the comparison of NVT figures across similar coins can allow us to assess relative fundamental strength across-the-board (something I will be developing as I write these reports).

But, onto some actual metric analysis:

Given the fundamental aim of GeoCoin that I highlighted above, the metric that is most significant, and that stands out as very promising, is, of course, inflation. Supply emission is integral to our assessment of the profit potential of any coin, and particularly one that is actively seeking to accrue value over time. GeoCoin passes the test with flying colours in this regard. In my book, I write that I do not like to invest in altcoin suffering from greater than 100% annual inflation. GeoCoin has an annual inflation rate of 1.57%. That’s lower than the current inflation rate of the US Dollar.

This supremely low inflation rate is facilitated by the Proof-of-Location consensus mechanism that airdrops 50,000 GEO annually and not a single GEO more. At current prices, that’s less than 5 BTC of extra supply a year. This is very promising with regards to future profit potential at current prices, as we have next-to-zero additional supply to contend with. Demand doesn’t really have to grow in order to sustain current prices. Ultimately, the low inflation rate acts as a cushion for our positions, due to the minimal sell pressure being experienced. Looking forward, this also implies less headwind during a bull cycle.

Another metric that stands out is the % decrease from GeoCoin’s USD all-time-high. Depending on which source you use for the USD all-time high, this is a decrease of between 96-98%. Using the CoinGecko figure of $18.66, current price is ~97% away from those highs… a potential 33x return in waiting. The general consensus is that alts will see new USD highs but not necessarily BTC highs. I am mostly in agreement with this, as I believe ALT/BTC all-time highs will be more hit-and-miss, whereas I think many altcoins will find themselves trading at new USD highs in the next bull cycle.

A third positive can be found in the Average Price figure of $0.56. This just means that GeoCoin has been trading ~$0.56 on average for 30 days; a sign of a potential accumulation range having formed. This is something we can verify later using the chart. But, it suggests that the current price of ~$0.57 is possibly a good entry.

Now, thus far, all seems to be positive, but there is some data I’d like to point out that isn’t particularly promising: namely, the two figures relating to Volume-to-Network Value and Average Volume-to-Network Value. The first is 0.28% and the latter is 0.13%. Generally speaking, I like to see a VNV of 1% or higher, as it suggests smart-money interest. This is highlighted as a critical step in my framework for picking microcap coins. However, GeoCoin isn’t a microcap; it is a midcap. And we are currently in the heart of a bear market. It is unreasonable, I believe, to expect high VNV at such a time… at least not as high as we experience during bull cycles. Regardless, both figures are low, and 0.13% AVNV would usually put me off, or at least compel me to do extensive rich-list analysis to identify accumulation during this period. Unfortunately, as I mentioned earlier, that faculty is no longer available for GeoCoin, so you’ll have to take my word for it that, when I last looked at the top addresses, the signs of accumulation were there.

Further to the above, there is also only ~0.5 BTC of buy-side liquidity within 10% of current price across both exchanges that GeoCoin is listed on. This is, of course, another symptom of the bear market, but liquidity of only 0.18% of network value is not particularly impressive.

That concludes my analysis of the figures. Onto the GeoCoin 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 five main platforms to examine: Twitter, Facebook, Telegram, Discord and Slack.

GeoCoin doesn’t have a Telegram or Slack, but is present on the other three. To start with, I calculated some general metrics across the GeoCoin Twitter and Facebook pages, and they are as follows:

Twitter Followers: 10170

Tweets: 264

Average Twitter Engagement (30-Day): 0.18%

Facebook Likes: 1815

Facebook Posts (90-Day): 27

Average Facebook Engagement (90-Day): 0.08%

Again, these metrics will become more insightful as tools of comparison rather than standalone figures but there is certainly some promise here. According to RivalIQ, media companies (the closest industry in the 2018 report to what I would consider GeoCoin to be) tend to have an average Twitter engagement rate of 0.013%. GeoCoin’s engagement is almost fourteen times above the average. With Facebook however, the average media company generates a 0.08% engagement rate: identical to that of GeoCoin. Twitter is clearly their strength, though that comes as no surprise given that Twitter acts as the social hub for the cryptosphere. Going broader, the average engagement rate on Facebook across all industries is 0.16%: GeoCoin’s is half the overall average. The all-industry average Twitter engagement rate is 0.046%… GeoCoin are still almost four times stronger than this.

Moving away from the two metric-focused social platforms, let’s talk about their Discord channel; a platform more suitable for fostering conversation and sparking ideas on development.

Given that the GeoCoin Discord channel operates within the larger Ubiq group (of ~4589 members), I was expecting something different to what I found. There is a great deal of productive conversation, with ideas on development being bounced back and forth, as well as progress updates pretty much every day. However, all of this conversation is being generated by 6 or 7 members, which is less than I’d have hoped for, especially since there are over 5100 active users of the GeoCoin platform.

Bitcointalk:

Finally, let’s look at the Bitcointalk thread. This, for me, is the hub of all my altcoin research, and has been for years. GeoCoin’s thread smashed it out of the park. There are 240 pages of conversation since January 2015 and 4788 posts. This works out at an average of over 100 posts per month. However, in the past three months, there have been 94 posts, which is a slow-down from the average but still a high level of activity. What I gathered from the thread is consistent development updates by the lead developer, with questions being answered within 24 hours. These 94 posts were written by ~30 different individuals.

