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ICO Analysis: Change

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Change Bank CEO Kristjan Kangro opens the Change whitepaper with a note on the failure of the world’s oldest bank. One would think that would be the end of the missive – the oldest bank in the world has failed, banking itself has failed more than once, cryptocurrency is intended to make such situations impossible. While there are moral reasons to object to the invasive tentacles of the legacy banking establishment, from an investment perspective, it bears looking into. We’re decades away from cryptocurrency having entered the common lexicon such that on-boarding outfits like Coinbase, Monaco, or Change Bank won’t be necessary, and even then, it’s likely they’ll still find rent in the system somewhere.

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For the author, the great thing about Change Bank is that they don’t take a lot of explaining. They intend to be a cryptocurrency bank, complete with fiat withdrawals and deposits as well as a debit card. Their focus is in the spending of monies and extracting fees from such activities. We should, nevertheless, briefly go over what they do have on offer, since it’s not a direct copy of any other project, but perhaps not as exciting as some might have first thought.

  • Will allow deposit of major cryptocurrencies and ERC20 tokens.
  • Pays a 0.05% dividend in network token for every purchase made with account.

Change began as a Fintech solution in Singapore, and now they officially consider themselves established in Singapore and Estonia, which is quickly pushing to become the crypto capital of the globe.

The rubber meets the road for Change in the revenue model. They rely on the establishment of Third Party Service Provider (TPSP) contracts relating to economic activity generated by Change Bank members.

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Change Token

20% of what Change Bank members spend with such merchants is returned to the network, and from this, 83% is redistributed among token holders. The payments will apparently be made in Ethereum, to the Change Bank users account, on a monthly basis. This bit makes the author weary, since anytime there is a delay, there is an opportunity for malfeasance. Additionally, Change Bank itself is going to kickback 0.5% of its share of revenues from Mastercard proper, distributed over the entirety of the token holders. This could be a problem if a proper vesting schedule on any withheld-from-the-public coins is not established. They say that if 1 million users were to spend an average of $1000 per month through the Mastercard Debit card, then the annual revenue to token holders would be around $60 million.

The issue with Mastercard, of course, is their long history of flip-flopping on cryptocurrencies. There could be problems down the road that are unforseeable regarding this particular firm, but others seem to be working with them without problems.

Change will not force you to spend Change tokens when you’re shopping, but Change tokens will be used for any other transaction on the platform. This might not make much sense at first, but break the users of Change down into groups: token holders/investors and users. The users will have the least, if any, interaction with Change tokens. Their primary source of them will be in rebates, and their primary use of them will be exchanging for more currency to spend.

So who needs the Change tokens besides the Change platform?

Change Marketplace

The value of the Change token will actually be generated by the associated financial marketplace. Change identifies a core problem of banking conglomerates being that they bundle together inferior services, when instead they could offer the best services from the best providers, or leave it up to the market – which is the approach that Change is taking. Insurance providers, portfolio managers, the whole range of financial services will be able to integrate with Change Bank. They give an example of how this might work, with a supposed user having invested in a rental condo somewhere remote, and how this investment was done through a platform that integrated with the Change marketplace. We can see outfits like Liquid Asset Token wanting to integrate and provide access to Change Bank users, so we consider this open-ended marketplace of financial offerings to be a double-edged sword: on the one hand it has the potential to make a lot of money, on the other it sounds like a scammer’s paradise.

Nevertheless, even scammers would be forced to kick back to the network, and they would have to buy tokens in order to get started. As Change themselves say, their value is in re-bundling the best services from disparate sources – but not doing so directly. Instead, allow the service providers to have direct access to the clients who might benefit from them, and simply collect small fees on their take.

So more than anything, what Change has to do in order to succeed is get quick, massive adoption. A huge number of users makes the platform more attractive for the service providers who will, in the end, create the actual value for the token. Unfortunately, its only difference from Monaco is that it gives a smaller reward in tokens and has an extendable application programming interface. Its only difference from TenX is that its extendable API is probably extremely inferior to the Comit.network. We should think that integrating on top of Comit.network instead of re-building the wheel would be a smarter move, but we can’t tell people how to start their businesses. What we can do is suggest that while there will be a lot of hype around Change, just like all the others that attempt to bring crypto to the masses, in a broader scope we can already identify enough weaknesses to see that it may not stand the test of time by comparison.

