Showing posts with label ICO. Show all posts
Showing posts with label ICO. Show all posts

December 22, 2017

Correlation between cryptocurrency value and exchange listings: Expert Blog

By Munair Simpson - December 21, 2017 (cointelegraph.com)


There is a positive correlation between the value, or market capitalization, of a cryptocurrency and the number of exchanges that it is listed on. For the top 1,000 cryptocurrencies, the correlation is over 50 percent. Rudimentary data analysis indicates that the market capitalization of the coin or token crudely increases with exchange listings. However, correlation is not causation and it is not wise to conclude that simply listing a cryptocurrency on more exchanges always adds more value to the cryptocurrency.

Correlation

Correlation explains how much two variables are related. A correlation of 100 percent would mean that the positive change in one variable is perfectly related to the positive change in the other variable. If the correlation between cryptocurrency value and exchange listings was 100 percent, then it would possible to observe an exactly proportional increase in market capitalization with an increase in the number of exchange listings.

Since the correlation is over 50 percent, it might be tempting to list on as many exchanges as possible to maximize token value. Do not be tempted. Even though market capitalization and the exchange listings are somewhat linearly correlated, it does not mean that listing on more exchanges definitely results in an increase in market capitalization. Especially when a little more analysis reveals the presence of major outliers.

Outliers

Thanks to the Coin Market Cap API it is easy to observe outliers in the top 1,000 cryptocurrencies. Dumping the market capitalization and exchange listing data into Google Sheets or an RStudio dataset helps to explain a lot. Plotting value against listings shows that cryptocurrencies like Bitcoin are not normal in comparison to the majority of other cryptocurrencies.

Plotting the log of market capitalization against exchanges listed reveals roughly three different clusters of value in the cryptocurrency world.


Clusters of value

The first cluster includes Bitcoin, Litecoin, Ethereum and Bitcoin Cash. This group of cryptocurrencies are all listed on over 75 exchanges. The second cluster of cryptocurrencies are scattered between 15 and 55 exchange listings. The second includes DASH, Ripple, ZCash, and popular cryptocurrencies. Finally, the vast majority (~98%) of cryptocurrencies have 15 or fewer exchange listings.

Statistical summaries show that median cryptocurrency is listed on just two exchanges and the average is listed on just under four exchanges. Using a box plot to graphically describe the data shows the large number of outliers in relation to the majority of cryptocurrencies.

Box Plot of Exchange Listings. Data obtained from http://www.coinmaketcap.com on Dec. 10th 2017.

In general, the major outliers widely function as mediums of exchange and stores of value. To be globally valuable as intermediary instruments used to facilitate buying, selling or trading goods and services, these cryptocurrencies should be listed on many exchanges as possible. Currencies generally have more legitimacy the more widely they are used, and listing on many exchanges advances those network effects.

Not all of the outliers present in the dataset serve as money. Ethereum is an exception. Though it was designed with a different purpose in mind, the market decided that it too should function as a medium of exchange and store of value.

There are other exceptions in the first and second cluster of cryptocurrencies. Qtum and TenX were also not purposed as mediums of exchange, yet they are listed on over 15 exchanges.

Strategy implications

In spite of these outliers, analyzing the relationship between value and exchange listings has implications for cryptocurrency strategy. Further dividing cryptocurrencies into subsets and rerunning the analysis provides more meaningful information to can reinforce or redirect the intuition of a cryptocurrency strategist.

Knowing that the outliers are primarily used as stores of value or mediums of exchange, it only makes sense to list widely if planning to compete with cryptocurrencies used as money. There are always exceptions. However, if the purpose of a cryptocurrency is to be a better form of money, then it may need to be widely listed to in order to compete with the other widely listed currencies.

For example, cryptocurrencies competing to be a medium of exchange in Venezuela may increase their market capitalization through listing on a Venezuelan cryptocurrency exchange. With each new geographical market entered, it might experience additional increases in value.

This might not be the case with tokens. Since tokens usually represent an asset, the economics of valuation with respect to exchange listings may be different. Being listed on a Venezuelan exchange may add no value at all.

Security tokens may observe increased market capitalization with exchange listings, as investors will appreciate more trading options in the case there are problems at one of the major centralized exchanges. However, there will most likely be diminishing returns to increasing exchange listings.

The long tail

Focusing on cryptocurrencies with fewer than 15 listings makes sense for getting a rough idea of the relationship between value and exchange listings for average tokens. This subset is the third cluster of cryptocurrencies. They represent over 97 percent of the top 1,000 cryptocurrencies. This cluster also includes cryptocurrencies, like IOTA and NEM, which are not tokens but are highly valued and listed on fewer exchanges than their peers.

Top 1000 Cryptocurrency [Data Source: http://www.coinmarketcap.com]

Graphically, with the aid of a histogram, it is possible to observe the concentration of cryptocurrencies. The chart exposes the first and second clusters as the long tail cryptocurrency exchange listings.

Focusing third cluster makes it possible to notice that the linear correlation between market capitalization and exchange listings drops to 20 percent. That means that it might not really matter that much how many exchanges the average token is listed on. The correlation between the average token’s value and exchange listings is not very significant.