The BTCTalk users seem excited by the project, with most expressing their interest in the progress of development and close-to-zero expressions of a less favourable kind. The thread does what it is meant to do: it provides clear, concise and consistent updates on the project. On September 4th, the lead developer announced that the ‘GeoCaching Interface’ is in development, following the launch of which there will be a heavier focus on marketing – a gem of information for the speculator. Overall, impressed. The Bitcointalk thread made up for the small concentration of conversation in the Discord channel.


Development:

Here we come to what is, for many, the crux of any fundamental analysis of a project: development. However, for me, price is always the primary concern, and development is perhaps second in rank. For this section of these reports, I’ll do a brief run-through of general project leadership, followed by an evaluation of the roadmap, whitepaper (there isn’t one for GeoCoin), website and wallet. I’ll conclude with some general thoughts on the project’s past, present and future development.

Project Leadership:

From what I can gather, there is one lead developer that is running the entire project. This is Dave on Twitter. Single-person teams can be risky for the speculator, particularly when there is a smaller community that partake in conversation on development. Keep in mind that GeoCoin has over 5100 active users of the geocaching platform, but less than 50 individuals across BTCTalk and Discord that are actively involved in discussion. This raises a potential question: would community members step in if Dave was to step down? ‘If’ is emphasised for good reason, as, from my research, I do not expect such a sitation to arise, but the question must be asked nonetheless. My honest answer is that I believe there would be community support for development of the project. GeoCoin is safely nestled under the Ubiq wing, and from the conversations I have read through across their social platforms, there is certainly a keen interest in continued development of GeoCoin. Further, the lack of animosity amongst the small community (a rarity in this space) is another positive sign for the doomsday scenarios. The way things tend to play out in such situations is with utter chaos for projects with bickering amongst their own dedicated community and with smooth transition for those, like GeoCoin, with general excitement and positivity. Of course, I maintain that this is simply an if-then scenario, and not one that I expect to arise.

Roadmap:

The roadmap can be found as a section on the website, but it did disappoint me; not for all bad reasons, however. The roadmap is presented as a quirky infographic, which is visually appealling, but it lacks the specificity and clarity that I like to find in a roadmap, as I talk about in my book. I’d have liked to have found projected dates for clearly delineated goals, concise progress summaries and a more extensive roadmap for the future. Part of my disappointment, however, comes from the fact that GeoCoin has already achieved most of the roadmap it has presented. This is a double-edged sword, as it suggests effectiveness on the part of the developer as well as work ethic, but it lacks ambition. Perhaps a revised roadmap will come with the marketing campaign. Scoring it out of 5, I’d give it a 3.

Whitepaper: N/A

Website:

The website has clean UI, if a little basic, but it is easy to navigate and informative. There is clear and active promotion of geocaching (the primary concern of the project), which is good to see. The website lacks depth…  a regularly-updated blog would have been useful, especially for a project like this one.

Wallets:

GEO runs on the Ubiq blockchain, so it can be transacted on any UBQ wallet.

General:

Generally, the main point-of-interest for me regarding GeoCoin’s development is that it has already achieved its primary innovation: successful merging of cryptocurrency with geocaching. The transition to the Ubiq blockchain was a smart move, too. Looking forward, I like that they are considering the introduction of a burn mechanism and that there will be in-app events to foster user-base growth.


Other:

I believe I covered everything in the above sub-sections. That concludes the fundamental section of the report. If you feel I’ve missed something out regarding fundamentals, please do let me know in the Comments section.


Technical

Now, the fun part. Why did GeoCoin come onto my radar in the first place? I talked about it in my last Market Outlook, but let’s take another look at the chart:

GEO/BTC

GEO/USD

In all honesty, all I really needed was that first chart with a horizontal line at 9k satoshis. It is the most important level in GeoCoin’s price-history, and buying below that level has been very profitable numerous times, given a sufficient time-frame. Ranges across GEO/BTC and GEO/USD have formed clearly and tightened of late, indicating an accumulation zone at this oh-so-significant level once again. GEO/USD has returned to July 2017 levels; the levels that preceded a 6000+% move between then and January 2018. Historically-speaking, this is a very good area to accumulate a position, with an aim of an average entry below the 9k satoshis level. Upside potential is huge going forward based on previous prices. Overall, very promising.


Conclusion

This report has run on for well over 3,000 words now, and I think it’s time to draw it to its conclusion. I’ve spent many many hours this week researching and compiling this for you guys (and myself), and, quite frankly, I want to stop typing…

However, I have found this entire process to be very insightful and I look forward to writing more, if only for the possibility of deep cross-comparison. Perhaps, in the future, I’ll also devise a way to make these reports more visually appealling; particularly the Metric Analysis.

My final grading for GeoCoin is a solid 4 out of 5. It is strong in almost all the right areas, but there is certainly a lot of room for fundamental improvement, if not technical.

Please do let me know if you’ve enjoyed this first Coin Report; which sections you found most valuable; where you’d like me to develop further/refine/improve etc. And feel free to leave any questions in the Comments section and I’ll get back to you. Oh, and sign up for the mailing list if you want these delivered direct to your inbox!


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