Fundamental Pick: Cardano (ADA)

BBOD Rating [01/04/2019]

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price


Overview


Currency CodeADA
Transaction Start Date01/10/2017
Total Supply31,112,483,745
Market Cap1,870,396,035 USD
Protocol TypeBase blockchain
Where To BuyBinance, Upbit
Where To Trade on MarginBBOD

Cardano is a decentralised and open source public blockchain that seeks to address the key inadequacies of existing models by utilising a scientific philosophy with its foundations built upon a peer-reviewed academic framework. Thus, the project is developed by a global team of leading academics including the former CEO and Co-Founder of Ethereum, Charles Hoskinson, who understand that in order for a blockchain to achieve real-world utility it must be simultaneously secure, flexible and scalable. Consequently, considerable thought and time went into the development of the base layer protocol, with research commencing in 2015 before the official launch date in late 2017. Such scientific rigour combined with the implementation of Haskell, an industrial grade coding language, has allowed Cardano users assurance that the underlying infrastructure is fundamentally secure akin to mission-critical systems such as aerospace and banking. Ultimately, Cardano intends to tackle the problems of scalability, interoperability, and sustainability by utilising a distinct two-layer architecture and democratic governance model.

Problem To Solve


Scalability 

Perhaps the biggest issue facing blockchain protocols today is scalability. The most notable blockchains, Bitcoin and Ethereum, can currently only handle a measly 7 and 15 transactions per second (TPS) respectively. When up against established payment titans such as Visa who process 24,000 TPS, it is hard to fathom how mainstream adoption of cryptocurrency as a means of transfer will ever occur. Of course, there are blockchains such as Ripple which can handle 1,500 TPS, but such projects are accompanied by huge trade-offs, sacrificing protocol security and decentralisation for speed. There have been several attempts to solve the issue of scalability such as Bitcoin implementing the Lightning Network and Ethereum introducing Sharding. Yet ultimately, the foundations that such projects have been built upon did not have sufficient provisions for scalability from their inception. Although they may find workarounds which allow them to pick up speed over time without sacrificing security, at current, they simply aren’t viable platforms for mainstream adoption.

Interoperability 

As the cryptocurrency ecosystem continues to mature, although there will be dominant blockchain protocols such as Bitcoin is today there will also likely be numerous other blockchains that will need to interact with one another in a seamless manner. Moreover, blockchain platforms must have the ability to interact with traditional legacy systems where necessary. Comparably, in the traditional finance world, banks must use SWIFT, ACH and SEPA simultaneously without the end user ever needing to be concerned with what is happening behind the scenes. This is where interoperability between different blockchains comes into play. The problem lies in deciphering how blockchains which are already extremely complex in and of themselves should communicate with one another. This is no easy feat and has yet to be achieved to proof of concept by any blockchain project in the market. Yet it is essential for individuals to utilise cryptocurrencies to their fullest extent moving forwards. Without interoperability, one would have to rely on a single blockchain for all use cases. In reality, this is highly inefficient as every blockchain will have their own unique strengths and weaknesses that users should be able to combine to form a perfectly functioning network. Ultimately, interoperability needs to be achieved without the end user ever needing to be concerned they are switching blockchains in the first place.

Sustainability 

Thus far, financing models in the cryptocurrency market have been barely thought through in terms of sustainability. Although firms have managed to achieve astonishing sums of money from ICOs in the 2017 bull market, the model certainly isn’t sustainable in a bear market, especially as regulators continue to crack down on ICOs. Moreover, ICO funding requires the team to allocate funds in a responsible manner to ensure the long term success of a project. Although a large war chest may take you so far, how does a project continue to succeed when the money runs out? Additionally, funding received at a later stage of development often comes with inherent costs. If one allows a centralised party to fund a considerable amount of their project then they can expect that investor to have a considerable say in the direction of the business. Such centralisation is exactly what blockchain technology is trying to escape and thus it is integral that governance models not only seek to provide for their users but also for the development of a projects longevity. Ultimately, Hoskinson understands that such complex blockchains are not adopted overnight and consequently funds must be in place for years if not decades of experimentation.

Solution


Scalability 

After observing the failures of other blockchains ability to scale, Cardano designed a layered architecture which splits different blockchain functions into independent software stacks. By separating the platform into a series of distinct layers, the project has the flexibility to upgrade one aspect of the platform without interfering with other functions. Ultimately, this allows for simpler platform maintenance, ensuring upgrades are implemented swiftly and allowing the platform to develop at a much faster pace than competitors who have to alter the entire blockchain in order for progress to be made. For example, in the past lack of foresight by well-known industry players such Ethereum has led to contentious hard forks that have taken time and diluted network effects. Alternatively, Cardano will never have to deal with such issues, instead, any upgrades will be made by means of soft forks. The layered architecture works as follows, the first stack concentrates on settlements between parties on the blockchain utilising the Cardano’s native currency ADA. This initial layer allows individuals to transact value with one another, Cardano hopes this will lead to financial inclusion for the billions of unrepresented individuals in the banking system today. The second layer focuses on smart contracts, which are the digital enforced legal agreements that are likely to underpin the future of business. Finally, Cardano will provide a platform that will run Dapps that individuals, organisations and governments may utilise. Ultimately, the Cardano project is in this space for the long-haul and although their TPS may not significantly pass competitors such as Ethereum by much at current, the way their blockchain has been designed allows for long-term scalability.

Interoperability 

In order to solve the issue of interoperability between blockchains, Cardano is implementing an innovative sidechain protocol which allows value and information to be safely transferred between two independent chains with ease. Such a mechanism will initially be used in order for the internal layered architecture to transfer value and information between the settlement layer and the smart contract layer. Once this has been achieved and the project grows in user base, Cardano will strive to create bridges between their independent blockchain and other distinct chains within the ecosystem. Additionally, although the ability to integrate Cardano into traditional legacy systems is very much a work in progress, the research that supports their effort to achieve such a goal is clear and open for all to comprehend. This detailed open-source transparency is an excellent example of just how research-driven the project is and one would be hard pushed elsewhere to find such complex ideas expressed in an easier understood format for their users. Ultimately, Cardano is making clear progress towards achieving interoperability by using a methodical approach to ensure that the concept operates perfectly internally before trying to integrate into distant blockchains in an inadequate manner. This is a testament to the scientific philosophy of Cardano and will surely serve its users well in the long run.

Sustainability 

Base layer blockchain protocols need longevity in order to ensure they can compete in years to come when mass user adoption begins to occur. In order to achieve this Cardano has implemented a Proof-of-Stake (PoS) consensus mechanism named Ouroboros. One of the key attributes of this governance model is the treasury provided by transactions that occur on the Cardano blockchain. Essentially, Ouroboros has sustainability baked into its code as a 25% of the block reward for each transaction is placed into the Cardano treasury to help foster the growth of the ecosystem. This innovative use of block reward ensures the project can organically finance itself for as long as the network is functioning, the greater the project grows the more funding it will have to ensure its future. Besides, the initial funding round of 63 million USD should be plenty to keep the project up and running until user adoption can flourish. Ultimately, this mechanism avoids involving any centralised party in the project for the sake of financial necessity. This will allow Cardano to grow in the decentralised nature as initially intended, sticking true to the morals that should be upheld by all projects within the cryptocurrency ecosystem, yet are often not.

Catalysts


Longevity: Unlike many blockchain platforms which seek to become the market leader as quickly as feasibly possible, Cardano has disguised itself by introducing a more methodical approach comparable to that in scientific communities. Consequently, although such a research-driven strategy will not necessarily see the quickest implementation, Cardano is far less likely to suffer from bugs and critical failures as many other projects will likely show in time. This should provide investors assurance that the project is a safe long-term investment.

Hindsight: Since Cardano began development in 2015 and did not rush to enter the altcoin bull market in 2017 it has learnt from the mistakes of its competitors, especially concerning scalability. Such patience to provide users with an improved layered architecture that may now actually be able to scale to tackle the needs of those who are unrepresented in the financial system today shows that the project founders are certainly not in this to make money. Instead, Hoskinson and his vast distributed team of researchers appear to truly care for the needs of their users which with time will certainly build a strong and dedicated community. The influence of network effects in the blockchain market should not be underestimated.

Introduction of Futures contractsBBOD, the world’s major cryptocurrency derivatives exchange, has announced that it is launching ADA futures contracts with up to 25x leverage. Cardano project was selected as one of 16 most popular and promising projects with the most enthusiastic community and promising technology.

Risk Factors


Highly Saturated Market: If Cardano is to succeed as a smart contract platform for Dapps to be built on top of then it must compete against the numerous other blockchain platforms that already exist within the market today. As most are aware, the majority of Dapps are currently built on top of Ethereum, but other projects such as NEO and EOS are nurturing a small group of Dapps themselves. Despite this, It is worth noting that Cardano’s smart contract platform will be compatible with Ethereum smart contracts. This enables developers to transition their code over to the platform if they believe Cardano is more suited to their needs. In the long run, this may well be the case.

Project Scale: Cardano is hugely ambitious in scale and with its research-driven approach the implementation of the project for real-world use cases is likely to take a considerable amount of time. That being said the market is certainly still in its early adopter phase and being seen to be the market leader at current is not necessarily beneficial if users do not actually adopt the technology for another decade. If Cardano can achieve all it has set out to accomplish then it will certainly be a key contender in the market when mass adoption is actually present.

Conclusion


The research-driven approach that Cardano has chosen to implement to the development of their project speaks volumes in a market that is largely diluted by cryptocurrencies which appear to only be seeking short term gains. The goals of Cardano are certainly ambitious, yet appear feasible if the same transparent methodical steps are taken to slowly improve upon the solid foundations that have been established since the inception of the project. If achieved, Cardano could present itself as an immutable means of transfer of value and information for those who are truly in need. As developers and users become more informed on their options for creating smart contracts or utilising a blockchain network for self-gain, Cardano will surely be seen as one of the most secure and sensible blockchains to take advantage of. The road to a fully functioning blockchain network is certainly long but that should not deter savvy investors or users who are in this space for the long haul. Certainly, a blockchain platform to keep on your radar as the cryptocurrency ecosystem continues to evolve.


Trade Futures Contracts with TrueUSD as a deposit currency.
Go Long or Short ADA/TUSD. Up to 25x leverage.


Join our Glogal Community

Stay updated on the upcoming BBOD developments via our various social media channels:

Telegram: https://t.me/BBODCommunity

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Facebook: https://www.facebook.com/BBODTrading

YouTube: https://www.youtube.com/c/BBODTV

Linkedin: https://www.linkedin.com/company/bbod


BBOD Rating Standard

BUY: A low-risk buying opportunity

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

HOLD: Maintain current levels of position until further research is published

SELL: Investment is associated with the potential of losing capital


Disclaimer. BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis. This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold an asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

Fundamental Analysis: DigiByte [DGB]

BBOD Rating [05/03/2019]


ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

Overview


Currency CodeDGB
Transaction Start Date10/02/2014
Current Rank#43
Total Supply21,000,000,000
Circulating Supply11,509,175,132
Protocol TypeBlockchain Platform
Base ProtocolDGB
Where to trade with leverageBBOD
Where To BuyHuobi, Bittrex, Poloniex, Upbit

Problem to Solve


DigitByte aims to solve some of the key perceived shortcomings of the Bitcoin Blockchain. Although, project founder Jared Tate does not necessarily want to directly compete with the titan that is Bitcoin. Instead, he proposes an alternative for a community of individuals who believe improvements are necessary for mainstream adoption. As such, the project focuses its efforts on two distinct aspects which are viewed by many as obstacles to overcome in order for Bitcoin to function as an immutable currency, rather than a store of value. Whether illusive Satoshis Nakamoto intentions were to create an everyday currency or a store of value are outside the scope of this report, although personally, I would argue the latter.