At present, Change has only three partnerships for their financial marketplace: Smartly, the current operation of Change co-founder Artur Luhaäär; danabijak, a Singapore-based P2P lending company; and Bit of Property, an Estonian start-up that wants to facilitate real estate investments (similar in scope to LAToken or Propy). It would be much better if any of these were well-established firms, but none of them truly are. If we were going to get really excited, we’d have to see integration with at least one household name.

Change Distribution

We find here the problem with Change. Only 40% of the total token supply is entering the public domain.

The 200,000 ETH worth of Change coins issued in this initial sale covers 40% worth of all Change coins. 15% would be distributed out to the community over time as rewards for R&D and bounties. 10% is allocated to early investors & backers and future partnerships. 15% is reserved for the current team and most importantly, the future team members’ motivation packages. The final 20% will be held by Change, under scrutiny of the community, to reach future sustainability through network revenue distributions.

Change Bank itself is taking 35% of the tokens, and therefore all of the revenue sharing mentioned above is cut by that amount – these revenues actually go back to the bank.

Change Team

CEO Kristjan Kangro formerly was the CFO at Expara Financial, “Singapore’s pioneer and leader in venture capital, incubation, entrepreneurship, VC and innovation trainings, mentorship and advisory work.” He previously worked on a Dutch-Estonian appointments application called SwingBy as a business manager. His experience is limited, but as is the experience of most of the cryptosphere and the rest of the team.

We can attribute the scope of Kangro’s project to his youthful exuberance, we suppose, but we can’t get away from this point without noting that a very successful, established business leader has voiced support for Change. While we don’t normally take into account the words “big names,” we do have respect for those who’ve made it in the times before it was so incredibly easy to get into business and make money. Thus, the statement of former DHL CEO Roger Crook carries a bit of weight, as regards the team behind Change:

I’m backing this project because I think that it’s got an extremely good future. I mean, it’s the team behind it, Kristjan the founder, are exceptional people. They’re smart, they’re young, they’re energetic, they’ve been extremely well educated, and they’ve got so much drive, so much passion, to make this a success. I have no doubt that this business is going to thrive and grow global over the coming years. So for me it’s extremely exciting to be just a little part of it by backing it and supporting the team.

Well, Mr. Crook, the author wishes he could share in your lack of doubt, but we’ll take your word for it that the people are solid. Everyone has to start somewhere.

The team are also honest. According to a source from the Hacked community, their response to the question of what differentiates them from Monaco and TenX can be paraphrased as follows:

The main differentiator is the marketplace, we do agree TenX and Monaco have a head start – but that is not necessarily a good thing. It means they are poised to step over a lot of initial problems in the space- and have to exhaust resources to solve them and we can learn from some of their mistakes with regards to the card aspect. However with regards to the marketplace aspects, if they do want to head into this direction then they would be behind us. To be honest this is a large space and there will be enough for all of us.

All of these are fair points that we must consider. However, while their offering of a marketplace API will be more friendly to businesses actually getting started, the whitelabeling and other aspects of the Comit.Network should not be underestimated. However, just like they say in the above paraphrasing, there is plenty of meat to go around. It is a mistake to view the crypto space with a “Highlander”-like philosophy – there can certainly be more than one.

The Verdict

We find that we agree with Crypto Judgement’s assessment of Change as having “high credibility,” however do not stop reading here (see last bit of this article). We think they have designed an intriguing product and that they are more likely to deliver than not. We see the fundamental drag on their success being the arduous process of establishing partnerships and gathering marketplace participants in order to build the functional value of the token.

Risk

  • Service providers that would most benefit from the marketplace will have legal hurdles to get around, at least some, as regards existing contracts. This will be a complexity far greater than the team appear to recognize. We have to pick off 3 points for the hard slog of building the marketplace. Token value will not significantly increase until that marketplace is established, at least in terms of real value – speculation will be there. (-3)
  • A serious distribution problem. 35% left to their trusted hands? 60% total protected from market forces? -2
  • Change has a massive task in establishing its marketplace and user base. We see this as a bigger task than they probably do, which means the team may not be prepared. In terms of short-term effect on price, this is neutral. -0

