ICO Analysis: Digitize

Digitize is an interesting project that looks to eliminate the use of change in any consumer transactions. Their solution involves an Acorns-style approach to change. According to the official whitepaper, “Digitize is an ecosystem which will provide users with a digital wallet, and allow them to save their loose change and cash digitally, at the point of a transaction.

Digitize removes the need to carry loose-change and promote the transition from a cash to a digital-based economy, which will reduce physical currency manufacturing cost, as well as reducing the challenges associated with physical change.”

The whitepaper also makes the point that the Digitize ecosystem will strengthen the overall cryptocurrency market by bringing an additional revenue stream into cryptocurrencies through the conversion of loose change.

Although a majority of the western world is adopting digital payments, many developing nations are still widely run on cash transactions. Digitize’s strategy aims to assist in the transition of cash into digital wallets.

Their whitepaper suggests that they will first target South Asian markets where cash transactions are still dominant.

The Digitize team makes the surprising point that the actual costs of manufacturing currency are incredibly high.

Specifically, they cite a recent report from CoinDesk, which stated that “the global production cost of notes in 2014 as $26.5 billion USD and $1.5 billion USD for coins. These figures are extrapolated only from the materials and labor operational costs needed to manufacture currency and do not contain any other factors like environmental implication and energy costs.”

Even more surprisingly, many of the coins cost more to manufacture then they are actually worth.

Statistics from the US Federal Reserve Mint demonstrate that both the nickel and penny cost more to make than they are worth. A penny costs 1.66¢ to make while the nickel costs 8¢ to produce. A quarter, worth 25¢, only costs 9¢ to make while a dime only costs about 4¢.

These costs eat into state budgets, reducing the available capital for necessary government spending.

Digitize’s solution is therefore to promote mainstream adoption of cryptocurrency. Digitize enables the conversion of loose change into crypto-currency at the retail point-of-sale by the customer. The converted cryptocurrency would then be held on an easy to use mobile digital wallet.

The Digitize mobile wallet will be available for both Android and iOS. In addition, there is no restriction on the type, size, or location of the retailer who may enable Digitize functionality.

Through Digitize, consumers will have a platform to convert and exchange their loose change for Ethereum to invest in a crypto index token.

Digitize also offers retailers a rewards platform, where they could award feedback rewards or offer discounts through the use of Digitize tokens to their customers.

Digitize will manage the:

  1. Digitize token creation and the token launch to fund development and expansion.
  2. Establishment of a decentralized, fair and secure model for token execution.
  3. Development of smart contracts to run the order payment and fulfillment process.
  4. Release of the website and mobile app for retailers and consumers.
  5. 5. Creation of an effective incentive model for all parties to join the Digitize ecosystem.
  6. Development of active marketing campaigns to ignite initial traction.
  7. Elaboration of the ecosystem’s regulatory aspects.

Retailers

According to the whitepaper, the retailer adoption of the Digitize platform is an important role for the success of Digitize, therefore, the ecosystem was strategically planned to be available as a free mobile application for any retailer in the world to install and use.

They incentivize retailers to use the platform by providing transactional revenue of 2% each time a consumer deposits change into their wallet through them.

Furthermore, they argue that the publicity, marketing, and consumer demand received by announcing a crypto-partnership will provide large-scale benefits to the retailer.

The retailer responsibility includes:

  1. Provide Digitize services directly to the consumer.
  2. Participate and create rewards programs.
  3. Review tutorials and manuals.
  4. Ensure regular deposits into their retailer wallet, to cover consumer demand.
  5. Promote the Digitize ecosystem by bringing traffic via online marketing.

Consumer roles include:

  1. Sign up to Digitize services.
  2. Participate in referral programs.
  3. Review tutorials and manuals.
  4. Provide feedback.
  5. Receive promotion, referral and feedback rewards.

The current standard electronic funds transfer at the point of sale (a customer making a digital transaction at a retailer) entails more than 10 different steps to settle a transaction, entailing a lengthy process that could be cut short with the use of Blockchain.

Digitize argues that blockchain technology can create a more efficient and trustful retail payment process.

