The winter of 2018 is exceptionally cold with the total market cap of global digital assets falling to 112.1 billion dollars. Compared to the 760 billion dollars market cap in early 2018, 85% of its value has been wiped out, along with massive fluctuations in tokens’ price. Among all, Bitcoin [BTC]’s price bottomed out at 3300 USD after plummeting from 6400 USD, and showed sign of rebounding from 3300 USD.
What can investors learn from this volatile market, and hopefully make every penny they lost worth it? My suggestion would be: get ready to make wave in the market rebounding.
The first rebound after a series of falling always means opportunities. If a person chose a good stock, he/she may offset the loss in a short period of time, or he may even make unexpected profits and vice verse. Therefore, in current market, choosing a good investment target is critical.
First of all, let’s dissolve the term “value depression”:
During the digital assets’ bull market, whichever token issuer’s story-telling skill surpassed the others, the related token price went hype. The irrational hype sounds not strange. Experienced stock investors remember the “price-to-whatever-ratio” leading to the stock market crash in 2015. To be an out-performer in investing, “understanding the market” is no longer an advantage. Public chain who used to “make dreams” are experiencing the “low valuation”. Whereupon, thorough understanding of market and real use cases become extraordinary important.
Which token will be understood by all and has wide use case? My answer is tokens issued by crypto exchanges. People know, understand and accept the tokens, especially those with a history of project operation, top ranked trading volume, multinational management, legal licenses, a wide range of business lines and a myriad of application scenarios.
Some investors think some exchange tokens’ price are relatively high? Indeed! Market capitalization of these tokens are higher on the whole as they are being adopted, applied and recognized. Investors should notice that, only those relatively undervalued exchange tokens worth an investment, not those absolutely cheap ones.
How to dissolve the term “relatively undervalued”? The most fundamental indicator of crypto exchanges is trading volume. Let’s have a look at the top 3 in term of trading volume on CoinMarketCap.
It’s not surprising to see that the top 3 exchanges are “old faces” who launched their own tokens. Let’s check their total market capitalization on “FeiXiaoHao”, a source for tracking market capitalization of crypto exchanges:
- No. 1: 567 million dollars of trading volume in 24 hours, with total market capitalization of 630 million dollars of its tokens, ranking 15.
- No. 2: 535 million dollars of trading volume in 24 hours, with total market capitalization of 210 million dollars of its tokens, ranking 25.
- No. 3: 450 million dollars of trading volume in 24 hours, with total market capitalization of 330 million dollars of its tokens, ranking 19.
We may get a ratio as below if we divide 24-hour trading volume by its tokens’ market capitalization:
Then we search for exchanges along with the ranking on CoinMarketCap and calculate their ratios with the same formula above. If the ratio of any exchanges is higher than the above top 3 ones, it is safe to say the price is being “relatively undervalued”.
By doing so, we can quickly find out the token that is seriously being undervalued. BIX, a platform token issued by Bibox, an AI enhanced encrypted digital asset exchange, with operation centers in the US, Canada, Estonia, China, Singapore, South Korea, Japan, Vietnam, etc. Per its official statement, the registered users of Bibox have reached more than 2 million. We can also see that, in accordance with CoinMarketCap, the 24-hour trading volume of Bibox amounts to 210 million dollars, but only has a 20 million dollars market capitalization of BIX, merely taking up a fraction of integers of the above exchanges. It would be more obvious if we do the ratio calculation, and compare it with the above ones.
The trading volume/market capitalization ratio of tokens of the top 3 well-known exchanges is around 1 to 2.5, while that of BIX reaches up to 10.5, which explains why the market capitalization of BIX is remarkably low. That’s precisely what we called “value depression” .
Second, circulation is the key:
Stock market veterans might say, even with low PE ratio, it would be hard to see the price of iron and bank shares to go up when market rebounds.
People familiar with stock market know that those stocks rebounding fast are the ones with small market capitalization, which has two meanings, first, the number of circulation stocks is small, it’s easy to move; second, the number of stocks being locked is small, or stocks at high price are not sold out. Both of them resulted in the less sell-off as the price goes up, so the stock price is quite easily to elevate.
In stock market, equity pledge means reduced shares circulation, which can be considered as positive news. It is the same case in crypto space/market, if a considerable part of a certain token is locked, it will narrow its circulation. Therefore, many project teams came up with a variety of ways to reduce the token circulation, such as repurchasing with proceedings, token burn, depositing money to earn interest in the “Cui Bi Bao” program, etc.