Growth Potential

  • (Realism of concept and its effect on token value.) With massive caveats regarding their actual gathering of users and market participants, we say this thing is well-designed and can produce a lot of revenue for both token holders and Change itself. A goal of one million users in 2 years seems reasonable to expect, but the users will only increase once the marketplace is fully established and enticing. +4
  • On the advisory team, they have three people with wide-ranging connections that will help build the momentum and hype around the ICO: Roger Crook, Leslie Goh from Microsoft (who works as a financial services lead there), and David Moscowitz from Indorse. We think in terms of buying at ICO and selling at market, their involvement is going to produce favorable results. +3.5
  • One of the few ICOs where the company will actually share its revenue (although, as we found, not as much as it appears) with investors instead of expecting them to get their money from the market itself. Undeniably attractive to investors, and therefore another big plus. +1.5

Disposition

We can’t get higher than a 4/10 on Change at the moment, in terms of long-term performance, due to a few things we discovered in our investigation. For actual ICO acquisition and market performance, though, we can see results that will somewhat mirror the performance of Mona.co. Thus, on the short side we’re going to lend 2 extra points, in the belief that they will actually yield results for short traders, but probably be lackluster at best for long-term investors who want to collect dividend payments.

Investment Details

The ICO will begin at 5AM EST (US) on September 16th. The total contributed Ether will be 200,000, with a maximum of 50,000 collected during pre-sale at a rate of 650 Change Tokens (CAG) per Ether. Regular sale price will be 500 CAG per Ether contributed. They say they will deliver the tokens within a week after the sale closes, but also reserve the right to be late.

We foresee that the delivery of Change coins from the Smart Contract will occur one week after the sale has concluded, but we reserve the right to delay the delivery up to four weeks after the sale closed.

Interestingly, although they list one of the time/dates in Singaporean, they are not allowing investors from the US, Singapore, or Estonia. The ICO is being conducted by Lion Capital OÜ & Lion Capital Foundation OÜ, which is based in Estonia. This makes the ban on Estonian residents very, very confusing, and raises a bit of a red flag we can’t end the article without flying.

Be sure to take official directions on investing from https://change-bank.com/ico/ – do not send money anywhere without being sure it is the correct address for the smart contract. Do not let Fear Of Missing Out cost you capital.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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  1. dragosid

    September 7, 2017 at 7:08 pm

    Hey P.H, lots of respect for the quality reviews on the ICOs however with regards to an actual serious contender for Monaco & TenX I’d definitely suggest doing a review of Centra.tech (Disclaimer – I’m investing, but it took them a long time to finally convince me).
    In this short interview with their CEO it says it all, mostly why it has major advantages over Monaco, Tenx, Change, Ubiq etc etc etc neocashradio.com/blog/centra-card-interview-president-sam-sharma.
    Would love to hear your feedback/see a review. Keep up the good & objective work.

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Analysis

Crypto Update: Chinese Crackdown Triggers Next Leg of Correction

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The cryptocurrency segment is crashing again, with double-digit losses across the board, and with several coins shedding around 30% in one day amid the widespread and heavy selling. The sell-off was triggered by reports on a new set of measures by the Chinese authorities limiting crypto trading, which added to the still looming South Korea related regulation worries. Bitcoin tested the mini-crash lows at $11,300 today in early trading, dipping slightly below that level before a strong bounce started.

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The most valuable coin is now between two crucial support/resistance lines, with the other ahead at $13,000, and as the downtrend is entering its more mature phase the $10,000 and $9,200 levels could come in play, with a possible dip to the support zone near $7,650.

BTC/USD, Daily Chart Analysis

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Interestingly, the coin is still hovering within the daily range of the crash of December 22nd, and that points to a very active and volatile period ahead near the low at $11,300, as automatic orders will likely get triggered on both sides of the market.

The short-term setup is bearish, and although it’s possible that the primary support level will hold, odds still favor another leg lower, following the exponential run-up at the end of last year that pushed sentiment into bullish extremes.

BTC/USD, 4-Hour Chart Analysis

Altcoins

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Analysis

Music: One Overlooked Use Case

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So far in this year, Ethereum has been the crypto star appreciating over 80% to a recent record of $1402. All this suggests that more and more applications are being created. We know this by the demand for Ether, the gas that drives the Ethereum network.

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The reason behind the explosion of Ether demand was confirmed by Ethereum co founder Steven Nerayoff in a CNBC interview where he claimed the number of Ethereum projects today is more than 10 times year ago levels.

One of those areas is the music business and there are several names appearing on the ICO list to add to your research agenda.