Speed

Regardless, the speed of confirmations on the Bitcoin Blockchain means transacting fractional amounts is cumbersome and cost ineffective. In order for a transaction to be confirmed, on the Bitcoin network, one needs to wait for 6 confirmations, with each block confirmation taking approximately 10 minutes, totalling an hour. This simply does not work in retail environments where transactions are currently made in a matter of seconds using traditional intermediaries such as Visa and Mastercard. Although there have been efforts to introduce faster transactions by utilising a protocol known as the lightning network, nothing yet has come to fruition. Moreover, the limited supply of 21 million Bitcoin means its divisibility becomes questionable when working as a means of transfer. In the future, one might have to divide a Bitcoin into a single satoshi, 8 decimal places smaller than a Bitcoin itself. This is time-consuming and not especially user-friendly for small purchases.

Security

Additionally, some have questioned the security of the Bitcoin network, as although the Bitcoin Blockchain is incredibly robust at current, it only utilises one mining method. This may become a threat in the future, as those who can afford to mine Bitcoin will need to spend large amounts of money on extremely advanced hardware. Ultimately, this could lead to several centralised mining corporations controlling the network, making the likelihood of a 51% Blockchain attack more feasible. This may seem far-fetched but it is a genuine community concern for the long-term success of the Bitcoin protocol.

Solution


Speed

In order to circumvent the issue of speed, DigiByte’s [DGB] block time is 40x faster than that of Bitcoin, processing each individual block within 15 seconds as opposed to 10 minutes. Consequently, the DigiByte Blockchain is now the longest in the world, despite being introduced 5 years after Bitcoin. Superior block speed allows DigiByte to handle approximately 560 transactions per second, whereas Bitcoin can currently only handle 8 transactions. Such an achievement was the result of DigiByte becoming the first cryptocurrency in the market to implement segregated witness (SegWit). Essentially, SegWit separates transaction confirmations from the transaction information on the Blockchain, making the ledger more compact.

Clearly, fast transaction speeds afford DGB some ability to compete as a means of transfer in traditional retail markets, with Bitcoin currently being undeniably useless for fast payments. For example, Visa currently processes approximately 2000 transactions per second, only around 4x quicker than DigiByte. To put things in perspective, Visa was founded 60 years ago in 1958 and DigiByte in 2014. The DigiByte protocol doubles block processing times every two years, thus if successfully implemented, DigiByte will outpace monopolies of the payment world within 4 years. This is an incredibly exciting prospect and certainly rare in the cryptocurrency space. If DigiByte were to achieve such a feat and keep pace with industry giants, then the project would unquestionably gain large amounts of publicity, with the potential for mass adoption.

Moreover, whereas Bitcoin has a fixed supply of 21 million coins, DigiByte has 21 Billion, decreasing the amount DGB needs to be divided in order to be used for a means of transfer. For example, a cup of tea may cost you 0.0005 Bitcoin as opposed to 150 DigiByte. Consumers enjoy dealing in whole numbers as opposed to decimal figures and so this ensures the usability of the currency for small transactions remains highly functional.

Security

In order to improve upon the immense security of the Bitcoin network, DigiByte has implemented a unique mining protocol which ensures centralisation of the network by large actors is even less possible. They have achieved this by splitting mining activities into five separate pools of miners, as opposed to Bitcoins singular pool. Each separate pool requires a different level of algorithm difficulty, allowing for a more diverse and decentralised group of miners to maintain the security of the network. For instance, the immense amount of computational power it takes to mine Bitcoin means it simply isn’t feasible anymore for small actors. Contrary, DigiByte can be mined using a variety of different levels of computational power, ranging from personal computers to more sophisticated ASIC rigs which are now essential in Bitcoin mining. This has enabled the DigiByte network to span six continents with over 100,000 nodes. Ultimately, this makes centralisation of DigiByte’s distributed network impossible.

Moreover, DigiByte has implemented a multi-shield protocol coined Digishield. Essentially, Digishield prevents one of the mining algorithms from becoming dominant by constantly adjusting the difficulty of each algorithm as soon as the computational power becomes familiar with it. Eradicating the ability for miners with more processing power to manipulate smaller mining pools. Sophisticated difficulty adjustments further the case for preventing malicious centralised takeovers of the network and makes the DigiByte network one of the most secure in the world. In fact, after the success of Digishield, many other cryptocurrencies have implemented the same strategy on their own Blockchains. This continual technological foresight is ultimately why DigiByte has such a large community who believe the project is at the cutting edge of Blockchain technology and will continue to lead the way in the future.

Catalysts


Forward-Thinking Tech: DigiByte excels at being a true innovator in the cryptocurrency marketplace in terms of their underlying technology. They were the first blockchain project to implement SegWit successfully allowing for incredibly fast transactions. Whilst Digishield immense security has become widely used after it was implemented on the project. This forward-thinking approach may be unnoticed by many but should ensure DigiByte keeps pace with industry giants for when mass adoption becomes a reality.

Introduction of Futures contracts: BBOD, the world’s major cryptocurrency derivatives exchange, has announced that it is launching Digibyte futures contracts with up to 25x leverage. Digibytye was selected as one of 16 most popular and promising projects with the most enthusiastic community ( along with Bitcoin, Ethereum, EOS) .

Means of Transfer: If Blockchain technology is to be understood by the mainstream market then layman will need to see simple interactions work in practice. DigiByte provides a means of transfer which has the potential to rival huge multinationals such as Visa and Mastercard in traditional retail environments within 4 years. Regardless of this, the project could be an excellent means of transfer for remittances as it currently stands, with Western Union charging extortionate fees for 3-5 day transfers as opposed to DigiByte’s minimal fees transferring within 15 seconds. Remittances certainly have the potential to become their leading market in the future.

Risk Factors


Fierce Competition: When the project launched in 2014, Bitcoin was still the dominant cryptocurrency, although it did not possess the world standing it has today. Competing with the biggest cryptocurrency in the marketplace is not an easy task. The success of DigiByte will likely stem from a move away from their comparison to Bitcoin and towards how unrivalled speed and security allow DigiByte to become one of the first cryptocurrencies to become a successful means of everyday transfer rather than Bitcoins competency as a store of value.

Adoption: The extremely decentralised nature of the DigiByte project leaves the founder Jared Tate at the helm with little team member support for necessary marketing and business strategy activities. Despite this, the project is propped up by a large community of individuals who believe in the cutting-edge technology, perhaps a testament of what the project could become a more aggressive marketing strategy. Whether the focus, for now, is purely on excelling at becoming the most technologically advanced cryptocurrency is up for debate, but if this is the case it should be communicated to DigiByte’s dedicated community.

Conclusion


DigiByte constantly strives to ensure the underlying technology of the protocol is cutting edge in an already incredibly innovative ecosystem. Although marketing certainly isn’t the projects strong suit, the continual foresight for implementing technical updates before anyone else in the industry, such as SegWit and DigiShield, speaks a thousand words. If the project can continue on its current trajectory with continual speed and security updates, it has a real chance of becoming ‘the’ immutable currency the industry adopts. If this is proven correct, DigiByte will gain enormous amounts of publicity and most importantly has the potential to fuel the day to day adoption that the cryptocurrency ecosystem currently needs. Certainly, one to keep a close eye on as it quietly continues to succeed.


Trade Futures Contracts with TrueUSD as a deposit currency.
Go Long or Short Digibyte/TUSD. Up to 25x leverage.


Join our Glogal Community

Stay updated on the upcoming BBOD developments via our various social media channels:

Telegram: https://t.me/BBODCommunity

Twitter: https://twitter.com/BBODTrading

Facebook: https://www.facebook.com/BBODTrading

YouTube: https://www.youtube.com/c/BBODTV

Linkedin: https://www.linkedin.com/company/bbod


BBOD Rating Standard

BUY: A low-risk buying opportunity

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

HOLD: Maintain current levels of position until further research is published

SELL: Investment is associated with the potential of losing capital



Disclaimer BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis. This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold an asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

Fundamental Analysis: BBOD (BBD)

BBOD establishes a new industry standard for cryptocurrency futures traders by providing high-speed leverage altcoin trading, stablecoin deposits, and non-custodial client accounts.

Company overview

Key Metrics
Ticker BBD
Target Price N/A
Total Supply 117,382,569
PlatformEthereum, ERC-20
Token Type Utility
Utility typeTrading fee discount
Website https://bbod.io/

Blockchain Board of Derivatives (BBOD) is a semi-decentralized cryptocurrency futures trading platform that provides a real-time, ultra-fast matching engine in conjunction with decentralised, secure blockchain based settlement.

BBOD accepts deposits in the stable coin TrueUSD (TUSD) and offers futures trading on 16 cryptocurrencies against TUSD, enabling one to make profits from both rising and falling cryptocurrency prices.

BBOD’s hybrid architecture offers the user experience of a centralised trading platform whilst providing the security and privacy of a decentralised exchange.

The exchange boasts a matching engine that can perform 1.25mln messages/sec and is known for its high capacity and low latency.

Behind the platform is a professional team of 35+ employees residing in Cambridge, Barcelona, Seoul, São Paulo, Manilla, Ho Chi Minh City and Mumbai.

BBOD is primarily an altcoin margin trading focused exchange, differentiating itself from Bitmex, Deribit, Huobi DM, and Okex. The platform aims to average $100m trading volume per day by the end of 2019.

BBOD looks forward to launching the beta version in 2019.


BBD Token overview

BBD token is an ERC-20 utility token built on Ethereum and serves as a medium of payment for transaction fees on the BBOD platform. The total supply is constant at 117 million and will only decrease every day at a rate depending on trading volume due to the buyback and burn mechanism.

The BBD contract address is: 0xb79fc5505ea4f3b920ee7e3349de064226692717

Total Supply: 117,382,569 BBD

Max. Supply: 275,803,582 BBD

Please note that, Max. Supply is higher than Total Supply because BBOD performed a ‘token migration’ in 2018. BBD token-holders migrated the tokens from the old contract address to the current contact address. As a result, BBD token-holders received additional BBD tokens. The split ratio was 100-for-1.

The old contract address: 0x5ca71ea65acb6293e71e62c41b720698b0aa611c

*Definition of Total and Max. Supply: https://coinmarketcap.com/faq/

BBD as a utility token

BBD is the native utility token that functions within the BBOD ecosystem and has several core use cases, including:

PAYING FEES – All trading fees as paid in BBD. Ultimately, traders need to buy BBD tokens to execute trades on our platform. The more transactions, the bigger the demand for BBD.

CASHBACK – Users will receive a % of fees paid by them according to their daily trading volume and BBD balance. This mechanism should increase demand as well as stabilise the price of BBD.

BUY & BURN – A portion of a daily income from trading fees and the insurance fund is used to buyback BBD at market price and burn them every day. The supply will shrink everyday based on the amount of trading volume.

Demand Increases & Supply Decreases – BBD token economics has a built-in natural mechanism of reducing supply and increasing demand that is contingent on trading volume. The Buyback & Burn mechanism will cause the BBD token supply to decrease every day while paying fees in BBD generates instant demand in order for users to transact on BBOD.