Summary

The ICO is becoming an increasingly popular fundraising vehicle. Traditional businesses are starting to look to this crowdfunding mechanism and bypassing other traditional forms of financing.

Nonetheless, planning an initial coin offering requires a lot of thought and thorough research. Even deciding which exchanges to list on and how many exchanges to list on requires careful research. Fortunately, there are already hundreds of cryptocurrencies out there that can help to determine if it is worth the time and effort to pursue a certain strategy.

There is a correlation between market capitalization, but it is not very strong. Be guided by that. Whenever in doubt about correlation and causation, just look at Litecoin and Bitcoin. Litecoin is listed on 94 exchanges compared to Bitcoin’s 88, yet Bitcoin is a magnitude larger in market capitalization.

Munair Simpson is a business strategist and the principal researcher at Useful Coin Research. Munair lives in South Korea and enjoys teaching Capoeira when not thinking about the future of finance. Munair graduated from the Wharton School with an MBA in Marketing.

Belarus legalizes cryptocurrency payments & ICO's

By Alexander Lukashenko - December 22, 2017 (www.ccn.com)


Belarus, a country wedged between Russia and the European Union, recently legalized cryptocurrencies and Initial Coin Offerings (ICOs), in a move that’s set to drive private sector growth and attract foreign investors to the country, a former communist republic that’s still dominated by its state, filled with inefficient enterprises, and dependent on its neighbor Russia’s money and subsidies.

Bitcoin’s current crash, that’s already led the cryptocurrency below the $11,000 mark before it bounced back to $12,401 at press time, seemingly didn’t put off the country’s president, Alexander Lukashenko, who signed the decree on Friday while on the move.

The decree notably gives cryptocurrency enthusiasts tax breaks and legal incentives, as its goal is to help turn Belarus into an international tech haven, Bloomberg reports. In a statement Lukashenko, a former collective farm manager who’s in the past labeled the internet “garbage,” said:

“Belarus will become the first government in the world that opens wide opportunities for the use of blockchain technology (…) We have every chance of becoming a regional center in this area.”

Designed to attract cryptocurrency entrepreneurs looking to avoid regulatory scrutiny over cryptocurrency transactions and ICOs, the decree also exempts revenue and profits from all operations using cryptocurrencies for the next five years.

Speaking to Reuters, Anton Myakishev, the head of Microsoft’s offices in Belarus, stated that “the decree is a breakthrough for Belarus” as it gives the industry the “possibility to make a leap forward in its development,” while allowing foreign capital to enter it in comfortable conditions.

Creating a “Tech Nation”

Earlier this month, Lukashenko said that his goal in signing the decree is to turn Belarus into a “tech nation.” Not only does it legalize cryptocurrencies and ICOs, it also allows local IT companies to partly operate under English law, so it’ll help foreign investors who struggled to navigate the country’s legal system.

Denis Alinikov, a senior partner at private law firm Aleinikov and Partners, who helped draft the decree, stated:

“We regularly faced legal problems. When a Western company buys a Belarussian company they try to structure the deal outside Belarus. Investors don’t want to deal with Belarussian legislation.”

The decree further establishes a direct legal link between token issuers and their obligations towards its holders. To protect against fraud, it sets capital requirement for cryptocurrency exchange operators, while introducing smart contracts in the country.

The IT sector is one of the few that’s thriving in Belarus, as it attracts foreign workers who work for about five times the country’s average wage in its so-called Hi-Tech Park. It’s arguably the most prominent sector of the country’s economy, which is set to grow by 1.7 percent this year, according to Reuters.

Notably, Belarus was home to popular messenger application Viber, as well as the online gaming service World of Tanks, which made its founder the country’s first billionaire.

In an interview, Vsevolod Yanchevsky , head of the Hi-Tech Park, said:

“The decree has been written exactly the way our tech community wanted it. Belarus will be one of the best jurisdictions in the world for cryptocurrencies and blockchain.”

Belarus’ move may have been influenced by its neighboring country Russia, who’s upcoming draft law on cryptocurrency and ICO regulations is set to come on December 28. The law will reportedly consider cryptocurrencies as “other property,” and introduce possible limits on individual ICO investments.

The bill, which will prioritize the protection of retail investors, is likely going to be passed in March 2018. Back in October, President Putin approved a timeline for a framework on cryptocurrency regulations. Reportedly, the country may also soon be launching its own state-sponsored cryptocurrency, the Cryptoruble.

Alexander Lukashenko image from Shutterstock.

December 01, 2017

Russia Developing Global ICO Ratings Standard With 30 Countries

By Kevin Helms - December 01, 2017 (news.bitcoin.com)


The Russian Association of Blockchain and Cryptocurrency has partnered with representatives of 30 countries to develop a global ratings standard for initial coin offerings (ICOs). The association is also in talks with the Russian central bank to impose limits on ICO investments.

Russia Developing Global ICO Ratings Standard


The Russian Association of Blockchain and Cryptocurrency (RACIB) has announced that they will be developing a uniform ratings standard for ICOs, Izvestia newspaper reported this week.

The association was established with the participation of Herman Klimenko, the adviser to the President of the Russian Federation on Internet development. Its goal is to unite blockchain participants as well as owners, miners, and investors of cryptocurrencies and ICOs.