Take Bibox token, BIX, as an example. As mentioned previously, the market capitalization of BIX is only around 200 million dollars. Bibox was the first in the industry to take out 25% of its profits for buy-back tokens in the secondary market to burn when Bibox competitors unanimously agreed to take out only 20%. According to Bibox website announcement on November 1, 2018, Bibox bought back and burnt 1,954,452 BIX in the third quarter, adding up to 5,533,352 BIX in three quarters totally, that is to say, Bibox has already burnt 4.23% of its circulating BIX in three quarters alone.
It’s plausible to believe Bibox token is one worth an investment. The scale of its token buying-back and burning outperformed the other exchanges by 5%. And recently Bibox launched its token bond on the run – BIX Bonds with a 200% over-collateralization and 2.5 million BIX-denominated total face value. In other words, 5 million BIX will be locked as collateral.
It has a lot in common with the pledge of share right. Once stock shares are pledged, price will increase later on. However, in the case of BIX, the original circulation is already relatively small with substantial buyback and tokens burnt. Combined with over-collateralization, BIX token’s circulation is much smaller. Investors can stay optimal about BIX price because market rebounding can push its price up easily.
Third, observe if the exchange has further growth potential in bearish market:
Picking a good stock means picking a good company. Besides low valuation and small market capitalization, people are more concerned about the fundamentals, that is, whether the company’s performance is good or not. It is true for selecting tokens. Most of the blockchain projects, to be frank, are far from making real profits. However, most exchanges in the market are making profits and their tokens’ price are directly linked to their corresponding exchange’s growth potential.
It’s well-known that the main profit of exchange comes from tokens listing and transaction. The price of listing in bull market will be hard to replicate but still take a large portion of exchanges’ profits. As spot trading volume shrinks and the demand of hedging increases, futures contract trading is gradually valued by every crypto exchange. And the transaction fee of futures contract will become the stable source of profits growth.
Bibox is of no exception. On the summit held on 29 November in Singapore, Bibox disclosed that they would launch derivatives like perpetual contract trading, aiming to meet the demands of market investors and to bring considerable profit growth.
It should be pointed out that we can’t contribute token price’s growing to profit growth only. For instance, the launch of perpetual contract will also increase the trading volume tremendously, making the trading volume/market capitalization ratio of BIX token higher, and in the meantime, the growing profit will expedite the token buy-back and burning, then making the circulation smaller, lighter and token more valuable. Profit growth, total circulation reduction and good token ratio should always be the three indicators in forecasting an exchange token’s price [see the graph above].
In conclusion, the above three indicators fueled the growth force for future rebounding and price lifting. It’s reasonable to believe, once the market stabilizes, BIX price will bounce back and outperform most tokens in the market.
76156|Crypto companies beware-the risks of human error are too great to ignore
If there are three things we know about the human error, it’s that it can be costly, dangerous, and ultimately inevitable.
No matter how competent or intelligent a person is, they are bound to make mistakes, and a single error can lead to substantial losses and devastating repercussions to any company that does not take proactive measures.
This is especially true when it comes to managing or accounting for crypto. Although solutions exist to automate manual tasks and streamline finance workflows, many crypto companies continue to depend on a human workforce, leaving them susceptible, because no human is infallible.
Statistics show that overdependence on human skill is a liability not only in the world of crypto but in any company across many vastly different industries.
To demonstrate the severity of the human error and how it can impact your company, let’s take a look at some of the most telling statistics:
For businesses, incorrect or inconsistent data entry can lead to major issues when filing taxes or completing an audit. For crypto accountants, bookkeeping errors can lead to miscalculations of the business’s financial health and can result in inaccurate projections for reports, growth and total revenues.
Any professional will stress the importance of accuracy and verification for manual data entry. It’s simple, mistakes cost money, reputation and even trust from their customers.
Most crypto CFOs and CEOs are keenly aware of the overall need for increased cybersecurity. But they mistakenly approach the problem from the outside in, rather than the other way around. They believe the biggest threats are external and malicious, but nearly 90 percent of cyber attacks stem from human error.
This can even occur without an employee even realizing it, and many employees have exposed themselves and their companies by responding to phishing emails or using weak passwords.
The stakes are incredibly high in the world of cryptocurrency. One compromised employee account can result in potential financial losses for a company, or endanger the privacy of users or customers. It’s more critical than ever for crypto companies to mitigate risks originating from human error, and employ preventative solutions.