Assuming the increase in demand is equal to the decrease in supply, the shift in both supply and demand curves are proportionately equal. Effectively, the equilibrium quantity remains the same however the equilibrium price rises.


BBOD vs. Competitors

BBOD is classified as a semi-decentralised cryptocurrency futures trading platform. Currently, there are a few other futures trading platforms on the market, however, all of them are fully centralised.

BBOD is the only leveraged trading platform that offers non-custodial accounts for traders.

We have identified four other projects that portray significant similarities to BBOD with regards to their trading products offering.

Table 4. Main competitors

HUOBIOKEX BBODBITMEX BITFINEX
Traditional futures
Perpetual futures
Long/short altcoins
Non-custodial accounts
On-chain settlement
Proof-of-solvency
Number of data feeds for index calculations4594N/A
Base levarage20x20x50x100x3.3x
Number of underlying assets 48168+100
Collateral for margin tradingMultiplesMultiplesTUSDBTCMultiples

Competitive advantages

SAFETY
The world’s first margin trading platform that introduces non-custodial accounts. The platform does not hold either the clients’ digital assets or their private keys.

HIGH LEVERAGED ALT TRADING
There is no other place to trade such a large variety of smaller altcoins with up to 50x leverage. This allows one to utilise capital more efficiently.

TRANSPARENCY
All balances of the clients’ smart contract accounts are visible on the blockchain (e.g. via Etherscan.io website). In comparison, traders’ deposits at centralised exchanges are located in one or several large wallets controlled by the owners of the exchange.

PROOF OF SOLVENCY
Due to the full transparency of our clients’ funds, BBOD proves solvency (assets = liabilities) every day, once the daily settlement on the blockchain has been performed. It is not clear if our competitors have sufficient funds to satisfy all of their clients’ withdrawal requests.

ADVANCED INDICES DESIGN
Our robust, efficient and intelligently responsive algorithm combines data feeds from 9 spot exchanges. The component spot prices are dynamically weighted according to the current market conditions.

FAIR LIQUIDATION RULES
Any remaining funds from liquidation stay in a clients’ account. Some competitors take all the remaining equity after liquidation.


Roadmap

BBOD is very conservative in terms of announcing future project developments. However, BBOD aims to add three key features to the platform moving forward:

PRODUCT ROADMAP
> Q3/2019: Crypto Market Index Futures (10 most liquid cryptocurrencies)
> Q4/2019: Crypto Sector Index Futures (AI, Exchanges, Gambling) 
> Q4/2019: Crypto Protocol Index Futures (POW, POS, dPOW)
> Q1/2020: New asset classes (commodities, stocks, forex, treasuries)
> Q2/2020: New deposit/collateral currencies: BTC, ETH and other stable coins
> Q2/2020: Vanilla Options on Futures
> Q3/2020: Altcoins futures offering +100 pairs

PLATFORM ROADMAP
> Q4/2019: Customisable trading competitions
> Q1/2020: Enhanced Historical Market Data
> Q2/2020: Enhanced Reporting
> Q3/2019: Historical Data Playback
> Q4/2019: Copy (social) trading 
> Q1/2021: Managed trading accounts
> Q2/2021: Build, test, optimise & run live your trading strategy


Valuation

The most popular approaches to assessing the value of a token are the Discounted Cash Flow model (DCF) and Relative (multiple) Valuation model. Due to the lack of historical data related to the traded volume on BBOD, DCF is not an applicable model to assess the value of BBD tokens.

Thus, the Relative Valuation Approach using a dataset of comparable exchanges was adopted to derive a Market Value/Volume multiples (MV/Vol) for all selected exchanges to estimate a possible price range of the BBD token.

The MV/Vol ratio measures the dollar value of the traded volume relative to the total token market value (Market Value). This is a simple way to compare how the market prices one unit of traded volume across exchanges.

We sampled a set of 12 exchanges. The main factor was the Market Value of their tokens. We excluded some exchanges which may not report genuine trading volume.

First, we calculate the Average Daily Volume (Avg. Daily Volume) for each exchange as:

Avg. Daily Volume = 30-day Volume / 30

The MV/Vol ratio for each exchange is computed as follows:

MV/Vol = Market Value / Avg. Daily Volume 

In order to compute the ratios, we selected comparable exchange tokens and collected the required data from https://coinmarketcap.com as of 10/02/2018.

Table 5. Overview of comparable exchange tokens

CoinSymbolPriceTotal SupplyMkt CapType
BinanceBNB$9.150189,175,490$1,730,955,734Centralised
OkexOKB$0.6331,000,000,000$633,299,000Centralised
Huobi
HT$1.010500,000,000$505,000,000Centralised
EthfinexNEC$0.1211,007,949,847$121,984,106Decentralised
CoinbitDEX$0.0531,877,411,130$99,131,062Centralised
KucoinKCS$0.375179,939,916$67,531,450Centralised
BiboxBIX$0.129264,480,791$34,158,488Centralised
Kyber NetworkKNC$0.141215,232,645$30,451,760Decentralised
LatokenLA$0.062400,000,000$24,886,800Centralised
CossCOSS$0.065200,000,000$12,945,600Centralised
Crypto BridgeBCO$0.37027,000,000$9,990,000Decentralised
CobinHoodCOB$0.0091,000,000,000$9,360,000Centralised

After calculating the MV/Vol for each of the selected exchanges, we assigned weights to each exchange.

Weight = Market Value / Sum of Market Value for each exchange

Finally, we computed the Weighted Average Market Value/Volume multiple (WA MV/Vol). (Table 6)

WA MV/Vol = Sum of (Weight * MV/Vol) for each exchange

The valuation is highly sensitive to the weighting methodology. Due to the fact, that trading volume on many exchanges is often higher than in reality. Thus, we decided to assign the weights based on the Market Value of the tokens. We believe that the MV/Vol ratios of the tokens with the highest Market Value are more stable and more efficiently valued by market participants.

Interestingly, the decentralised exchanges offer higher multiples which may be a sign of a premium for proof-of-solvency and real volume calculation.

Table 6. MV/Vol Valuation

CoinMkt Cap30-day VolumeAvg. Daily VolumeMV/VolWeight
Binance$1,730,955,734$16,398,429,527$546,614,3183.252.8%
Okex$633,299,000$12,751,427,596$425,047,5871.519.3%
Huobi
$505,000,000$8,756,094,701$291,869,8231.715.4%
Ethfinex$121,984,106$46,542,806$1,551,42778.63.7%
Coinbit$99,131,062$1,641,185,589$54,706,1861.83.0%
Kucoin$67,531,450$138,418,538$4,613,95114.62.1%
Bibox$34,158,488$8,809,972,787$293,665,7600.11.0%
Kyber Network$30,451,760$5,350,486$178,350170.70.9%
Latoken$24,886,800$4,032,024,713$134,400,8240.20.8%
Coss$12,945,600$146,323,139$4,877,4382.70.4%
Crypto Bridge$9,990,000$13,774,782$459,15921.80.3%
CobinHood$9,360,000$35,531,872$1,184,3967.90.3%

Weighted Average Market Value/Avg.Volume multiple = 7.19

BBOD is planning to be launched in the coming weeks, thus we cannot assign an actual volume to the calculated multiple. The only way to assess the price of the BBD token is to present the hypothetical range of volume we can expect based on the average volume from similar exchanges.

We calculated the Avg. Daily Traded Volume of all relevant margin trading platforms. (Table 7)

Table 7. Main competitors and their Avg. Daily Notional Traded Volume

NameAvg. Daily Volume
Bitmex$800,000,000
Huobi DM$400,000,000
Okex Futures$300,000,000
Bitfinex$140,000,000
Deribit$50,000,000
Predicted BBD Price = (WA MV/Vol * Avg. Daily Volume) / Total Supply

Table 8. Estimated BBD token valuation based on Avg. Daily Volume

Avg. Daily VolumeProjected BBD PriceTotal SupplyMarket Value
$20,000,000
$1.23117,382,569$143,396,338
$50,000,000$3.06117,382,569$358,490,846
$100,000,000$6.13117,382,569$716,981,692
$200,000,000$12.26117,382,569$1,433,963,385

Thus, our estimation of 12-month EFV* for the BBOD tokens is in the range of $1.23 – $12.26 per BBD token depending on the traded volume. (Table 8)

*Estimated Fair Value

Please note, that the above valuation is based on the Total Supply of the BBD token. If Max. Supply is taken into consideration, our estimation of 12-month EFV for BBOD tokens should be multiplied by 0.426 (the ratio of Total Supply/Max. Supply) However, we cannot be certain that the remaining tokens are migrated (users might have lost their private keys or simply do not want to migrate their token in the near future).


Conclusion

We believe that due to the unique features of the platform, such as high-speed leveraged altcoin trading, stablecoin deposits and non-custodial client accounts, BBOD will start to capture a substantial share in the market segment of leveraged trading platforms

Overall, for the reasons listed below, BBOD Research affirms its view that:

  • In comparison to many other exchanges, BBOD collects all trading fees only in BBD tokens which could create instant and substantial demand for BBD token.
  • Tokens of decentralised exchanges (Bitshares, Ethfinex, Crypto Bridge) are priced more favorably by the market with the average MV/Vol ratio = 366.2.
  • The combination of decentralised features with the addition to the offering highly leveraged futures contracts on bitcoin, altcoins and other asset classes may induce an additional premium by market participants.
  • The BBD token price shall be resilient to short and mid-term fluctuation in the cryptocurrency market (as traders may go long or short) and should offer decent risk diversification for heavily skewed BTC/ETH/EOS portfolios given its lower correlation among the major coins.
  • The expected inflow of institutional money (hedge funds, family offices) shall result in high demand for USD-denominated funds for their clients. BBOD is perfectly positioned for this very likely event due to accepting deposits in TUSD.

Overall, based on our observations, the performance of leveraged trading platforms has been extraordinarily strong during the current bear market. The unprecedented drops in cryptocurrency prices that happened last year have created a unique environment for the potential of a dynamic bounce back. The favorable economic situation (the volatile crypto market) should create a strong demand for BBOD derivatives products in consequence stimulate demand for BBD tokens. New future product like other asset classes and vanilla options offering will, in our view, support the upcoming year’s valuation of the token.

We initiate a strong bullish stance towards the BBD tokens, Overweight, 12-month EFV in the range of $1.23 – $12.26 per BBD token depending on the traded volume.


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Disclaimer : BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis. This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold an asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

Fundamental Analysis: TrueUSD (TUSD)

Overview

Currency CodeTUSD
Transaction Start Date06/03/2018
Circulating Supply206,986,215 TUSD
Market Cap209,635,525 USD 
TypeOff-chain, fully collateralized USD-backed
Where To BuyOKex, Binance, DigiFinex
Where to trade FuturesBBOD

TrueUSD (TUSD), the first asset issued by the TrustToken platform, ERC20 stablecoin pegged to the value of the US Dollar that utilizes a distributed network of trustworthy escrow accounts to fully collateralize client funds, ensuring TUSD is consistently backed 1-1 by USD fiat reserves. The use of numerous escrow accounts as opposed to one centralized bank provides token-holders with accountability of funds at all times and legal protection against any misappropriation, ultimately reducing counterparty risk. Trust firm accounts in the network are required to publish their fiat holdings publicly on a regular basis and are subject to monthly attestations. To further the confidence that users funds are safe third-party security audits of trust firms are consistently carried out by world leading auditors for best security practices.