The director of the association, Arseny Shchetsin, told the news outlet that this development “will become the first in the world standard of ratings in the field of ICO,” noting that it will be applicable to not only Russian companies but also foreign ones. Currently, the industry operates on a self-regulation basis with each ratings agency adopting its own ratings system. RACIB decided to develop a standard because there is “a large number of scammers who manipulate the ratings” in the ICO market, using “unknown methodology and for a fee to raise the score,” he explained.

To develop this global standard, RACIB entered into partnership agreements with 30 organizations, which it considers “the largest players in the industry from different countries,” the publication conveyed, adding that:

"The association cooperates with representatives of Germany, Switzerland, Australia, Singapore, India, Bahrain, Kazakhstan, Ireland, Poland, Czech Republic, Turkey, Latvia, Indonesia, Lithuania, Malaysia, Estonia, etc. The requirements of the Russian standard are planned to be coordinated with the international community".

Restrictions on ICO Investments


Also this week, Vladimir Putin’s advisor on Internet development, Herman Klimenko, said that the association is discussing ICO investment restrictions with the central bank, Rambler News Service reported. According to him, an investment ceiling as low as $1,000 per project and $10,000 per year are being discussed.

“Collecting an amount of $2-5 million with such restrictions is very easy. The state, naturally, will not legalize the crowdfunding projects in the amount of $200-300 million for one project,” he elaborated. “But some reasonable limitations for medium-sized businesses, I think, are quite realistic for them,” he emphasized and was quoted saying:

"What we are now talking about with the central bank is a certain restriction on the maximum amount of attracting, for example, from a person, and restrictions in general per person per year".

Images courtesy of Shutterstock and RACIB.

November 26, 2017

Navigating the ICO gold rush – 4 critical ICO evaluation factors

By Matthew Loughran - November 22, 2017 (cryptovest.com)


ICOs are raising millions of dollars, but investors are still not sure how they can evaluate these opportunities. In this post we present the four critical ICO evaluation factors you should consider.

As I write this I am sitting just a few miles down the hill from where the first piece of gold was unearthed by James Marshall in 1848 at Sutter's Mill in Coloma California. This discovery kicked off the massive migration of over 300,000 wide-eyed individuals seeking their claim to a better future. As they braved a new path into the unknown with a prospect of prosperity, the hills and mines played no favorites, the environment was harsh to all no matter what your background or status.

Over the last year, the cryptocurrency markets have provided entrepreneurs and investors a sense of what it must have been like for the pioneers of the California Gold Rush. The aura of the ICO has been unearthed, this genie is not going back in the bottle, shattering fundraising records - a new migration is underway. The evolvement of the global blockchain movement is touching every industry with the inpouring of over $3.2 billion in funding this year.   

We have seen the meteoric rise of organizations raising hundreds of millions of dollars and the dramatic fall of companies from poor governance and internal controls. We have witnessed entrepreneurs with nothing but a business concept and a whitepaper raise millions of dollars on the premise of ‘what could be’, in comparison to what reality is. We have seen the rapid interest of government regulation around the globe with unclear paths on how to regulate decentralized markets with anonymous funding mechanisms.

So, if you were looking to plant your flag, grab your pickax and try to find some gold in those hills like past pioneers then let this be a simple guide to help you evaluate those tokens you’re thinking about buying. 

To start, I am going to skip the obvious like the strength of the executive team and their history, does their website pass the scam test (stay tuned for a dedicated story on this), and is the company incorporated.

What this article is about, is how to look at an ICO whitepaper, website and supporting materials to evaluate if it's a good deal or not. But first, a disclaimer: this article, the publication, and I, the author, are not providing investment advice, and accept no legal liability whatsoever arising from or connected to, the accuracy, reliability, or completeness of any material contained in this article. Now that the legal stuff is done with, let's jump in with the four things I look at when evaluating an ICO. 

Market Size


I look to see what is the market size for the opportunity the organization is getting into. Now I know what you're going to say, “blockchain will create its own markets”, yes that may be true, but I am looking for token utility now or within the next 12 months, not 10 years from now. Is the market size large enough to support multiple growing companies in the space? Companies that are both on and off chain will compete for the same customers in most instances. Also, to be clear, I am referring to the addressable market, which is the section of the market the company serves, not total market. Do macro factors dictate the target customer segment which in turn will affect utility and token value? All these questions need to be considered.    

Revenue


Yes, I listed revenue! We are starting to finally see some hints at marketplace sophistication from a company standpoint and investor standpoint by which companies that are currently in operations are migrating to blockchain technology, or are in beta stage with contracts, MOUs (memorandum of understanding) and LOIs (letter of intent) signed and in hand. If a company is pre-product then a revenue roadmap with targets, milestones, and plans for achieving those benchmarks are better than nothing.

Just an FYI, most whitepapers that are sent to me lack most of these milestones listed and this poses a significant red flag. If the organization is just starting out they need to be pre-selling the model, product or service. Typically, my first question when speaking with founders is, what is your path to revenue? When you see that an organization has been selling or pre-selling their product and has a starving crowd waiting for their release, then the path to revenue is clearer.  