Using the Blockchain enabled Digitize platform, consumers will be provided a means to store and save loose change, while also being able to make payments with their digital wallets.

On the other hand, retailers will benefit from instantaneous digital payments. The Digitize ecosystem provides retailers with incentives to adopt Digitize, through both transactional revenues on deposits made by consumers.

Each deposit transaction will charge the consumer 4% to deposit loose change into their digital wallets, with the retailer receiving 2% and Digitize receiving 2% of the value of the deposit. All trading and exchange fees will be at a set 1% trading fee.

Key components of the Digitize ecosystem include:

  1. Consumers who are willing to adopt cryptocurrency.
  2. Retailers who are willing to accept and deploy the Digitize services.
  3. An exchange that will allow Digitize to be traded for Ethereum and the crypto index.
  4. Additional components which will help to expand the adoption of Digitize and allow it to flourish include:
  5. Cross-marketing rewards between the retailer and the Digitize platform.
  6. Referral rewards for consumers.
  7. Promotions from suppliers to consumers.
  8. Feedback rewards.

Retailer Wallet

The retailer will be required to keep a minimum amount of Digitize tokens in their wallet so that when consumers do come into the store, they have sufficient amounts ready to be transferred to the consumers’ wallets.

The retailer will have a QR code generated unique to each transaction which will allow the instant transfer of Digitize tokens to the consumer.

Retailers can either purchase Digitize tokens on the platform or keep the tokens that consumers use to pay for goods and services. The retailer will be incentivized a percentage of the deposit-transaction fee.

Rewards

Rewards will be given to a retailer to motivate them to encourage consumer adoption of Digitize. These rewards will be provided through a percentage of the transaction fee, as well as through reaching certain milestones i.e. the more consumers they refer to Digitize tokens the more free tokens they will receive.

Feedback Rewards

Businesses seeking feedback on goods and services that they currently provide, or should they wish to introduce new goods and services, can provide incentives to consumers with Digitize tokens to motivate them to participate.

The feedback system will allow the businesses to conduct market research or focus groups that will enable them to understand the needs and wants of their consumers in more detail.

Information from the consumers will be securely stored and processed so as not to identify the consumer and will allow them the freedom to provide open and constructive feedback that will help all parties involved.

Business App

The business app and website will provide businesses with a dashboard where they can see the amount of Digitize tokens they have as a balance, the value of Digitize tokens they have, and other businesses that are on the Digitize platform that they may want to cross-market with.

The app will also provide businesses with a platform to set up promotions and discounts, rewards programs and receive feedback from consumers.

The app and website will both be securely protected with two-factor authentication.

The components of the business app are as follows:

Wallet

  1. Shows the amount of Digitize tokens the business has, and the value in local currency.
  2. Provides an option to send funds to consumers which will then generate a QR code.
  3. Shows the amount of cryptocurrency the business holds, and the value in local currency.
  4. Provides a means for the business to exchange between ETH and DTZ.

Payments

  1. Shows the number of digital tokens the business holds.
  2. Payments supported through DTZ and ETH.
  3. Provides a means of payment using supported cryptocurrencies the consumer holds.

Rewards

  1. Displays the number of feedback rewards.
  2. Option to set up rewards, promotions, and discounts on the business platform, for consumers to see.
  3. The app and website will provide access to video tutorials for businesses on how to use the various functions.

Token

The Digitize token is the entire foundation upon which the ecosystem rests. The utility of tokens are as follows:

Incentives For Businesses

  1. An innovative payment option.
  2. Increased security as currency is kept on a digital platform and not physical.
  3. Ability to accept multiple payment options for goods and services;
  4. Reduced reliance on physical currency i.e. to keep coins to give as change.
  5. Networking opportunities to interact with new businesses that will complement their own business.
  6. Provide attractive promotion and loyalty rewards to acquire and retain consumers.
  7. Get direct customer feedback.

Incentives For Consumers

  1. Being able to use Digitize tokens to purchase goods and services.
  2. Carrying less physical currency.
  3. Not losing money as it will all be digital in their own personal wallet.
  4. Ability to exchange to Ethereum and invest in the Crypto-index.
  5. Having new innovative rewards programs with retailers.
  6. Ability to earn Digitize Tokens for referrals.