Although TrustToken recognizes that making use of escrow accounts is certainly not the end game to a truly decentralized stablecoin, they appear open to exploring other possibilities once the cryptocurrency ecosystem matures enough for such a solution to be achievable. Ultimately, in a market where firms such as Tether (USDT) have taken advantage of user funds by providing no proof of solvency while storing fractional reserves in one centralized account, TUSD appears one of the most viable options for traders to hedge their portfolio against often extremely volatile market conditions.

Problem To Solve

Untrustworthy Stablecoins

Up until recently, there was little debate over whether one could trust a specific stablecoin. With so much noise in the space and profit to be made, individuals were simply too distracted to comprehend the relative safety of their funds. Over the past year, however, such an outlook has predominantly changed, which can largely be attributed to the Tether (USDT) scandal that began in 2017 and continues to unravel in the cryptocurrency market today. After an investigation from both avid cryptocurrency community members, namely Bitfinexed, and now more trusted investigative journalists such as Bloomberg and The New York Times, it has become apparent that Tether was likely used to inflate prices during the 2017 bull market benefiting exchanges such as Bitfinex who possess dubious ties to USDT. Perhaps more importantly for market participants, however, has been the clear acquisitions of the “Fractional Reserve Baking” method being utilized, where only a fraction of USDT funds is verifiably backed by money in a physical bank account. Continuing to add doubt to this debate, is Tethers inability or unwillingness to provide regular audits for their users, questioning the solvency of their funds altogether. Moreover, the inability to withdraw funds on exchanges such as Bitfinex and Kraken on certain occasions has spooked users who now want reassurance that their funds are verifiably safe and so are actively looking for new stablecoin alternatives. While numerous stablecoins are now battling to become the new pegged cryptocurrency of choice, which stablecoin will prosper will likely reflect firms who clearly tackle the failures of USDT. Ultimately, becoming the newly trusted counterparty for traders the ecosystem needs.

Choice of Collateral

The underlying technology of stablecoins can be categorized into three key areas: fiat-collateralized, crypto-collateralized and non-collateralized. All models possess their own unique strengths and weaknesses and so it is what market they wish to facilitate or the philosophy of their founders that ultimately determines which category a stablecoin falls under.

Fiat-Collateralized Stablecoins

First, fiat-collateralized stablecoins such as TrueUSD and Tether are rooted in a similar fashion to traditional fiat currency issued by a bank, they simply represent an IOU for a specified amount of money. As such, each stablecoin token equates to the equivalent value in USD (or any other fiat currency), 1 fiat collateralized stablecoin = 1 USD/other fiat currency. This method is perhaps the most viable option for a stablecoin at current, the cryptocurrency market continues to be extremely volatile and fiat reserves can provide the stability that simply no other type of stablecoin can achieve as if the cryptocurrency market collapses the reserves remain in fiat and so are unaffected. The model also has the ability to be highly regulated and so one can be more likely to receive legal discourse from the issuer if the stablecoin fails to hold value. This is all well and good if you can trust the party which has issued the stablecoin, but ultimately you are once more relying on a centralized party to determine your financial fate. As such, continual audits carried out by independent third party firms are essential to ensure that funds are indeed solvent.

Crypto-Collateralized Stablecoins

Second, crypto-collateralized stablecoins such as MakerDAO’s DAI. This method aims to circumvent the traditional fiat system altogether by providing a specified cryptocurrency as collateral as opposed to a fiat currency. In this manner, centralized intermediaries can be avoided altogether and a stable currency can exist without needing any entity to rely on other than the cryptocurrency market itself. The caveat to this solution is that as everyone is fully aware of, the cryptocurrency market is especially volatile, and so if the market crashes, measures must be in place to ensure enough reserves are held. The way to mitigate such a ‘black swan’ event is to over-collateralize the stablecoin so that it can absorb extreme price fluctuations. If the price fluctuation of a crypto-collateral reaches a certain point of instability the balance will automatically get liquidated, managed entirely by the blockchain. Although this seems to ensure the security of funds at first, the catch 22 is positions will be liquidated back into the cryptocurrency that was chosen for collateral, for example, Ethereum, which would likely be almost worthless in the case of such a ‘black swan’ event. Companies such as MakerDAO are beginning to try to mitigate this risk by multi-collateralising DAI against numerous different assets, but until this proof of concept proves to be a success, it cannot be shown to be the most secure stablecoin in the market.

Non-Collateralised Stablecoins

Finally, non-collateralised stablecoins, which are simply not backed by collateral whatsoever. This idea is akin to when the Gold standard was removed in the US and the transition to fiat money began. No longer was cash backed by Gold in a secure location, instead, parties simply had to trust the government that they were good for their word, the money was available if needed and no individual needs to be concerned. After numerous cases of government failure in countries such as Zimbabwe, Venezuela and more recently Turkey, however, It is clear that the ability of governments to control the money supply in certain parts of the world is broken. As such, to consider such a model for a cryptocurrency stablecoin becomes even less appealing. If one cannot trust certain governments to keep funds safe, then placing that authority in the hands of a for-profit cryptocurrency firm seems at best irresponsible. Basis is a perfect example of a non-collateralised stablecoin failing to foresee the regulatory requirements necessary for the success of such a project, recently being forced to return all funds to investors.

Store of Value

Perhaps the most obvious problem that stablecoins aim to mitigate is the extreme volatility the cryptocurrency market has shown since its inception. Although this may be extremely beneficial for experienced speculators, the continual fluctuations in the market value of cryptocurrencies ensure they are currently a useless store of value. Until the market matures enough so that well-known cryptocurrencies such as Bitcoin are akin to traditional assets such as Gold, one can expect the value of their account to fluctuate by double-digit figures in a single day on a regular basis. Ultimately, this stifles real-world adoption as the cryptocurrencies we know today cannot be used for regular transactions unless businesses and consumers want to take on unnecessary risk in the hopes of long-term profit. Moreover, individuals who live in countries with corrupt governments are not interested in speculating in order to profit, they simply want to utilize the revolutionary technology that is blockchain as a store of value to escape their collapsing economy while maintaining the value of their assets. At current, cryptocurrencies such as Bitcoin and Ethereum cannot offer them that guarantee.

Tokenization of Real-World Assets

Outside of corrupt states, a reliable store of value will become increasingly necessary as roughly $256 trillion worth of real-world assets begin to become tokenized. Such a process is already starting to take place, with tokenization occurring in key markets such as real estate, commodities, securities and fine art at current, with the list only set to expand as individuals strive to transact value with one another on a global scale using tokenization to offer innovative investment opportunities such as shared ownership. What is lacking for the success of tokenization, however, is a definitive store of value that cryptocurrencies themselves cannot yet provide and perhaps never will. For tokenization to prosper, a stablecoin which is consistently audited, that offers guarantees over the underlying assets with full collateral and possesses legal consequences for bad actors and remunerations to affected parties is essential. Up until recently, no stablecoin in the market offered such advantages.

Solution

A Trustworthy Stablecoin

Fully Collateralised

Whereas Tether has decided that only fractional reserves placed in a centralized location are necessary for their product to function effectively, TrueUSD has implemented full collateral for their clients using a distributed network of trust company escrow accounts. Such a prospect is extremely more robust as it ensures every TUSD that is minted is fully collateralized by USD ensuring client funds are safe at all times. The system works as follows, every time an individual decides to purchase TUSD they must clear their USD through one of the trusted decentralized escrow accounts, the corresponding USD is then held in that account ready to be retrieved any time the client deems necessary. If USD is redeemed the escrow fund burns the associated TUSD ensuring there is a continuous 1:1 ratio between TUSD in circulation and USD in the escrow accounts. This is a considerably superior offering to what Tether has chosen to provide its clients where one can never be certain whether the USDT is not only fully collateralized but backed by physical USD at all. Besides Tether not being verifiably fully collateralized, centralization of funds in one single bank account is incredibly risky as it is far more prone to being hacked as a single point of failure. TrueUSD tackles this head-on with it’s distributed network of trusted escrow accounts, a traditional banking protocol that has worked effectively for high value accounts for a considerable amount of time.

Consistently Audited

Although Tether now provides some transparency of their funds to the public, the fact that this is an internally organized audit furthers the question of the solvency of their funds altogether. Such a publication could easily be corrupted by those within the organization if they perceived they were at risk of losing their current market dominance. To combat such an issue TrueUSD provides regular audits to the public which are carried out by trusted third-party companies with no skin in the game. In the unlikely event that TrueUSD was proved to be insolvent, they would be called out by such trusted third parties who would not be willing to risk their reputation to uphold a company which they have no fiduciary responsibility for. This provides TrueUSD clients confidence that their funds are undeniably safe.

Legal Protection

Further to the never-ending scandal of Tether, in certain instances, clients have been unable to withdraw USDT from exchanges such as Bitfinex and Kraken in order to exit the cryptocurrency market for fiat. Ultimately, this has left experienced traders unable to withdraw funds at specific times where the market appears to be turning bearish. This leads those individuals to lose out on profit that they should be legally entitled to. The trusted escrow accounts which hold TrueUSD would be held legally accountable in such instances if they could not exchange client funds for fiat at a specific instant. Although placing TUSD on centralized exchanges does not necessarily guarantee any legal action will be taken if funds cannot be withdrawn when chosen, such initiative with their escrow accounts should force centralized exchanges to follow suit if they wish to retain clients moving forward.

Choice of Collateral

A Verifiably Safe Fiat-Collateralised Stablecoin

Fiat-collateralized stablecoins currently seem to be the most viable solution to ensure the absolute safety of user funds if designed correctly. As previously mentioned, TrueUSD is fully collateralized utilizing a distributed network of trusted escrow accounts which are consistently audited, and legally responsible for the loss of any of its client funds. Ultimately, TrueUSD appears to have learnt from the failures of their predecessors by tackling each and every issue that one might be concerned with when placing their trust in a centralized authority. In fact, it could be argued that TrueUSD itself is decentralized, as although the company is clearly centralised, the way in which client funds are managed in a decentralized network of accounts ensures that a single point of failure is avoided and detaches the company from the process of minting and burning TUSD altogether.

A Definitive Store of Value for Real World Adoption

As a fully collateralized, regularly audited and legally backed stablecoin, TrueUSD appears to provide the cryptocurrency ecosystem with the essential attributes that are necessary for real-world use cases. For example, for those who are seeking to escape corrupt regimes or increasingly volatile fiat currency situations, TUSD appears a viable hedge which would be definitively more secure than holding USD cash reserves in person. The distributed network of escrow accounts that TrueUSD works with provides immense security of funds above what one single individual could ever achieve while providing legal protection from any loss of funds. One use case for such economies is where salaries are paid in TrueUSD, if adopted this has the potential to circumvent government issued funds altogether, allowing TUSD to become a prominent medium of exchange for countries in desperate need of currency stability.

Perhaps what is more foreseeable in the immediate future, however, is the role that TrueUSD could play in the tokenization of real-world assets. An increasingly growing market in desperate need of a reliable store of value, TrueUSD has the potential to become the medium of choice for those looking to tokenize real-world assets such as real estate, fine art, and commodities such as gold. With the infrastructure in place to provide a safe store of value with full collateral, regular third-party audits and legal compensation for bad actors, the potential for TrueUSD to capitalize on this market is certainly present. Alongside becoming the stablecoin of choice for cryptocurrency exchanges globally, the tokenization of real-world assets appears to be the next best application for TUSD. Ultimately, if TrueUSD can dominate this market before others then the success of their stablecoin could substantially surpass Tether’s current market capitalization, as $256 trillion dollar market awaits.