Why The Music Business Needs Help

Music may live forever but the business side has been in trouble for a long while. Over the last decade there have been only three years when the global value of music sales increased. The combination of digital music and outright pirating through peer-to-peer sharing has much to do with the long-term trend.

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Throughout the world there are 69 copyright and royalty societies given the responsibility of documenting, collecting and distributing music royalties. That means collecting a few pennies whenever a song is played on the radio, Internet or anywhere else. Four of the largest of these is in the US, followed by Japan, Germany and Britain. Their operations are truly byzantine.

Experts in the music-publishing field confirm the time between music usage and royalty payment can run close to 24 months. Even then not all royalties are distributed. According to my sources, there are often millions of dollars collected by royalty authorities everywhere that never make it to the entitled recipients. That sort of practice borders on criminal behavior but copyright and royalty societies operate in a sub-rosa manner making it difficult to understand their policies.

In the past just 4 major record labels controlled over 80% of the industry. These giants could afford a full time legal department to pursue royalty issues dominated the music industry. Today, however, independent labels represent almost one-third of the market. This means less democracy in the business with the young independent artist at a particular disadvantage.

Of course, musicians aren’t the only group of artists loosing out on their pay. There are writers, poets and painters that go largely unprotected.

The music business is just easier to track because it has more data. Yet in spite of all the information, the music industry is widely recognized for its lack of transparency. Blockchain technology has the ability to disrupt long-standing industry practices.

ICOs To The Rescue

The number of Ethereum based white knights is starting to appear on the horizon promising to rattle the industry and hopefully restore some democracy on behalf of the independent artist.

One simple business model comes from a startup SingularDTV who is attempting to build their ecosystem on top of Ethereum. Here is the basic value added proposal.

SingularDTV tokenizes the artist work. In doing so the artist is turning their music into a financial asset. Anyone who buys into an artist’s token owns a share of the creation and its income stream. The more people consume an artist creation, the higher goes the token price.

Only time will show if SingularDTV succeeds with this model. The consequence of this model is how it eliminates many of the middlemen and nefarious influences in the industry. Instead of singing on a street corner for bread, an artist could raise money upfront without relying on an advance from a record label.

According to SingularDTV, distributing content via blockchain would allow artists to skirt streaming platforms like Spotify to earn royalties on their own terms. Now that is true democracy.

SingularDTV may stand out a bit in the news due its recent ICO success in raising $8 million but they aren’t the only player in the music game. Names like Voise recently raised $1 million as well as Soundchain, Blokur and Opus to name a few.

I am no longer a registered investment advisor, which means I don’t go around making investment recommendations. So I will only suggest this group to put on your list of late night reading. Next time, I will take a closer look at more of these names.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Analysis

Technical Analysis: Cryptocurrencies Start Week on a Quiet Note as NEO Shines

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The broad Bitcoin-led correction continued to dominate trading in the crypto-segment throughout the weekend, as the most valuable coin drifted sideways above the key technical level at $13,000, with dwindling trading volumes.

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BTC remains in a declining short-term pattern, although the digital currency still holds well above the mini-crash lows from December, spending almost a month now in the daily range of the year-end plunge. We still expect the largest coin to complete the current cycle with a move below the crash lows and the $10,000 level after the stellar rally of the previous months. Key support is still found near $13,000, with further levels at $11,300, $10,000, $9000, and stronger levels at $8200 and $7700

BTC/USD, 4-Hour Chart Analysis

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Altcoins also settled down across the boards with only a few coins registering strong activity. Ethereum and NEO have been among the coins making headlines, as the second largest coin continued to grind, higher still trading near its recent all-time high today. The price of the ETH token is moving in a short-term uptrend, in the face of the stretched momentum indicators, but we expect a meaningful correction soon, and long-term investors should wait for a more favorable technical setup before entering new positions, with key support levels at $1000, $850, $740, $625, and near $575.

ETH/USD, 4-Hour Chart Analysis

Ripple remained under heavy selling pressure in the meanwhile, as the oversold bounce of the weekend faded away and the coin got close last week’s lows again. As the short-term downtrend is intact, traders should stay away from entering new positions, while investors should wait for short-term sell-offs towards the main support levels at $1.50, $1.25, and $0.85 to add to their holdings.

XRP/USDT, 4-Hour Chart Analysis

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

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