Token Distribution

According to the white paper, Digitize will initially keep 10% of tokens in reserve to ensure liquidity and supply. Once the reserve is diminished, Digitize will purchase tokens regularly to ensure liquidity remains positive, by buying tokens at market price when token allocation is below 5% of total supply of Digitize holdings.

The total allocation of tokens will be 60% to sale to the public, 20% will be reserved for the team, 5% will be saved for advisers, 3% will be used to fund the bounty and airdrop programs, and 2% will be allocated for community managers. The remainder 10% will be used as a contingency for future reserves.

The whitepaper states that an airdrop will be scheduled three weeks after the ICO for individuals that refer a friend to Digitize, through their unique link.

The proceeds from the token sale are allocated as follows:

  • Research and Development Costs 65%
  • Sales and Marketing 23%
  • Admin and Operational 10%
  • Legal Costs 2%

Any tokens not sold in the token sale, will either be burnt or distributed equally to existing token holders.

Team

The Team looks pretty legitimate and appears to be doing their best to follow ICO best practices, including getting their smart contract audited.

Their CEO has double bachelors in Engineering and Business Management from The University of Technology, Sydney. He has over 6 years of experience in the tech industry last working as a portfolio manager with IBM, where he managed the Westpac account, which is one of Australia’s leading banks.

Their head engineer is a blockchain engineer particularly interested in Ethereum and Smart Contracts. In the fiat world, he has over 10 years of international experience in Big Data and Machine Learning projects. He got his MSc in High-Performance Computing with distinction from the University of Edinburgh, United Kingdom.

Notably, he also helped create the backend for PlayStation 4. He is also a triple winner in two different international IBM Apache Spark competitions and a handful of other successful hackathons.

The rest of the team is fairly large with skills useful to this type of project. Their ICO advisers are also fantastic. For example: One of them is Lead ICO Adviser at MoonShot Asia and also the Senior Talent Acquisition Specialist at CryptoRecruit. Another is the founder of OpenInfluence, featured in Forbes 30 under 30 in the area of Marketing and Advertising. Another is currently a Director at Kapronasia, one of Asia’s leading financial technology research and consulting firms.

In short, this is a well-rounded team with good advisers.

Verdict

Below is a breakdown of the risks and opportunities associated with Digitize.

Risks

  • When completed, the Digitize platform will be dependent on third parties to adopt, implement and to continue to develop, supply, and otherwise support the platform. There is no guarantee that those third parties will uphold their end of the bargain which will have an adverse effect on the Digitize platform. This is an example where relinquishing control could be problematic. -3.5
  • While the Digitize team does seem to focus heavily on marketing at the outset, it seems problematic that there won’t be a dedicated sales team to onboard retailers. This seems like a problem stemming from worshipping the decentralized ideology of the blockchain over actual business value. -2.5

Growth Potential

  • Low token supply is always a plus. This means it will not take a lot of capital to raise the price. +2
  • The team seems highly qualified and has gotten out of their way to legitimize the project. They did this by getting a trusted third party to audit their smart contract (it was cleared with flying colors) as well as by putting their own exhaustive list of risks in the whitepaper themselves. +4.5
  • Every use of the proceeds of the token sale is painstakingly mapped out in their roadmap. +3

Disposition

We arrive at a score of 5.5 out of 10 for Digitize. While this could be a worthy investment, the Achilles heel for long-term hodlers will be whether mass retailer adoption actually occurs.

Investment Details

  • Token Type: Utility
  • Platform: Ethereum
  • Symbol: DTZ
  • Token Price: 1 DTZ = 0.0002 ETH
  • Token Supply: 200,000,000 Total
  • Soft Cap: 600 ETH
  • Hard Cap: 20,000 ETH
  • Public Sale: 06 April 2018
  • Jurisdictions Barred From Participating: N/A
  • Website: https://www.digitizecoin.com
  • Whitepaper: https://www.digitizecoin.com

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