Catalysts

Tackling Tether: Up until recently the market dominance of Tether has truly outweighed all stablecoins that have chosen to challenge, as no fully encompassing solution could be found to tackle the broad inadequacies faced. TrueUSD is fully collateralized, consistently audited by trusted third parties and a legally backed stablecoin that directly tackles the untrustworthiness of the Tether project. As the market for stablecoins continues to fracture it will not be long before a new pegged currency becomes the stablecoin of choice in the market. Many exchanges are now disserting Tether as their sole stablecoin and introducing others, for example, BBOD will be accepting deposits in TrueUSD offering futures trading on 16 different cryptocurrencies trading pairs against TUSD.

Emerging Markets: During the cryptocurrency bull run of 2017, stablecoins were seen merely as a way for traders to hedge their portfolio to avoid any negative market downturns. As the market has developed, however, it has become clear that there are multiple other use cases for stablecoins. Perhaps the most poignant is the $256 trillion market for tokenization of real-world assets into digital assets. In order for this to occur on a mass scale a trusted stablecoin most be available for those seeking to place large amounts of value onto the blockchain. TrueUSD appears poised to appeal to this market if achieved TUSD will outpace the market capitalization of Tether in an instant.

Risk Factors

Market Saturation: As in any market, when an opportunity as large as the demise of the monopoly force comes into existence, many firms are willing to throw extortionate amounts of money at the issue to ensure that they become the next market leader. Such an opportunity is too big to miss and so many firms have now entered the market to become the stablecoin of choice in the industry. Thus far, TrueUSD is achieving well in third place at the time of writing by market capitalization against strong competition such as USDC (owned by Coinbase and Circle) and Tether. If TrueUSD wishes to become the stablecoin of choice moving forward then they will have to pick their market segment carefully to ensure they are best in class, the age of the all-encompassing stablecoin is over. For TrueUSD, tokenization of real-world assets alongside exchange integration appears to be their best bets.

Conclusion

The Tether scandal should leave individuals questioning how they wish to store their funds in times where speculation is unprofitable and stability is necessary. TrueUSD provides a fully collateralized, third-party audited and legally backed stablecoin that utilizes a distributed network of trusted escrow accounts to ensure user funds are safe at all times. Such advantages may be utilized by traders looking to hedge their portfolio, those wishing to tokenize their assets or individuals looking to escape corrupt regimes is up to the individual. Now that such secure alternatives are available perhaps it is time for market participants to consider their options in an increasingly saturated stablecoin market and only strive to use the best. At current, TrueUSD appears to be just that, the most trusted stablecoin available in the market.


Trade Futures Contracts with TrueUSD as a deposit currency.

Go Long or Short on various altcoins trading pairs with up to 50x leverage.


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Disclaimer : BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis. This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold an asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

Fundamental Pick: Decred (DCR)

BBOD Rating [10/12/2018]

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

Overview

Currency Code DCR
Transaction Start Date 06/02/2016
Total Supply 21,000,000
Circulating Supply 8,954,731
Protocol Type Blockchain Platform
Base Protocol DCR
Where To Buy/Trade BBOD, Binance, Bittrex, Poloniex, Huobi

Problem to Solve


Decred is an open-source decentralised cryptocurrency that is primarily concerned with ensuring community input is consistently valued by utilising an open governance model which is supported by sustainable financing for project development. Such a philosophy was born out of Bitcoin pioneers, specifically the engineers of the widely adopted btcsuite, becoming frustrated with the inefficient and unfair means by which updates to the Bitcoin protocol were being implemented. The Decred founders saw weakness in this approach and believed it could be improved upon by creating a level playing field for both miners and users in order to mutually benefit the network. Thus, Decred is an immutable currency which aims to be a store of value or medium of exchange, much like Bitcoin, whilst placing decentralisation of governance to community participants above the influence of centralised mining corporations and key developers.

Governance

The formation of Decred was a direct consequence of early Bitcoin developers experience with the governance model which was ingrained into the Bitcoin network from its inception. Such a system was designed in a way that placed Bitcoin Core developers and Proof of Work (PoW) miners at the centre of the ecosystem, assigning the majority of power to these large actors, who then had the ability to veto any change to the consensus rules they deemed unprofitable or that did not fit with their vision of the distributed network. Essentially, this gives minimal to no influence to smaller network participants who wish to implement changes they believe to be beneficial to the wider community or the Bitcoin protocol itself. Whilst some might argue that placing power in the hands of the wider community could lead to a dilution of ideas to less experienced parties, the ultimate purpose of a decentralised network is to serve each and every member of its community. Bitcoin has proved otherwise with prolonged disputes occurring between powerful centralised parties whilst ignoring the opinions of the actual users of the network, notably resulting in a contentious chain split which many network participants fundamentally disagreed with as such a move ultimately dilutes the network.

Funding

Bitcoin was funded entirely by donations up until 2014 and today there are no such rewards for developing the open-source protocol. This leaves early developers who likely profited from the exponential price increase of Bitcoin with the freedom to work on the project without the need for financial means, whilst excluding others developers who were late to the ecosystem. There is no system in place where a developer can claim expenses for contributing to the Bitcoin project and thus this excludes a large proportion of highly qualified developers from participating, centralising the power of decision making once more.

Mining

Although the PoW protocol implemented to mint Bitcoin has proven to be incredibly robust over the years, with no majority network takeovers occurring since the project was launched, as the mathematical problems become increasingly more complex the situation may change. This is the result of continuously needing to improve upon already incredibly expensive computational hardware in order to keep pace with mining competitors. In recent years we have seen this effect start to take place, with large centralised corporations such as Bitmain mining a large proportion of the Bitcoin network. As such large corporations continue to profit and grow, making the possibility for over 51% of the network to be mined by one centralised party increasingly more apparent. Ultimately, if achieved this would allow such a centralised authority to censor and implement updates to the bitcoin protocol as they see fit, completely going against the idea of a decentralised, censorship-resistant, immutable currency.

Solution


Governance

In stark contrast to Bitcoin, Decred ensures all stakeholders have the ability to influence decisions regarding the project by allowing them to vote on specific agendas and proposals that will be implemented to the Decred Blockchain. In order to become a Decred stakeholder one must simply own their native token DCR. Such decisions include aspects such as whether the development team should start working on a specific feature or not, whether to deploy a feature which has already been completed and even how to fairly split the development subsidies provided. This governance model allows for an entirely decentralised approach which ensures that no party has considerable influence over any other in the ecosystem. Miners and key developers must respect the decisions made by the stakeholders as they do not possess a majority share of the project. This allows for a more organic growth strategy which is inclusive of all parties constructive concerns and needs. As a result, Decred became the first cryptocurrency to implement changes to their Blockchain based on an automatic user voting approval in June 2017. Moreover, utilising this community-driven approach has allowed Decred to implement consensus changes much quicker than most other Blockchains, specifically Bitcoin’s, supporting the Lightning Network before Bitcoin and allowing a transaction to expire after a set period of time in order to keep avoid Blockchain bloat. Ultimately, Decred’s governance model is far more just than Bitcoin’s, allowing all stakeholders to have their voices heard and not ignored, creating a fairer ecosystem where everyone who is invested in the project can participate or affect the direction of future developments.

Funding

Uniquely, Decred’s Blockchain assigns a portion of miner fees to a development treasury which is distributed accordingly to those who wish to contribute to the project. This decentralised funding model allows anyone with an idea to contribute to the project by simply submitting a proposal and then if that idea is implemented they will be rewarded for their work. Such an approach is fundamentally different from most open-source projects, such as Bitcoin, which allow users to submit proposals but do not compensate them for their hard work. Instead, simply allowing one to build prestige in the developer community off the back of successful work. This opens the doors to a much larger pool of talent than possible with most unpaid open-source projects which simply cost those who do not have the means to work for free out of the market. Moreover, individuals can produce work which is not necessarily computer science-based, instead, they can apply more general skills such as marketing to help the project flourish and still receive compensation for work. Ultimately, business decisions will be decentralised amongst the wider community who support the project, distributing the power of decision making to a diverse set of individuals, avoiding centralisation of authority at all costs.

Mining

From the offset, Decred insured that their innovative hybridised consensus system was fair for both miners and stakeholders. This why they choose to implement Proof of Activity (PoA), likely influenced by Mackenzie’s (2013) whitepaper which proposed a PoA consensus mechanism. PoA involves a balance between both Proof of Work (PoW) and Proof of Stake (PoS) consensus algorithms. To this end, they have allocated 60% of the block reward to PoW miners, who serve the same purpose as in Bitcoin, 30% of the block reward for PoS voters, who keep check of PoW miners and can vote on important decisions and 10% to the treasury to incentivise the community to participate in project development. Typically PoW miners need to have spent a considerable amount of money on computational infrastructure and exert extreme control over a network, by introducing PoS additionally, network participants with much less financial means are able to keep a check on the work that the PoW miners are carrying out. This dilutes power from the PoW miners to PoS workers and decreases the likelihood of any network takeovers occurring as a result. Ultimately, Decred ensures that via a distributed mining consensus mechanism those who usually yield considerable power by owning expensive infrastructure cannot take over the majority of the network, whilst allowing individuals to participate in the project without needing excessive funds.

Catalysts


Community-Driven: The underlying strength of Decred lies in its commitment to ensuring the community has a strong influence over all aspects of the development of the project, whether that be allowing all stakeholders to vote on implementations to the protocol or supporting those in the community who wish to promote the project. This strategy ensures a diverse set of opinions are accounted for, and that a few large actors cannot control the direction of project development.

Team Of Pioneers: The team behind the project were the engineers behind btcsuite, a well regarded open-source project made for Bitcoin which has now been adopted by many other cryptocurrency projects. As some of the key members in the development of Bitcoin, they possess a true understanding of the successes and failures of the project. Thus, Decred takes a unique community-driven approach to achieve true decentralisation rarely seen elsewhere in the industry.

Risk Factors


Competing With A Titan: Ultimately, if Decred wants to see wide adoption then it has to draw from the community of Bitcoin, this is no easy task but may become easier with time as people begin to realise how centralised the decision making of Bitcoin has become since it’s inception. A large-scale event such as Bitmain taking over more than 51% of the Bitcoin mining activity could spark this realisation.

Belief In Your Community: As decred is community driven, the ultimate direction of the project is driven by who participates. This cannot be controlled, stopped or censored which is the essence of decentralisation. Whilst this is appealing to many early adopters within the cryptocurrency ecosystem, those who invest in the project moving forward must have belief in their fellow community members as well as the underlying fundamentals of the project itself. Despite this, it is difficult to question the direction the community has driven the project so far.

Conclusion


In a market where centralisation of power seems to be becoming an ever more prevalent force, Decred appears to be one of the few cryptocurrencies that continues to uphold the decentralised nature of the initial idea. By allowing members of the community to participate in the project in various ways including voting, mining and paid work contributions, Decred has created a vibrant community of incredibly knowledgeable and talented individuals avoiding the need for a centralised decision maker. Such a diverse set of opinions has allowed the project to quietly flourish, implementing changes to the Decred protocol much quicker than when centralised actors determine the direction of a project. This is true decentralisation in action. Thus, if the project can continue on its current trajectory whilst Bitcoin continues to become more centralised, it could become a direct competitor. Certainly, one to watch as the market matures.