Uniqueness  


What makes the product unique (and don't say blockchain)? A unique product or service not only provides something new and different but will not be commoditized and easily replicated by competitors. Does the organization have a true differentiator? Is there a secret sauce they talk about? If you removed blockchain from their offer would it still be attractive? If you have a chance to ask questions to a founder via an AMA, be sure to ask them: How will you stop the value of your firm from being cannibalized by existing competitors or new entrants? The response should speak volumes on their market knowledge, how they tend to make their product sticky with clients and long-term product adoption.

Show me the Metrics


In Jerry Maguire fashion, you want me to "show you the money" well you better show me the metrics. There are several things I look for when reviewing white papers. First, does the company have a forecast of revenues, and do those financials align with industry startups that are off chain? Because the underlying premise of blockchain is to be open and transparent, have they gone full kimono with their financial statements? This is not a use of funds pie chart, I mean are there sales targets? What is required from a cash flow perspective to operate the business? Do they know their customer acquisition cost? Estimated burn rate? What is the revenue model - recurring, one time? Can they anticipate the customer payback period? I would not be surprised if over half of the companies running an ICO right now have even spoken with their target customer let alone tested sales or distribution channels.

If you are new to evaluating businesses, their feasibility and how they will fair over time, then make sure the company you are evaluating answers these five questions at a minimum. What is the product? Who will buy it? Why will they buy it? Why will it win out against the competition? What is the size of the market/opportunity?  

The blockchain and crypto markets are just still in their toddler years, which as an entrepreneur or an investor, you should be ecstatic about. There will be plenty of ICO projects for you to evaluate, review, invest or pass on, but I can only hope you arm yourself with the right shovel and pickax to find gold in those ICO hills.

November 24, 2017

Russian billionaires invest in cryptocurrencies

By Joshua Althauser - November 24, 2017 (cointelegraph.com)


Russian billionaires Roman Abramovich, Aleksandr Frolov and Aleksandr Abramov are reportedly investing large amounts of money into digital currencies like Bitcoin through the European fund called Blackmoon Crypto.

The fund, which is a subsidiary of Blackmoon Financial, is intended to establish and maintain the best framework for tokenized funds around the world.

Meanwhile, another Russian billionaire Roman Trotsenko is planning to launch a platform for exchanging digital currencies and organizing initial coin offerings (ICO). Based on a report by local newspaper The Bell, Trotsenko claimed that he wants to meet the demand by investors who want to invest in the virtual currencies.

“We had an interest in investing only in Bitcoin and we’re developing the infrastructure; we’re not going to move passengers, but rather service them on the ground.”

Position of the Russian government on cryptocurrencies


Trotsenko’s proposed digital currency platform, however, is facing uncertain future before it has even started its operation. This is because the Russian government has a confusing position on how it will handle the virtual currencies. The government is scheduled to issue official regulations on cryptocurrency mining and initial coin offerings (ICO) in July 2018.

However, in late November 2017, Communications Minister Nikolay Nikiforov has claimed that the government will “never” legalize the virtual currencies.

Because of this pronouncement, Trotsenko said that he is awaiting further developments before launching his already fully functional platform. He further claimed that he already raised the issue of regulating and legalizing the cryptocurrency market with Russian President Vladimir Putin in September.

In early November, the Russian central bank has launched its digital currency CryptoRuble, which is designed to be the only virtual instrument to be recognized in the Russian market.

The CryptoRuble is also intended to enjoy some degree of regulatory freedom. In 2016, revenues from Russian ICOs have totaled more than $300 mln.

November 22, 2017

Rare Pepe Blockchain Cards have produced more value than most ICOs

By Jamie Redman - November 23, 2017 (news.bitcoin.com)


Over the course of 2017, there’s been a lot of blockchain projects, and the Initial Coin Offering (ICO) craze has been off the charts. One thing is for sure: a great majority of these ERC-20 tokens and some of the aspiring distributed ledger efforts have produced very little value, minus the gains and losses captured from speculative markets. However, there is one blockchain project created a year ago that has created a robust ecosystem based on a popular internet meme — Pepe the Frog.

Preserving the Rareness of Pepe the Frog


It’s been over a year since the Rare Pepe blockchain trading card economy was created bringing the dankest, most rarest pepes to the cryptocurrency environment. News.Bitcoin.com reported on the launch of the first few series of Rare Pepe cards traded as counterparty (XCP) assets over the bitcoin blockchain. 

Rare Pepe cards are basically assets designed utilizing the Counterparty blockchain similarly to the popular card game Spells of Genesis. Counterparty assets are held within the Bitcoin blockchain inside traditional BTC transactions. These tokens or assets are different than the technology used in Colored Coins, as they are not tethered to a specific BTC address or balance. This allows people to transfer bitcoin without affecting underlying assets like Rare Pepes. In addition to the technology behind these collectible cards, pepes are traded on the decentralized Counterparty-based exchange called DEx. Utilizing the DEx exchange, users can purchase and exchange extremely rare pepes in XCP-denominations. Pepes can also be collected using the Rare Pepe Wallet which supports XCP, BTC, Pepecash, and gift cards.

