ICO Analysis: PlayChip

Given that the 2018 FIFA World Cup is currently unfolding, PlayChip couldn’t have picked a better time for its PlayChip ICO. PlayChip, whose key distributional partner is PlayUp and whose brand ambassador is Aussie cricket star Brett Lee, is looking to decentralize and further incentivize the global sports betting market, which according to the company’s white paper is a $3 trillion annual opportunity.

The PlayChip management team is looking to address a couple of key issues in the sports-betting industry:

  • “Payment lag and transactional security”

PlayChip finds the current system for redeeming winnings in the sports-betting industry to be arduous at best. They point to the several hoops that must be jumped through before the user can actually access their winnings. Incidentally, similar delays can be found in the cryptocurrency market amid time-consuming know-your-customer (KYC) and anti-money laundering (AML) standards that are necessary to combat fraud.

  • “Confines of global sports market”

Sports-betting market participants operate within the borders of their jurisdiction. PlayChip attributes this to a focus on local competition and the lack of a universal payment system, one that PlayChip believes their decentralized token is the solution to. They point out in the white paper that PlayChip can be “redeemed in local fiat currency or other cryptocurrencies,” which removes the jurisdictional hurdles that are currently in place, local regulations notwithstanding.

Ecosystem

The PlayChip ecosystem, which is fueled by the PlayChip (PLA) token, is comprised of fantasy sports and licensed online gambling establishments as well as a PlayWallet that’s scheduled to be launched in November 2018. PlayChip has partnered with PlayXchange, which links to the PlayWallet and gives users the ability to trade the PlayChip token. PlayXchange also backs the PlayChip Foundation, which is designed to manage the excess token supply.

There are other exchange partnerships in the works, too.

Token

PlayChip is a blockchain-agnostic utility token that fuels the PlayChip ecosystem. They point to the inefficiencies of the Ethereum blockchain, which led to the development of their own proprietary blockchain dubbed PlayChain. The white paper states:

“Due to the high volume of transactions that can take place on DFS and betting websites, the technology around the PlayChip is required to be blockchain agnostic and scalable, allowing us to realize our ambition of becoming the universal gaming token. An internal network is required to handle the internal transactions of PlayChip’s distributed partners, which can number in thousands per minute.” – PlayChip White Paper

Users become PlayChip holders once they sign up, as they are rewarded with tokens as a sign-up bonus, according to the white paper. PlayChip has developed what it calls a rewards bucket that’s meant to drive demand for the tokens.

PlayChip has created a model in which early demand for the tokens will diminish the supply and lead to liquidity for the PlayChip token on cryptocurrency exchanges, though they maintain that the token is not designed for speculation.

The white paper says: “This is expected to create the scarcity to allow the market to determine the appropriate PlayChip price and create a gradual, but steady, upward pressure on the token value.”

While the public ICO hasn’t occurred yet, the PlayChip token is already fueling half-a-dozen centralized sports-betting platforms that also support off-chain payments. These platforms are fully functional and include PlayUp, Draftstars, TopBetta, ClassicBet, betting.club and Mad Bookie.

The value of the PlayChip token in these centralized environments is US$0.01.

Source: PlayChip White Paper

Team

The PlayChip management team boasts more than three decades of combined experience across interactive gaming and global online businesses including listings on the Australian Stock Exchange. With offices across Sydney, London, New York and Hong Kong, PlayUp employs more than three-dozen full-time staff.

Daniel Simic is the CEO.

Michael Costa is the CTO.

They’ve also engaged a seasoned team of advisors spanning the sports and blockchain arenas, which should serve them well. Major League Fantasy Founder Jesse Merl is among the advisors, as well as Echelon One Founder Luke Lombe and IT Consultant Stephane Savanah, among others.

Verdict

PlayChip has a certain appeal, one whose components sports betters are sure to appreciate, particularly those in the blockchain community. The more deals they can ink, the better their chances for creating a universal sports-betting token. The pre-ICO is currently unfolding, and the public crowdsale is only expected to be a two-day event in August. As a result, if you’re interested in this project, you will have to act quickly to be part of this ICO.

Risks

  • PlayChip says in its white paper: “Changes in the PlayChip valuation may influence the value of winnings and support growth of the PlayChip economy.” Considering the volatility that is inherent in the cryptocurrency market, the PlayChip valuation could indeed influence the value of the winnings in either direction — higher or lower. (-1)
  • Combining two industries whose very future is dependent on the jurisdictional regulation in place — sports betting and cryptocurrency trading — is a lot like playing with matches. It could either ignite a firestorm or go down in flames. PlayChip points to a recent decision in the U.S. that lets states legalize sports betting. While on the face of it this is a positive development for PlayChip, the ruling is in juxtaposition to the desires of the NFL. (-2.5)

Growth Opportunity

  • Recipient of the “Draper’s Hero Choice Award”, which is the namesake of billionaire venture capitalist and cryptocurrency advocate Tim Draper. The award, which was presented by the San Francisco Blockchain Economic Forum, reflects the ICO with the most promise. +3
  • A current user base of more than 500,000 across 70 countries. Playchip has also inked partnerships with the likes of Draftstars, ToppBetta, ClassicBet, MadBookie.com.au and PlayUp. $430 million in annual turnover. +4
  • Listings on the No. 9 cryptocurrency exchange based on trading volume HitBTC and LATOKEN, which is among the top 65 exchanges, scheduled for August 23. +3.5

Disposition

We arrive at a score of 7 out of 10 for the PlayChip ICO.

Investment Details

  • Token Type: Utility
  • Platform:  PlayChain, an off-chain internal platform that PlayChip’s partners are required to integrate
  • Symbol: PLA
  • Pre-ICO: June 1 – July 26
  • Public Token Sale: August 8-9
  • Token Supply: 50 billion
  • Tokens Available for Sale: 12.5 billion
  • Price: $0.01
  • Maximum Purchase: US$50,000
  • Payment Methods: USD, AUD, VISA/Mastercard, ETH and BTC
  • Jurisdictions Banned: Seemingly China, where PlayChip’s services are banned
  • Contact: [email protected]

Featured image courtesy of Shutterstock

Author:
Gerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.