ICO Analysis: CyberTrust

Fin-tech has long been a disruptive force in traditional finance, but rarely has it threatened the very essence of the banking system. The advent of cryptocurrency brought forth a radical re-think of not only financial services, but our modern view of monetary value. Banks can no longer ignore cryptocurrency or mock its esoteric roots. But that doesn’t mean they are willing to accept it, either.

The inherent tension between traditional finance and cryptocurrency will grind away into the future, even as banks continue to investigate blockchain technology for their own benefit. But what if these diverging schools of thought can merge in some way – if, for nothing more, than to benefit consumers?

CyberTrust has a grand plan to make cryptocurrency more amenable to traditional finance. It plans to do so by creating a securitized token that can be readily deployed by the financial industry to enable ownership of cryptocurrencies. In other words, it is creating a token that acts as a custodian bank for cryptocurrencies.

The Token

CyberTrust is offering an ERC-20 standard CABS token, which will enable users to buy and hold cryptocurrency derivatives. According to the whitepaper, the CABS token has three distinct role:

  • allow accredited investors to securitize major cryptocurrencies at a much lower rate than the competition (i.e., Grayscale BIT);
  • prioritize the broader public as opposed to just institutional investors or professional traders; and
  • develop the foundation for future derivative cryptocurrency products.

The total token cap is 600,000, and based on the pre-sale, will likely sell fast. The base price for each token is 0.6 ether, which is equivalent to roughly 0.024 bitcoin, or $182 U.S.

The public token raise is set to begin Dec. 5 and run until Jan. 5.

The Team

The CyberTrust team is among the strongest we’ve seen. It all begins at the top with Scott Freeman, the CEO who has made stops at some of the world’s most prestigious banks. He just so happens to run the C2CX cryptocurrency exchange, which is ranked in the top 30 by overall trade volume.

CyberTrust has also managed to add Bill Delahunt to its roster. The former U.S. Representative for Massachusetts’ 10th congressional district adds even more credibility to a project already with plenty of potential.

The CyberTrust team includes 16 staff and five advisers, with expertise ranging from content production to IT development and all the way up to legal. A full LinkedIn profile for each member is provided on the main homepage of the website.

If you’re a stickler for personnel, CyberTrust has plenty of brainpower and legitimacy behind its name. The latter is a breath of fresh air for a cryptocurrency community struggling to find reputable crowdraises.

Verdict

CyberTrust clearly has all the characteristics of a solid ICO. The project is backed by a solid team and has plenty of sample use cases to present the case for securitization. Of course, the big question for investors is whether they want to back a project that brings cryptocurrency within the purview of traditional banking, or whether they want to maintain the core element of decentralized, unregulated markets. This quickly devolves into a political debate, and I have very strong political beliefs, so let’s just leave it there.

Risks

  • The use cases, although well developed, appear to be samples of what securitization could look like. Of course, we know what the securitization process entails, but will CyberTrust be able to lure institutional investors into the fold? Implementation is a point of contention that investors should consider. While implementation concerns are certainly not unique to CyberTrust, when you dream big, the consequences of failure are even greater. -1
  • For the most part, cryptocurrencies have been designed to operate outside the purview of centralized governments and institutions. The purists among us may therefore scoff at any project that attempts to marry cryptos with traditional banks. Investors need to think long and hard about whether they want their cryptocurrency balances integrated with traditional finance. -2
  • Cryptocurrency securitization is expected to be a highly competitive market. The team at CyberTrust has correctly identified Grayscale and the yet-to-be approved Winklevoss exchange-traded fund (ETF) as potential competitors. Although the Winklevoss ETF failed to win regulatory approval, many say it is only a matter of time before bitcoin and other cryptocurrencies are made available through these funds. Let’s also not forget that CME Group, CBOE and Nasdaq are all planning to launch bitcoin futures very soon. -3

Growth Opportunity

  • The initial round of funding, which closed Nov. 28, collected 42,770.81 ETH. At the time of writing, that’s equivalent to roughly $18.6 million. Clearly, investors are excited about CyberTrust. +2
  • Cost efficiency is one of CyberTrust’s biggest advantages. The platform is promising to securitize cryptocurrencies at a rate of ~2.4% premium, which is well below the 50% to 100% premium offered by Grayscale BIT. +4.5
  • On the topic of Grayscale BIT, the fund has already generated more than 1.8 million shares and nearly $1.1 billion in assets under management. Clearly, demand for cryptocurrency securitization is huge. It is also expected to grow substantially as more institutional investors enter the fold. +3
  • CyberTrust is backed by a strong team with plenty of experience in fin-tech, business development and sales. CEO Scott Freeman also built one of the world’s largest cryptocurrency exchanges, based on volume. +3

Disposition

If you like securitization and believe cryptocurrency should be part of the equation, it’s tough to find a better proposition than the one offered by CyberTrust. Against this backdrop, the CyberTrust project gets a solid rating of 7 out of 10. Although the author has reservations about securitization, the team backing the CyberTrust project is too strong to ignore. The project is very well focused, and the whitepaper is executed extremely effectively.

Investment Details

  • Type: Crowdsale
  • Symbol: CABS
  • Token Sale: Dec. 5, 2017 – Jan. 5, 2018
  • Platform: Ethereum
  • Total Supply: 600,000 CABS
  • Accepting: ETH

Disclaimer: Author has no investment stake in CyberTrust at the time of writing.

Featured image courtesy of Shutterstock. 

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi

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