Due to the frog’s extreme popularity, the Rare Pepe blockchain scene has a robust community, foundation, a wallet, and a trading card directory. Since then the community has grown significantly, and certain cards have been exchanged for thousands of dollars this year. As far as laughter and immutable Pepes that are always available on the blockchain go, this grassroots community has produced far more value than most ICOs in 2017.

“For years people have been trying to preserve the rarest of pepes from being stolen — Thanks to bitcoin and counterparty we can associate these Rare Pepes with tokens to make them truly rare,” explains the Rare Pepe blockchain trading card’s directory page.   

"Now Pepes can preserve their rareness and actually be traded on the market".


The Rare Pepe Blockchain Economy Grows in 2017


Blockchain-based Rare Pepes are actively traded on the market alongside the community’s native token Pepe Cash. Back in 2016 Pepe Cash was trading at less than $0.000087 per token and these days it trades for $0.02. Further, as far as the collectible pepes are concerned, some cards have traded for thousands of dollars. For instance, the very rare card ‘Lord Kek’ (only 10 made) traded for 1600 XCP or $22,720 at today’s spot prices. The first series ‘Satoshi Nakamoto’ card (300 in circulation) has traded for $200.  

The Rare Pepe Directory shows the card assets now have a total of 30 series with roughly 20 cards per set. The compendium of Rare Pepe blockchain assets now includes cards like Marty Pepfly, Pepe Punchout, Games of Trump, Pepe Soup, the Dark Pepe, Playboy Pepe and so many more. Scrolling through the entire directory of blockchain based pepes can take hours and even days to review, as the library is not only dank but vast.


The Rare Pepe Community Isn’t Going Away, It’s Immutable


These days the community’s Telegram group has over 1500 active members sharing and discussing their very favorite pepe cards. Alongside this is the Rare Pepe Foundation which has acted as the great protector from those trying to infiltrate the internet frog trading card ecosystem. For instance, the foundation claims it is preparing a 29-day Rare Pepe Training Conference that will give out truly rare certificates to the event’s participants.

“The Rare Pepe Blockchain Training Conference is a new kind of conference,” explains the foundation’s website.

"Not only will the event be the first 29-day Rare Pepe blockchain training event ever, but it will be the first one where attendees can walk away with real Rare certifications in the field, as well as continuing education credits for professional Rare credentials".


Green Frogs and DLTs


Further, the foundation details that Rare Pepe blockchain technology is being actively researched by financial incumbents, tech giants, and venture capitalists. Just a few hours of research will tell anyone this particular distributed ledger tech (DLT) based on green frogs just might transform society for the better.

So if you’re sick of hearing about blockchain projects that pretend to be backed by real-estate and diamonds, then the pepe blockchain space may interest you. ICOs that raise millions worth of ether and do nothing with it but party continue to come and go, but these dank trading cards will be cemented in time forever.

Images via Shutterstock, The Rare Pepe Blockchain Community, Foundation, and Directory.


Jamie Redman

Jamie Redman is a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Redman has written hundreds of articles about the disruptive protocols emerging today.

Switzerland - the cradle of ICO

By Margaret Nail - November 22, 2017 (bitnewstoday.com)


Swiss projects accounted for more than 20% of the funds raised out of 324 ICOs. What jurisdictions and what legal status are chosen by projects that launch ICO, read in the article by Bitnewstoday.

Jurisdictions


According to cryptocompare.com, Switzerland-based projects accounted for at least 21.52% of all the funds raised with ICO, Hong Kong - 5.38%, Australia - 1.75%, Singapore - 1.01%, the Cayman Islands - 0.55%, the United Kingdom - 0.48%.

Pic. 1 Structure of funds raised with ICO by jurisdiction

Source: Calculations of Bitnewstoday.com

Viewed in quantitative terms, 18 out of 324 projects were registered in Switzerland, 5 projects - in the Cayman Islands, the UK and Singapore.

Legal Status


As for the legal status, projects registered in the form of corporations account for 16% of the funds raised, foundations - 12%, 2% of the funds come from projects that decided to become limited liability companies.

Pic. 2 Structure of the funds raised with ICO by legal status

Source: Calculations of Bitnewstoday.com

In the course of the analysis, it was revealed that most of the projects that had already raised funds with ICO tend to issue tokens on the Ethereum platform. So 68% of the previous ICOs chose ETH tokens (ERC 20), 6% - WAVES, 3.3% - New Blockchain.

November 19, 2017

NEO surges to $44 with vague Tweet hyping an upcoming announcement

NEO has surged by over 50%, trading at $44 after a tweet by a council member made vague claims about an upcoming announcement.

By Hunain Naseer - November 18, 2017 (cryptovest.com)

NEO went through the roof overnight, recording gains of more than 50% and is currently trading at $44, up from around $28 just yesterday. The surge seems to be related to a vague tweet from Malcolm Lerider, a member of the NEO Council.

The message, which is in Mandarin, has been roughly translated to mean:

"Moving forward, never stopping, when you have read this, you are one with neo, let's change the world together 3 days to an announcement 3 lifetimes of blessing"

Though not very clear, the message has fueled bullish sentiment in the community as trading volume went from just under $41 million on Thursday, to over $252 million on Friday, and is currently over $400 million. NEO’s market cap has also gained around $1 billion over the last 24 hours.