Instead of solely focusing on hackers [who rank fourth among all threat actors, according to Netwrix], c-suite leaders should be focused on investigating tools such as Blox.io, a crypto accounting and bookkeeping platform that provides automated and intelligent technical solutions to circumvent the issue altogether.
Humans are to blame for the vast majority of workplace mistakes. Crypto leaders should absorb this point in particular because people tend to trust human intuition over computer logic. But,over-reliance on employee accuracy could lead to serious problems for any company with too much trust, and not enough checks and balances in place.
On the crypto accounting side, employees may accidentally forget critical workflow steps, incorrectly calculate cost basis or mislabel transactions, or create organizational chaos across accounts, exchanges, and wallets. These acts aren’t intentional, but the consequences are undeniably detrimental to a company’s success, reputation, and bottom line.
Data centers are one of the most vital components to almost every industry in existence. They host our data, private user information, websites, cloud services, and essentially everything that takes place online is flowing through data centers across the globe. To exemplify, Facebook recently faced a social media backlash after its servers went down for hours, with many businesses suffering the loss of service and revenue.
When considering that 22 percent of unplanned data center outages are caused by human error, this should raise legitimate concerns over how data is stored and protected. Moreover, if an interruption in server uptime causes a crypto exchange to go down, the repercussions can mean a loss of millions and major backlash from users. The potential for disaster is real, and this is why businesses must be deliberate and proactive.
To conclude, humans are the driving force behind innovation, and employees are essential for critical thinking on high-level decisions and strategy. However, when introducing automation and technology, businesses can limit their exposure to the risks caused by a human error while still leveraging the experience and intuition of the human workforce.
For any company, crypto or traditional, the fear of human error is real and is unlikely to simply vanish. The only means to protect against human error is to use smarter and more innovative technology to assist and empower your human workforce. By integrating technical solutions, businesses can improve productivity, boost performance and protect against costly human mistakes.
Adam Efrima, Co-founder, Blox:
Adam is a blockchain entrepreneur and active member in the Chinese Financial and Fintech industry, living in Shanghai for over 8 years. Adam previously served in leading roles at the Chinese financial conglomerate, CITIC, and eventually founded the Shanghai office for eToro. After being deeply involved in the blockchain space for several years, Adam went on to co-found Blox.io, where he leads the Blox China headquarters, with plans to expand across APAC.
76008|Machi X Beta launch sets pace for new Intellectual Property marketplaces
Machi X – an open marketplace for copyright and intellectual property rights -has officially launched its Beta version of the platform, setting the standard for blockchain-based tokenization of copyright and IP rights. Originally conceived by famous Taiwanese musician, Jeffrey Huang, Machi X connects fans and artists directly, enabling fans to purchase fractionalized ownership in artist creations [i.e., songs] via tokenized copyrights.
Artists and musicians have struggled to keep pace with the rise of P2P technologies that have largely precluded them from maximizing their opportunities for profiting from their work. Further, the prevalence of intermediaries in traditional music revenue structures has hindered better profits for artists.
Machi X changes that paradigm, by removing costly intermediaries and allowing content creators to focus on their craft, giving them the power to maximize the potential of their pieces.
Fans and supporters of musicians can buy tokens representing fractional ownership in song copyrights with ERC-20 compatible tokens [i.e., on Ethereum] and store them in collections on the market or in wallets – even cold storage wallets.
Users can buy copyright tokens using Machi X, USDT, and Maker Dai currently. The platform plans on expanding its support of other tokens following the Beta.
There are three current artists with IP tokens available on the Beta, including Stanley Huang, Nicky Lee, and Khalil Fong. In total, eight IP tokens are available for trading. Machi X is planning on extending their offering of IP tokens further into the creative landscape, targeting movies and TV shows on its future roadmap.
Jeffrey Huang came up with the idea for Machi X following his own struggles in consistently receiving royalty payments and losing out to expensive middlemen that extracted large portions from his bottom line. Founder of both Mithril and 17 Live, Asia’s largest streaming app, Huang strives to foster a new open era for both content creators and their fans to benefit.
Machi X is a ‘Mithril Forged Company,’ and expects to list the Mithril Token as a way to give back to the broader ecosystem that it is a part of.
Machi X offers an alternative funding option to artists outside the limitations of traditional licensing and intermediary-prone avenues. Based in Taiwan, the current artists are well-known and award-winning musicians in Asia.
Following the Beta, the platform will add support for more artists and musicians who can distribute IP tokens representing a stake in their work for fans to collect and profit from their market price and correlating royalty revenue.
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