Trade! Go Long or Short with leverage on Decred/TUSD


BBOD Rating Standard


BUY: A low-risk buying opportunity

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

HOLD: Maintain current levels of position until further research is published

SELL: Investment is associated with the potential of losing capital


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Disclaimer : BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis. This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold an asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

Fundamental Pick: Elastos (ELA)

BBOD Rating [10/10/2018]


SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

Overview


Currency Code ELA
Transaction Start Date 01/02/2018
Total Supply 33,647,865
Circulating Supply 7,722,239
Protocol Type Blockchain Platform
Base Protocol ELA
Where To Buy LBank, Huobi, CoinEgg, Kucoin

Problem To Solve


Since the inception of the Internet, it has become impossible for content creators to claim individual ownership of their works and to ensure such original creators receive the monetary benefits from their creative outputs. This is the result of the Internet’s inability to provide unique content which cannot be copied by individuals and spread freely over its vast distributed network. With over 3 billion individuals having access to the Internet, who all possess the ability to copy original content with ease, trying to stop the flow of illegal content between parties is simply impossible. Moreover, it is not only individual actors who take advantage of the ability to stream content globally, well-known centralised digital content providers such as Spotify, Youtube and Netflix all profit substantially from monetising digital content which is not of their own creation. Ultimately, this process often leaves original content creators with a tiny fraction of the actual profit they should be receiving for their creative endeavours and large corporations with the majority.

On the opposite side of this dilemma, individuals themselves no longer physically own much of the digital content they consume. People simply pay for subscription services and become drip fed by whichever corporation they choose to worship. Many may argue that, in fact, this is not an issue for the individual, as digital content has never been so easy to consume, yet is convenience necessarily a good thing without rights to ownership? In the past, individuals collected physical possessions over the period of their lifetime, such as books, records and photo albums, which could then be passed down to their family. This not only acted as a memoir of deceased loved ones but also a mechanism of passing value down through generations. Today, little of what we consume is actually ours and consequently, we cannot monetise our possessions when needed for ourselves or our children.

The Solution


In order to tackle the dissemination of creator content, Elastos [ELA] proposes a unique Blockchain design philosophy which detaches original content from the internet itself and runs separately on what Elastos has coined the ‘Smartweb’. Here creators content will not be uploaded to the internet that we know today, rather, it will be placed on a decentralised application on Elastos ‘Runtime’ software. ‘Runtime’ will enable individuals to store, view and exchange original content peer-to-peer on their personal smartphones or computers without connecting to the internet itself. Instead, Elastos will utilise the Blockchain only to confirm transactions between parties and verify their identity without needing a third party.

Thus, creators using the system will have the ability to attach their personal identity to their unique content on the Blockchain, allowing them to track exactly how many individuals are consuming their content, ensuring all revenue is sent directly to the original artist rather than unnecessary intermediaries. Moreover, Content creators will have the ability to introduce the concept of digital scarcity to their work, limiting the amount of digital content that can be bought by consumers to a fixed number. As in all markets, scarcity often creates increased incentives for individuals to purchase an item in a specific timeframe whilst supply remains fixed, increasing adoption and price over time. Such mechanisms should allow creators to reek the financial rewards they deserve for digital content, unlike in the current status quo.

Additionally, the Elastos ‘Runtime’ ecosystem will benefit consumers of the network, by allowing them access to original content which they will digitally own, verified by their Blockchain Identity. Unlike in today’s markets where one merely owns the right to use a product for a specified amount of time via a subscription service, consumers of Elastos ‘Runtime’ network will have unconditional ownership of their digital assets. Much like in the physical content world before the era of the internet, this will allow individuals to generate future revenue if they decide to sell some of their digital content. For instance, perhaps, due to the scarcity of the digital content when first purchased, such an asset has now significantly increased in price as there is now huge demand and virtually no supply, one could benefit akin to selling a rare piece of art. This mechanism creates an entirely new smart economy by allowing anyone to participate in wealth generation through peer to peer free markets without the interference of costly and unnecessary third parties.

Summary


Ultimately, Elastos allows digital content to be stored, viewed and traded in a secure and transparent manner. Without the need for third parties, creators are guaranteed to be rewarded with fair compensation for their creative output whilst consumers can benefit from their digital content ownership. Within this closed environment, the projects native ELA token will be used to pay for access to content that individuals desire. ELA can then be spent within the Elastos ecosystem itself or transferred to any other financial network.

Catalysts


  • Rewarding Content Creators: Since the introduction of the internet, content creators have lost out significantly as they have no means of stopping the dissemination of their artistic works. Moreover, unnecessary intermediaries have profited substantially by providing user-friendly interfaces which consumers have gravitated towards due to their ease of use. This is only set to continue as more individuals have access to the internet and product offerings become more sophisticated. Elastos provides a way out of the traditional content economy that allows creators to become the sole beneficiaries of their work, an idea that would not be possible without Blockchain technology and certainly appealing to creators themselves.
  • A Universally Beneficial Ecosystem: Not only does Elastos benefit content creators, but it also allows consumers themselves to take back the ownership of their digital content. This should attract individuals who are fed up with paying for subscription services that have the right to remove content at any time. Elastos allows consumers to benefit from the financial rewards of having exclusive ownership of digital content by exchanging such content in a peer-to-peer manner. Individuals can also feel confident that their purchase decisions are directly affecting the lives of the artists they admire.
  • Longevity and Strength of The Elastos Team: CEO Rong Chen began work on Elastos after leaving a senior role at Microsoft in 2000. Over time, the project has evolved in line with the pace of technology to now include Blockchain technology, which now allows it to function. The foresight and longevity of the project suggest the team is certainly in this for the long haul. Elastos now comprises of over 52 team members, with well-respected Blockchain advisors including Jihan Wu (CEO of Bitmain) and Hongfei Da (Founder & CEO of NEO).

Risk Factors


  • Challenging Traditional Oligopolies: The market for content streaming services is fierce, with a few key playing dominating the space, such as Spotify, Youtube and Netflix. If Elastos is to overcome the huge amounts capital these companies have at their disposal, they are going to need to pursue aggressive marketing strategies in order to establish themselves as an alternative competing brand. Despite this, the overwhelming benefits for content creators who utilise the platform should push the market forward, if they decide to limit content exclusively outside of the traditional system.
  • Copying Copyright Material: Although digital content will be detached from the Internet on the Elastos ‘Runtime’ software, this does not stop consumers from screen-capturing videos, text or rerecording audio. Individuals desire to find content for free will prevail if they search hard enough. Regardless, individuals who choose to do this will only receive knock-off versions of an original file of lesser quality, unlike today where original files can easily be copied and disseminated.
  • Verification: Elastos have failed to state how they will verify content is uploaded by the original creator. Although a Blockchain ID will be assigned to each piece of digital content, there is nothing stopping someone else uploading a file to the ‘Runtime’ system and claiming it as their own. In order for this to occur, however, the fake uploader would have to possess the original file and upload it before the original content creator, a rare circumstance.

Conclusion


Elastos provides an innovative alternative ecosystem for content creators and consumers to maintain full control of their digital assets and monetise them without the need for unnecessary intermediaries. The projects key strength is the ability to create a marketplace for digital content detached from the internet itself, Elastos ‘Runtime’, utilising the Blockchain only to verify the identification of content creators and to implement trustless peer-to-peer transactions. This has the potential to create an environment outside of the traditional corporate structure that will allow consumers to truly own their digital content and content creators to be rightfully rewarded for their creative endeavours. If Elastos can market their brand effectively, content creators could start transitioning exclusively over to the platform, leaving consumers no alternative but to adopt the system if they wish to enjoy their favourite artists. With support from cryptocurrency giants such as Bitmain and NEO and a dedicated team of 18 years, Elastos seem capable of successfully implementing their idea. Thus, as the mainstream begins to adopt decentralised applications, Elastos is certainly one to watch.

BBOD Rating Standard


BUY: A low-risk buying opportunity

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

HOLD: Maintain current levels of position until further research is published

SELL: Investment is associated with the potential of losing capital

Disclaimer


BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis.

This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold any asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

Fundamental Pick: Binance Coin (BNB)

BBOD Rating [10/10/2018]


BUY: A low-risk buying opportunity

Overview


Currency Code BNB
Transaction Start Date 25/07/2017
Total Supply 192,443,301
Circulating Supply 117,443,301
Protocol Type Cryptocurrency Exchange
Base Protocol BNB
Where To Buy Binance, HitBTC
Go Long/Short BBOD

Binance Exchange Overview


Binance began trading as a little known Chinese cryptocurrency exchange in July 2017, during a boom time for the marketplace as a whole. Utilising the fortunate timing of their project and an aggressive marketing strategy the company became the highest traded spot exchange by daily volume a mere six months after inception. This rise to fame was unprecedented and something competitors such as Bittrex and Poloniex certainly did not anticipate. Binance achieved such success by significantly beating competitors on tradings fees with 0.10% per trade as opposed to 0.25%. Additionally, they employed an extremely liberal coin listing policy, growing their community at an exponential rate by attracting traders from a wide pool of already well-established cryptocurrency projects. Today, the platform lists 280 active trading pairs with an average of 1 billion trading volume daily and over 9 million active users.

Binance Coin [BNB] Overview


In order to raise money for the platform, Binance launched their ICO for Binance Token [BNB] on July 2nd. Due to the substantial bull market of the time and their solid project, Binance sold the entirety of their 100 million BNB tokens within several minutes of availability. The token sold for an average price of 0.11 USD, equating to approximately 11 million USD total funds raised during their ICO. BNB is an ERC20 token based on the Ethereum blockchain with a max supply of 200 million, after which no more coins will be created. Although BNB is now widely acknowledged as a utility token for use on the platform, the value of the token also corresponds to the equivalent of a traditional stock, with holders owning a proportional share in Binance that will likely appreciate proportionally with the growth of the exchange. This is a particularly rare phenomenon in the cryptocurrency space, where the majority of coins do not have such a substantial functioning product supporting them.

The Utility of Binance Coin [BNB]  


Discount

Currently, the main use case of BNB token stems from its ability to be used to decrease trading fees on the Binance Platform. Users can choose to pay for fees using BNB instead of utilising the cryptocurrency they are trading. If one chooses to do so they can expect 50% trading fees in their first year of membership, which decreases by half every year of subscription, until year five, where a discount no longer applies. In essence, BNB becomes the fuel for the Binance ecosystem, providing real-world utility to the token, unlike many other cryptocurrency projects whose promise of utility stems from the future success of yet to be released product. The reduction in fees is hugely significant to frequent traders as the platform itself currently undercuts any other exchange on the market without even employing the token discount, at 0.1% per trade. Combine this with the lowered fees when BNB is implemented to trade with and the exchange substantially undercuts its competitors on trading fees. For example Huobi and Bitfinex both employ trading fees of 0.2%. The oversight of Binance competitors higher fees is likely what drew many to the platform from in the first place.