There is a lot of speculation around an upcoming announcement to do with China’s ban on ICOs, and some in the community believe NEO may reveal a partnership of sorts, becoming the go-to token for new ICOs seeking to raise capital in the country.

Additionally, Monday also marks the release date of the NEX whitepaper, (NEX is an upcoming decentralized crypto exchange), which would detail how the decentralized exchange will work, and may even be accompanied by a much-awaited announcement about its ICO, which is expected to utilize the token sale legal framework developed by the NEO Council.

According to an official announcement by the City of Zion (CoZ) last month:

“NEX platform is built on a completely new protocol developed within the NEO ecosystem, utilising the best features NEO platform has to offer. NEX will consist of a reference exchange application, which will make it easy for developers building exchanges and payment services, to integrate with the NEX protocol.”

It remains to be seen what big announcement comes out on Monday, and at this point, it’s anybody’s guess. However, if this turns out to be false hype, it will damage NEO’s reputation and buyers entering the market at this stage may regret it.

If there is a major positive announcement regarding NEO’s integration into the China-ICO story, we may see prices rising even higher and easily surpassing NEO’s previous all-time-high.

November 16, 2017

10 keys for evaluating Initial Coin Offering (ICO) investments

By Michiel Mulders - July 22, 2017 (cryptopotato.com)

An initial coin offering (ICO) is a fundraising method that trades future crypto coins for cryptocurrencies which have an immediate, liquid value. Usually, a percentage of the tokens is sold to ICO participants and a percentage kept for the company’s needs (private investors, etc. Terms differ from one ICO to another). An ICO allows both big and small investors to fund the projects they like. The recent year carried thousands of successful ICO stories. The motivation for the project is obvious. The motivation for the investors of the ICO is that the price of the token would be higher (or much higher) than the token’s price during the ICO.

The highest value raised by an ICO is Tezos, which raised a record breaking $232 million in less than a month! Many factors influence the chances for a successful ICO and they can predict whether it will be valuable for its investors.

At this point it is right to mention less successful stories like the Mycelium ICO. Its team members just disappeared after raising the money, and later it was reported they used the funds to pay for their own vacation. The lack of regulation might be one of the reasons it happened. Just days ago, $7 millions were stolen as CoinDash’s ICO started. Right before the start of the token sale, their website was hacked and the ICO wallet address was changed to the hacker’s address.

This article will discuss the main keys to pay focus on when evaluating an ICO investment.

* Important warning before we start: ICOs are a high-risk way of fundraising. Never invest anything you can’t completely afford to lose. Keep in mind that due to a lack of regulation, you will have difficulty getting back your lost money in case of any failures.

1 – Team Composition


Find out everything you can about the team, especially the development team and the advisory board. Look up each team member for relevant experience. Google their names. Visit their LinkedIn profiles. Look for famous  names among the advisory board of the project. Find out if the team has any crypto experience and more importantly – in which projects, or ICOs, they were involved with and the impact they had. 

2 – Bitcointalk.org Thread


A good starting point is the project’s announcement (ANN) thread on BitcoinTalk.org, as Bitcointalk is the biggest forum for Bitcoin and crypto related issues. It is strongly recommended that you read the messages carefully. Investor’s concerns will be answered (or may be unanswered) in this thread. It is a bad sign when the developers avoid answering certain questions or aren’t collaborating. Sending devs a personal message to see how responsive they are is also a good idea.

Each message on Bitcointalk contains the rank and activity degree (number of past messages) of the sender. Be aware of newbies and low-ranking writers. Reputation has become very important and significant.

Be aware of experienced writers comments, and also look for negative messages, sometimes it could be a warning sign. Use Select [All] to see all comments in the thread and use CTRL + F (Windows) to search for red flag words like ‘scam’, ‘con’, ‘MLM’. See the relation between the search results and the total number of replies as can be seen in the following live example:

Source: Kibo announcement thread with 287 replies and 75 hits on the word ‘scam’ (https://bitcointalk.org/index.php?topic=1572491.0;all)


3 – Stage of the project and VC investments


Evaluate the stage of the project. Does it only have  a whitepaper? A beta version? Is there a launched product with limited functionality? Prefer projects which have “some lines” of working code, however, many ICOs have proven they can become success stories without any code written.

VCs (venture capital) tend to invest and support projects from early stages. Look for this information usually on the main page of the project’s website. It’s likely to be considerable if a well-known crypto VC is involved, like Blockchain Capital or Fenbushi (belongs to Vitalik Buterin – founder of Ethereum).

4 – Community and Media

It is crucial to have a wide open supporting community like a public Slack for all investors. Openness is as crucial in gaining our trust as the Github code. Try to grasp the atmosphere within the community. Look at the size of the community and its activity.

Source: Slack community QRL – #trading channel

Other sources like Reddit, Twitter or Facebook can be relevant when evaluating the project. Be aware of bounty posts. It is a common practice to launch a bounty thread to reward users for spreading positive information about the project to increase media coverage, or to help out with translations. These bounty threads can stimulate the hype around the project but they are not very objective. On the other hand some investors participate only for some tokens.

Source: ABAB Twitter Bounty Rules (https://bitcointalk.org/index.php?topic=2004773.0)





5 – What do they need the token for? Is the blockchain necessary?


