Coin Report #25: 0xBitcoin

Coin Report #25: 0xBitcoin

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

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

Introduction

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

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


Fundamental

General:

Name: 0xBitcoin

Ticker: 0xBTC

Algorithm: Keccak256 (Proof-of-Work)

Sector: Decentralised Mineable ERC-20

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

Launch Overview

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

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

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

Price-History Overview

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

Project Overview

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

As stated in its whitepaper:

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

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

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

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

Let’s begin with some Metric Analysis:


Metric Analysis:

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

Metrics:

General:

Price: $0.225 (2591 satoshis)

Circulating Supply: 4,544,800 0xBTC

Total Supply: 4,544,800 0xBTC

Exchange Volume: $1.064mn

Network Value: $1.022mn (117.76 BTC)

Maximum Supply: 20,999,984 0xBTC

% of Max. Supply Minted: 21.64%

Network Value at Max. Supply: $4.722mn

Exchange Volume-to-Network Value: 104.1%

Category: Microcap

Average Price (30-Day): $0.188

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

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

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

Volatility* (30-Day): -0.04345

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

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

NVT*** (7-Day): 332.9

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

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

USD All-Time High: $4.54

% From USD All-Time High: -95.4%

Premine % of Max. Supply: 0%

Premine Location: N/A

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

Liquidity-to-Network Value %: 0.46%

Supply Available on Exchanges: 135,851 0xBTC

% of Circulating Supply Available on Exchanges: 2.99%

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

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

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

Supply Emission & Inflation:

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

Average Block Time: ~10 minutes

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

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

Annual Inflation Rate: 57.82%

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

Distribution:

Address Count: 5,289

Supply Held By Top 10 Addresses: 4.73%

Supply Held By Top 20 Addresses: 6.59%

Supply Held By Top 100 Addresses: 13.24%

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

Analysis:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

That concludes this section. Onto the 0xBitcoin Community:


Community:

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

Social Media:

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

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

Twitter Followers: 178

Tweets: 98

Average Twitter Engagement: 11.52%

Facebook Likes: 50

Facebook Posts (30-Day): 0

Average Facebook Engagement: N/A

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

Twitter:

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

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

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

Facebook:

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

Discord:

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

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

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

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

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

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

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

Telegram:

The 0xBitcoin Telegram group has 278 members.

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

BitcoinTalk:

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

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


Development:

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

Project Leadership:

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

Website:

https://0xbitcoin.org/

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

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

Roadmap:

There is no roadmap available.

Whitepaper:

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

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

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

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

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

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

Wallets:

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


Technical

0xBTC/BTC

Daily:

0xBTCBTCDaily

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

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

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

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


Conclusion

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

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

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

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

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


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