Token Burn

In order to counteract the decreasing value of the BNB fee discount over the period of five years, Binance has employed a quarterly coin burn for their tokens. Essentially, Binance will buy back BNB tokens from the market and send them to a public address whose private keys are unobtainable, effectively destroying the tokens. This decreases the supply of BNB in circulation with demand remaining the same, usually resulting in an increase in price as the token becomes more scarce. This ingenious tactic has gained much publicity and succeeded in its aim thus far, with prices increasing substantially before coin burns that have occurred in the past. Binance aims to do this every financial quarter with 20% of their profits. So far they have met their promise, with 986,000 BNB burned in their first quarter, 1,821,586 BNB in the second and 2,220,314 BNB in the third, approximately 30 million USD at the time. The process will continue until half of their total supply remains, 100 million BNB. Such a mechanism has captured the attention of investors who will likely hold onto BNB for speculation purposes once users fees no longer decrease by utilising the token for trading fees. With increased visibility into the valuation of the BNB due to its direct correlation to the success of the exchange, no doubt prices will increase if the business continues on its current trajectory.

ICO Launchpad

Continuing their effort to provide BNB with meaningful value, the Binance Launchpad program allows individuals to invest in certain cryptocurrencies that are in the process of being listed on the platform using BNB. This furthers the tokens use case and creates a seamless marketplace between available ICOs and the exchange itself. Additional add-ons such as the Launchpad program increase the utility of the token and hence its demand, potentially leading to an increase in price. Continuing the process of frequently improving the usability of BNB will likely be key to the tokens success going forward. Such efforts thus far include Monaco adding BNB to their cryptocurrency Visa Card/App and the ability to buy virtual gifts on Uplive using the token.  

Future Applications


Decentralised Exchange

Looking to the future, Binance plan to build a decentralised cryptocurrency exchange (DEX) which will utilise the BNB token as the primary base asset and gas to be spent. Binance has coined this project Binance Chain, although it is still in the stages of development, admittedly aiming to outsource the underlying technology by providing a 1 million USD bounty and a job at Binance to an individual with a successful proposal. Although, if Binance Chain is as successful as Binance itself, BNB will gain significant value from a substantial increase in demand for the token for investors to utilise on the DEX platform. Moreover, they would mitigate regulatory risks of their current centralised exchange, as decentralised exchanges are inherently impossible to shut down. Despite this, the current DEX environment has largely suffered from a lack of usability, functionality and liquidity. Thus, pulling off a decentralised exchange successfully at this moment in time would be no easy feat.

BNB Catalysts


Organic Growth Through Reputation: Binance’s significant success in the cryptocurrency spot exchange market thus far has gained them substantial brand recognition in the marketplace. Couple this success with an ever-expanding user base and this could translate into sustainable long-term growth for the BNB token.

Continual Drive for Innovation: Since their inception, Binance has made continual strides to expand their product offering and overall ecosystem. For example, improving the functionality of the exchange itself, introducing the coin burn function and offering market participants the opportunity to invest in cryptocurrencies utilising BNB in their Launchpad program. Further efforts to improve the Binance ecosystem will not go unnoticed and will certainly affect the price of BNB.

Sustainable Growth During a Bearish Market: Although the fortunate timing of the implementation of the exchange can be seen as luck by many, Binance have not failed to increase their market dominance this year in a declining market (approx. -70% YTD). The consistency of trading volume, hovering around 1 Billion USD per day suggests that when the market decides to turn bullish, the number of individuals who utilise the platform and its token will increase.

BNB Risk Factors


Regulatory Environment: Since the success of BNB is entirely hinged on the success of the Binance exchange, the centralisation of the exchange may become an issue if regulators choose to crack down on cryptocurrency exchanges in general and make an example of them as a key figure in the industry. The platform has shown no interest in complying with regulators and so the way forward appears to be creating their decentralised exchange Binance Chain, which they are far from realising.

Market Saturation: Now that the market for exchanges is becoming incredibly saturated, firms with capital are employing aggressive strategies such as feeless spot exchanges, eradicating the need for BNB’s fee reduction utility. Despite this, none have diversified their market as much as Binance thus far and it will be hard to keep pace if the company pays attention.

Centralised Ownership: Ultimately Binance is a centralised exchange and thus decisions on what utility BNB should hold are made by management officials. This removes the right for token holders to collectively decide the fate of their token going forward. Although, so far, one would be stretched to challenge the decisions for BNB’s utility, as the strategies implemented seem to have largely paid off.

Conclusion


The initial incentive to buy BNB tokens was to gain discounted trading fees on the Binance platform, as doing so would substantially out-compete other spot exchanges on fees. Although this function is slowly being phased out over the period of five years, over time Binance has presented multiple other utilities for their token such as the ability to invest in ICOs to be launched on the Binance platform using BNB and the future hopes of utilising the token on Binance Chain, their decentralised exchange in the early stages of development. Couple this with token burning to slowly decrease the supply of BNB and Binance seem to know how to create sustainable long-term value for their BNB token. Hence, looking forward, as long as Binance can keep pace with the ever-evolving regulatory environment, BNB appears to have a bright future ahead of itself.

BBOD Rating Standard 


BUY: A low-risk buying opportunity

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

HOLD: Maintain current levels of position until further research is published

SELL: Investment is associated with the potential of losing capital


Disclaimer


BBOD Research is an independent cryptocurrency research-house and research arm of BBOD Exchange. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis.

This report has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof. This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research under the Market Abuse Regulation (EU) No 596/2014. Reports issued by Trade the Future Holding (“BBOD Research”) or its affiliates are not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services and are not recommendations to buy, sell, or hold any asset. The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. BBOD Research will not be liable whatsoever for any direct or consequential loss arising from the use of this publication/communication or its contents. Trade the Future Holding and its affiliates hold positions in digital assets and may now or in the future hold a position in the subject of this research.

Bitcoin Scarcity: Perception Vs. Reality

Earlier this year the press flooded the internet with articles stating that only 20% of total Bitcoins remained to be mined, causing a frenzy of fear of missing out for those who were not already invested. They were correct, 80% of the total fixed supply of 21 million Bitcoins set by mysterious Satoshi Nakamoto was now accounted for, with the 16.8 millionth transaction occurring on the 13th of January 2018. Despite this, many news outlets failed to convey how that, with time, Bitcoins would become increasingly more difficult to mine as a result of minings inherent complexity and the diminishing reward scheme over time. As a result, many have suggested that a vague approximation of the last Bitcoin block to be mined will take place in 2140. This article aims to ensure that market participants are aware of the facts surrounding Bitcoins fixed supply, the evolution of mining Bitcoin and how scarcity, or the perception of it, could affect demand in the future.

Bitcoins 21 Million Hard Cap

Unlike in traditional nation-state economies, Bitcoin operates in an entirely decentralised manner with a fixed supply. Whereas a central bank usually issues currency as they wish – according to the growth of the number of goods which are being exchanged in the economy (commonly known as Quantitative Easing). Bitcoin is produced at a predetermined rate defined by the initial algorithm that was implemented by its anonymous creator. The algorithm has set rules which cannot be altered. As such, how the currency is created and at what rate was inherently finalised at inception. Hence, one can be certain that only 21 million Bitcoins will ever be created.

The certainty of the fixed supply of 21 million Bitcoins can be explained as follows. Bitcoins are created every time a miner discovers a new block. Since the first block on the Bitcoin Blockchain was created (otherwise known as the Genesis Block), the rate that blocks have been mined has adjusted every 2016 blocks in order to maintain a two week adjustment period, as six blocks are created per hour. The total number of Bitcoins generated per block is predefined to decrease every 210,000 blocks by half, equating to approximately four years. These predetermined conditions mean that the rate of new Bitcoin created exponentially slows down over time and ensures that no more than 21 million Bitcoins will ever be created.

(Source: Controlled Supply: Timeline Estimation)

The intentional decreasing supply algorithm was chosen in order to introduce the concept of digital scarcity to the cryptocurrency. Certain individuals compare Bitcoins scarce attributes to precious metals such as Gold. For instance, as time passes large quantities of Gold are becoming increasingly impossible to find without large-scale investment. This process continues until the cost of sourcing Gold almost outweighs its market value. Capturing this phenomenon in the digital sphere is no easy feat and thus scarcity is one of the defining characteristics of Bitcoin. It should be noted that the concept of scarcity is not widely seen in the cryptocurrency marketplace, projects like Ripple, Nem and Lisk released all coins into the market at once.

The Evolution of Bitcoin Mining

To continue the analogy of Gold, in order to obtain the raw material huge amounts of physical effort must be expended to mine the scarce asset. In Bitcoin, this equates to the large amount of computational power which is necessary to solve extremely complex mathematical problems in order for a new block to be created. Hence, those who endeavour to solve such challenges are coined ‘miners’.

As discussed previously, every 210,000 blocks miners receive half the reward for solving a new block. When Bitcoin was originally created in 2009, miners received an astonishing 50 BTC for solving a block as a reward for being innovators within the space, albeit with much easier equations to solve. For instance, when Bitcoin was first released in 2009, an average retail computer would have been able to mine approximately 200 BTC in a few days. Nowadays, it would take the same computer 98 years to mine just 1 BTC. As a result, such mining is not as available to retail clients as it was previously. Instead, more industrial institutions have moved into the market with Application Specific Integrated Circuit (ASIC) computer configurations to maximise the amount mined. This truly displays the exponential increase in difficulty in a relatively short space of time.

(Source: Controlled Supply)

Today, miners receive 12.5 BTC as a reward for solving a new block. The next ‘halving’ event is expected to take place in 2020. As this process unfolds, miners will receive less and less reward for the blocks they create whilst the equations they need to solve will become increasingly complex, thus requiring much more computational effort and expense. This intentional paradox implemented by Satoshi ensures that the supply of coins cannot rise too quickly. As previously stated, the last block will be mined in approximately 2140. Consequently, with Bitcoins supply remaining constrained until 2140 and demand likely continuing to rise, as a result of Bitcoins scarcity amongst numerous other factors, the value of Bitcoin is almost certain to increase exponentially over time. This ensures that Bitcoin is an excellent store of value, once again similar to Gold.

How Scarcity Affects Demand

Undoubtedly, scarcity has had a great impact on the demand for Bitcoin and this will feed into the self-perpetuating snowball effect as time goes on and supply continues to decrease. As with any limited supplied asset, when the underlying resource becomes harder to source, the scarcity of supply causes significant demand for the market when the asset is perceived to have value. As previously suggested and widely acknowledged, Bitcoin is now viewed as a desirable store of value comparable to Gold. Thus, with only 21 million Bitcoins ever to be created, the market shows, or certainly will in the future, a significant gap between the number of individuals who wish to purchase the asset and the amount available. As this process unfolds, digital scarcity will make Bitcoin exponentially more valuable over time.

To further perpetuate this, individuals perception of Bitcoin scarcity over the actual reality will only increase the rate of adoption. It won’t be long until we see headline articles stating that only 15% of all Bitcoins ever to be created have been already been mined. No doubt the masses will hoard the asset once more, before they feel it is too late. The fact of the matter is, as displayed in this article, the supply of Bitcoin rapidly slows down with time, as the complexity of solving blocks becomes increasingly difficult and miners are rewarded less. Bitcoin will continue to be mined until the approximate year of 2140. Hence, there is still plenty of time to invest. As Bitcoin continues to be recognised as a store of value and understood and adopted by the layman, one may wish they invested sooner rather than later.

Conclusion

This article has aimed to bridge the gap between one’s perception of the scarcity of Bitcoin and the actual reality of the matter. There is no denying that the majority of Bitcoins have already been mined, yet the excellence of the mysterious creators’ code ensures that supply cannot be created too quickly. This inherent attribute makes Bitcoin an excellent store of value, akin to Gold, yet in the digital sphere. Something truly pioneering and unique in our digital world. Instead of investing for the fear of missing out, perhaps we should marvel in the astonishing technology behind the project itself. Either way, one can be certain that the price of Bitcoin will increase as its supply slowly decreases whilst people perceptions remain unchanged.