ICOs mean the creation of a new dedicated token for the project. One of the most important questions each project needs to answer is what is the token for? Why isn’t Bitcoin or Ethereum enough to serve as the project’s token? Yes, many projects just make up a scammy story. Hey, an ICO can’t be an ICO without a dedicated token. The same question needs to be asked regarding the use of the blockchain technology behind the project.

6 – Unlimited / Hard cap


In the early days of crypto ICOs, the difference between open and hard cap didn’t have the same impact as today’s ICOs. An open cap allows investors to send unlimited funding to the project’s ICO wallet. The more coins are circulating, the less unique your tokens become for the trading afterwards – through less demand.

As ICOs become mainstream within crypto land, enormous amounts are collected. Take a look at Bancor, this project raised an astonishing $150 million in just three hours. This resulted in no percentage gain for the investors. Keep that in mind when participating in ICOs with no cap.

On the other hand, you don’t want to be the only one investing in the project. Exchange’s have much less interest in projects that raise very little, which makes it harder to sell these tokens after release.

7 – Token distribution – when and how


Greed can be defined by a high token distribution to the team members, let’s say, more than 50% of the tokens is suspicious. A good project will link its token distribution to the roadmap. Because each phase or milestone of the project requires a certain amount of funding.

Watch for the token distribution stage. Some projects just release their tokens hours after the ICO has ended. Some projects need to develop a beta version before sending out the tokens. If you look at the percentage gain of Etherium (one year between ICO and token distribution, around 500% gain), Augur (1+ years, 1500%) and Decent (8 month, 350%), sometimes this break creates a very positive hype around the project.

Source: Augur token distribution – Only info available about the usage of fundings. Roadmap is poorly described without link to this chart.


8 – Evaluating the Whitepaper


Most typical investors actually don’t read through the whitepaper, even though it contains all the necessary information about the upcoming project and the ICO.

Don’t hesitate to read it, or at least the majority of it. Note the strong and negative aspects and add in some of your own research. In the end, the whitepaper is the silver platter to potential investors. After reading it you should be able to answer a simple question – what kind of value does this project bring to our world? You’ll also learn what you’re investing in.

9 – Quality of the code – Meet Githhub


If you have a little bit of programming experience, you should be using it here. The quality of a developer can be understood by analyzing some of their code. As a non-techie, it is still possible to evaluate their quality by looking at the consistency of the code. Another good indicator, is the usage of proper commenting. Avoid messy developers. A piece of code reflects the attitude of a developer.

Next, the length of a function is another indicator. A function containing more than 50 lines of code should raise a red flag. Modularity is important and makes the code more readable and maintainable.

Source: Piece of readable code by editor with proper commenting



Crypto projects tend to have open-source code. This creates trust among the project’s community, encouraging devs from the community to make suggestions or improvements. An open-source project provides the opportunity to look at the commit logs. A commit is essentially developer slang for pushing a piece of code to the Github code repository.

Source: Github Code repository of QRL project (https://github.com/theQRL/QRL)


 You can see each commit by clicking on the text saying “366 commits”. This allows you to investigate each change. The “Insights” tab gives you a more general summary of the developers activity. This tab shows a graph with the amount of commits daily. Beneath the graph, you can see the activity of each developer individually. This information is key for investigating the development team.

Source: QRL Insights (Graph) Github (https://github.com/theQRL/QRL/graphs/contributors)


It is even possible to see how popular the project is by looking at the amount of stars it receives.

Source: Github (stars)


Bonus: Ask yourself why the project chose to run on the specific blockchain. Whether it’s on the Bitcoin’s blockchain, Ethereum’s (smart contract), Waves, and more. Recent months have shown the rising popularity among the ERC-20 Ethereum based smart-contract’s ICOs. These tokens can be stored easily on Ether’s based wallets (like MEW – Myetherwallet), sometimes they don’t require exchanges to be traded, and they usually have high liquidity.

10 – The Bottom Line


ICOs will become more and more ‘mainstream’ as a method for raising funds. There will be plenty of projects to choose from, hence it will become even harder to assess these projects.

It is key to investigate and read as much information as possible and write down all the important aspects, positive and negative, before making an investment decision.

Half a billion Dollar ICO Tezos stung by second lawsuit in under a month

By Kai Sedgwick  - November 16, 2017 (news.bitcoin.com)


Tezos, a company with over half a billion dollars in crypto assets, have been rocked by yet another lawsuit. Following a record-breaking ICO four months ago, founders Arthur and Kathleen Breitman have endured a torrid time after falling out with the head of the Tezos Foundation. Concerned investors filed a class action lawsuit on October 25. Now, it’s emerged that a second suit has been filed in Florida.

When ICOs Go Wrong



When husband and wife team Arthur and Kathleen Breitman raised $232 million in a high profile token sale this year, they were hailed as paragons of success. Their decentralized Half a Billion Dollar ICO Tezos Is Stung by Second Lawsuit in Under a Monthgovernance model was going to be the benchmark against which future tokenized projects would be measured. Following a well-publicized fallout with Tezos Foundation overseer Johann Gevers, however, the project became embroiled in controversy.


Investors, who were promised a stake in “a new digital commonwealth”, are still waiting for their decentralized wonderland to materialize. Frustrated and fed up, a group of them have lost patience and filed a class action lawsuit, the second to be leveled against the Breitmans in three weeks. The Tezos lawsuit, which was filed in a U.S. District Court in Florida, alleges that the couple sold unregistered securities in violation of federal law.

Court In The Act


With SEC chairman Jay Clayton recently opining that the majority of ICOs constitute securities, Tezos’ plaintiffs may have a prima facie case. In a wide-ranging complaint, the Breitmans, the Tezos Foundation, and Dynamic Ledge Solutions, the company which owns Tezos’ intellectual property, are all cited as defendants.

The damning complaint reads:

"Notwithstanding the defendants’ attempts to avoid governmental and private scrutiny, it is clear that the financiers were indeed profit-seeking investors in a security and that Defendants promoted and conducted an unregistered offering of securities, not a charitable fundraiser".

It also cites “many misrepresentations, factual omissions and unlawful activities engaged in by the defendants – it appears [the plaintiffs] cannot, and potentially will not, see any return on their investments”.
The world’s most expensive tote bag.

They Were Promised Tezzies But Wound Up With a Tote Bag


In a quote that has come back to haunt Kathleen Breitman, the project founder likened the company’s fundraiser to contributing to a public television station. Dismissing suggestions that “Tezzies” tokens could be securities, she said it was more like receiving “a tote bag”. With the Tezos project yet to get off the ground, and investors forced to watch in anguish as the cryptocurrencies they parted with appreciate in value, the event has cast a shadow over 2017’s ICO bonanza.

The $232 million of ethereum and bitcoin that Tezos raised back in July would be worth $590 million at today’s prices. There should be more than enough in the pot to cover legal fees and compensation, should the courts find against Tezos in either of their impending lawsuits. Whatever the outcome, the experience has left a bitter taste in the mouths of investors.

Images courtesy of Shutterstock, and Tezos.

November 14, 2017

After rollercoaster crypto price weekend, European Union issues two ICO warnings

By C. Edward Kelso - November 14, 2017 (news.bitcoin.com)


European Securities and Markets Authority (ESMA) issued two same-day warnings concerning initial coin offerings (ICO) on 13 November after the preceding weekend was witness to dramatic swings in prices and volatility. One release is geared toward investors and the other is aimed at participating firms. 

ESMA Warns ICO Investors


In what might be taken as a response to a rollercoaster weekend for cryptocurrency markets, where bitcoin cash traded places with ethereum, and bitcoin shed billions, ESMA has issued two same-day statements regarding ICOs.

Dated 13 November 2017, ESMA50-157-829 focuses its attention on investors. “If you are considering investing in ICOs or have already done so, be aware of the many risks this may entail,” ESMA begins, “including the total loss of your investment. In particular, be aware that you will have no protection,” they note.

ICOs are indeed largely unregulated in the traditional sense, having gained great traction this year as at least a tail in the price-comet that is bitcoin.


“ESMA has observed a rapid growth,” they write, “and is concerned that investors may not realise the high risks that they are taking.” “ICOs are highly speculative investments,” and “depending on how they are structured, may fall outside of the regulated space, in which case investors do not benefit from the protection,” they reiterate.

The regulatory arm is one of the three European Supervisory Authorities within the European System of Financial Supervisors bureaucracy.

They continue, “ICOs are also vulnerable to fraud or illicit activities, owing to their anonymity and their capacity to raise large amounts of money in a short timeframe.” Risks include the above along with money laundering, losing one’s entire capital, lack of exit options and price volatility, inadequate access to information, and fundamental flaws in early, untested technologies, the body urges.

“Virtually anyone who has access to the Internet can participate in an ICO,” they point out.

ESMA Warns Participating ICO Firms


ESMA50-157-828 is decidedly more stern in its tone. Issued the same day, it urges firms “to meet relevant regulatory requirements.” In a cat-and-mouse, near Orwellian turn of phrase, they argue, “If their activities constitute a regulated activity, firms have to comply with the relevant legislation and any failure to comply with the applicable rules would constitute a breach.”

This might be very difficult for firms to ascertain, especially when the very same body refers to them as “unregulated.” Keen readers might ask, are such offerings regulated or not?


Some clarification might be had in the following: “where the coins or tokens qualify as financial instruments it is likely that the firms involved in ICOs conduct regulated investment activities, such as placing, dealing in or advising on financial instruments or managing or marketing collective investment schemes,” the body details. These too seem rather broad and vague.

The memorandum then sets out some basic guidelines for firms. A prospectus is urged among start-ups in the field, containing “necessary information which is material to an investor for making an informed assessment of the facts and that the information shall be presented in an easily analysable and comprehensible form,” ESMA advises.

It continues in this manner, imploring firms to also be transparent in their organizational dealings and structure along with complying with anti-money laundering regulations. “Firms have an obligation to report any suspicious activity and to co-operate with any investigations by relevant public authorities,” they say.

Images courtesy of: Pixabay, Balint Porneczi, ESMA.


C. Edward Kelso

C. Edward Kelso is a long-time fintech journalist, passionately covering the cryptocurrency space since 2014.