Check out the BBOD Research Blog for more similar articles.

Fundamental Pick: Quantstamp

PROVIDING MUCH-NEEDED SECURITY AUDITS FOR SMART CONTRACTS

BBOD RATING (04-10-2018)


ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

OVERVIEW


Currency Code QSP
Transaction Start Date 21/11/2017
Total Supply 976,442,388
Circulating Supply 617,314,171
Protocol Type Application Protocol
Base Protocol Ethereum
Where To Buy Binance, Huobi, Kucoin, IDEX

PROBLEM TO SOLVE


Currently, the development of smart contracts is left solely in the hands of those who create a blockchain project. Although such contract creators are often highly skilled in their field, the potential for oversight of vulnerabilities in their code is highly possible as a result of a single point of failure, with only a few individuals ensuring optimal smart contract security.

The importance of auditing smart contracts efficiently cannot be understated. Without such a mechanism, projects that are backed by huge sums of investors money could be vulnerable to attack once deployed on the Ethereum network. For instance, Quantstamps whitepaper presents two notable hacks where $30 million and $55 million were respectively stolen, as a result of flaws in smart contract code. This is the exact scenario Quantstamp seeks to prevent. With the creation of new ERC-20 tokens being a continual process, and only set to increase in volume in the future, Quantstamp’s services are likely to be in high demand.

SOLUTION


Quantstamp aims to solve smart contract impenetrability by creating the leading decentralised protocol that will provide security auditing for smart contracts based on the Ethereum network. In essence, Quantstamp allows developers of smart contracts to submit their work to their protocol where numerous security auditors can review the contract, in order to receive QSP tokens as a bounty. The level of auditing required is set by the initial developer who pays such fees to any individual who identifies a problem within the smart contract.

As noted in Quantstamp’s whitepaper, traditional smart contract auditing is extremely expensive, costing on average $5000 and taking up to a week to complete. By spreading the workload amongst numerous security experts, Quantstamp aims to considerably lower the cost of auditing and substantially decrease the amount of time taken to complete

APPLICATIONS


When the project launches in Q2 2019, Quantstamp protocol will comprise of two main types of security audit. Firstly, their software verification system that is entirely automated will scan Solidity programs for bugs. The software is designed to become more intelligent over time as the result of artificial intelligence, allowing it to catch attacks of increasing sophistication. Secondly, Quantstamp will automatically provide a bounty to human participants in the form of QSP tokens who manage to find vulnerabilities in smart contract code. Human auditors receive compensation for their efforts and Quantstamps clients ensure the integrity of their cryptocurrency project.

This multifaceted approach combines the best of artificial and human intelligence to form a strong alliance to fight against any proposed security threats. Thus, clients of Quanstamp should feel much more confident in the overall strength of their network than if merely working as sole actors.

SUMMARY


Quantstamp seems to have uncovered a gap in the market that needs to be filled. The project has the potential to become the leading security auditing protocol. This could provide the level of trust the community needs to feel safe in investing substantial amounts of money, by confirming a project is safe from attacks that currently plague the industry. With support from Binance, already completing numerous security checks for ICO’s launched on their exchange, the project looks to have a great future ahead of itself and is certainly one to keep a close eye on.

CATALYSTS


  • Proven Ability: CEO Richard Ma and CTO Steven Stewart have extensive experience in software security testing and smart contract development
  • Academically Respected: The team as a whole has over 500 citations in Google Scholar regarding software security
  • Proof of Concept: Numerous successful audits have already been completed for Binance clients, indicating substantial interest in the project
  • Growing Interest: The expansion of mainstream interest in smart contracts will attract more security threats in the future that need to be addressed
  • Expanding Market: The continual introduction of new projects using smart contracts ensures an expanding target market

RISK FACTORS


  • Foresight: The Ethereum network may not always be the leading smart contract platform, the project could consider expanding to include Ethereum’s competitors
  • Low Supply of Able Workforce: Currently, the talent pool within the blockchain space is minimal, with demand far outstripping supply, finding enough auditors to become scalable could become an issue
  • Competition: Not the only project trying to lower the cost of smart contract development, although the projects rigorous emphasis on security is unique

EVENTS


  • 30th April 2019 (or earlier): Quantstamp audit network launch, as described in the whitepaper

CONCLUSION


In the continually evolving blockchain industry, unique problems to solve are always present yet often missed. Quantstamp’s vision to provide much-needed security to smart contracts is certainly a valid addition to the blockchain ecosystem. By decentralising auditing work and splitting traditionally expensive costs and knowledge amongst actors, Quantstamp could substantially improve the security of smart contracts moving forward, whilst providing a discounted price.

With numerous successful audits already completed for reputable firms on the Binance platform, the project has the potential to become the go-to protocol for contract creators seeking network security in years to come. As the market for smart contracts continues to grow, Quantstamp could become an incredibly lucrative endeavour for investors if this holds true. Certainly, one to keep on your radar.

BBOD RATING STANDARD

BUY: A low-risk buying opportunity

ACCUMULATE: An opportunity to buy a medium risk cryptocurrency at a low price

SPEC BUY: A speculative opportunity for investors with a higher risk tolerance

HOLD: Maintain current levels of position until further research is published

SELL: Investment is associated with the potential of losing capital

DISCLAIMER

BBOD Research is an independent cryptocurrency research-house. The company has not received any remuneration (cryptocurrency or otherwise) in preparing this analysis.

Bitcoin ETF Proposals Possess Substantial Market Influence

Before July, one could be forgiven for being confused by the prospect of a Bitcoin ETF being introduced into the cryptocurrency ecosystem. Almost three months on, however, such ETFs have become synonymous with the term Bitcoin. To claim naivety of the ETF proposals at this stage risks entirely misinterpreting current market conditions. This article aims to ensure market participants are completely aware of the facts thus far including what exactly a Bitcoin ETF entails, when they are likely to be implemented and how they will impact the overall market.

ETFs Defined

Exchange-traded funds, commonly known as ETFs, are a traditional investment vehicle offered on all major stock exchanges around the globe. The most notorious example of such a fund is the well-regarded S&P 500 on the New York Stock Exchange (NYSE). They allow exposure to an underlying asset or basket of assets offered in the form of a security that is proportionally represented by the funds’ shares. Most importantly, they allow exposure to a market without needing to physically hold or store the underlying asset, which is left up to the fund. For many years now, ETFs have become one of the key mainstream methods for passive investment by the masses in mainstream markets, as they are commonly associated with lower investment risks than individual stocks.

Indeed, as ETFs allow an individual to buy a basket of multiple assets, they mitigate strong price swings which individual stocks often suffer from, especially in the incredibly volatile cryptocurrency market. Any losses from assets which do not meet up to their promise are counterbalanced with assets which have performed particularly well and the growth of the overall industry during that period. Driving up the funds share price over time. The notorious investment tycoon Warren Buffett once proved the power of ETFs with a successful bet that the S&P 500 would outperform a collection of well-regarded Wall Street hedge funds over the period of a decade. His victory truly displayed to the masses the power of such funds.

Bitcoin ETFs Market Impact

One of the major barriers to mainstream cash inflow into the blockchain ecosystem has been the lack of institutional investors ability to purchase assets using traditional methods. Many do not understand that such market participants are simply not going to risk their hard-earned capital on unfamiliar and unregulated cryptocurrency exchanges, there is simply too much at stake. Instead, institutional money will enter the space once they can acquire cryptocurrencies without needing to hold the underlying asset, in a highly regulated and fully insured manner. Thus, for institutional investors crypto ETFs mitigate the risks of the industry whilst allowing them to profit from one of the greatest financial revolutions one will likely see in their lifetimes. Make no mistake, institutional investors want to get involved in the ongoing revolution, they simply want to do so in a highly regulated and safe fashion.

Although the impact of such institutional investors on the market will likely be of a speculatory nature in the first instance, this huge influx of money to the market will bring much-needed market exposure. The media love to shame the cryptocurrency ecosystem as much as feasibly possible, calling it a scam or a fad on a regular basis. Such institutional money would bring credibility to the entire industry and allow well-respected entities who have been quietly investing in the cryptocurrency space to come out of the woodwork and into the spotlight. Ultimately this could lead to mainstream cryptocurrency adoption long term, as a result of the perceived integrity of the industry as a whole.

Bitcoin ETF Calendar

Issuer Company Filing Date Status SEC Date
“Physically” Backed by Bitcoin Holdings
Winklevoss Bitcoin Shares Winklevoss Cap Mgmt 01/07/13 Denied 26/07/18
VanEck SolidX Bitcoin Trust VanEck & SolidX 05/06/18 Postponed 30/09/18
Bitwise HOLD 10 Cryptocurrency Index Fund Bitwise 24/07/18 Awaiting Approval Unknown
Derivatives Based
GraniteShares Bitcoin ETF GraniteShares 15/12/17 Denied 15/09/18
GraniteShares Short Bitcoin ETF GraniteShares 15/12/17 Denied 15/09/18
Direxion Daily Bitcoin 1.25X Bull Direxion 05/01/18 Denied 21/09/18
Direxion Daily Bitcoin 1.5X Bull Direxion 05/01/18 Denied 21/09/18
Direxion Daily Bitcoin 2X Bull Direxion 05/01/18 Denied 21/09/18
Direxion Daily Bitcoin 1X Bear Direxion 05/01/18 Denied 21/09/18
Direxion Daily Bitcoin 2X Bear Direxion 05/01/18 Denied 21/09/18
Evolve Bitcoin ETF Evolve Funds 21/09/17 Awaiting Approval Unknown

The table above displays cryptocurrency ETFs which are currently laying the foundations for their approval. Such firms are on a waiting list ready for their hearing with the U.S. Securities and Exchange Commission (SEC), who will ultimately determine their fate. The notorious Winklevoss twins fund has already been turned down for the second time as of the 26th of July. Following this, the SEC has denied a following 9 applications, predominantly from Derivatives based ETFs such as GraniteShares and Direxion. Such a decision results from their perceived inability to provide significant liquidity due to their market size, which could lead to significant market manipulation.  

Despite such dismissals, the most important ETF which market participants should be fully aware of is the VanEck SolidX Bitcoin Trust who plan to release their ‘physically’ backed ETF on the notorious Chicago Board of Options Exchange (CBOE). Recently, the SEC hearing date was postponed to the 30th of September. The CBOE has true industry influence as the largest options exchange in the world and have proven themselves in the cryptocurrency market by introducing their Bitcoin futures market in late 2017. They have meticulously studied the failures of all previous ETF denials and reviewed their application accordingly. If an ETF is likely to get approved this year, this will most likely be the one.

Despite all the hype, some sceptics suggest that ETF delays are usual, with Copper being the last ETF to pass through the SEC. With their reasoning, the likelihood of an ETF being approved in 2018 is minimal. However, regardless of whether a decision happens in the next few months or not, the market has certainly been responding rapidly to both positive and negative news. The first Winklevoss twins ETF denial news caused a flash crash which quickly corrected, whilst the delay of the major CBOE proposal caused a more prolonged fall in Bitcoins valuation. Ultimately, the market appears to be in a stalemate until a further delay, approval or disapproval occurs. The latter would likely cause a long-term downtrend, whilst an approval could see prices increase exponentially. As the 30th of September looms, the market tension builds. Be sure to have a plan for all situations to ensure one maximises or minimises the ETFs impact.