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ICO Analysis: Power Ledger

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Renewable energies are all the rage, for good reason. It is not hard to imagine dozens of companies, globally, prospering exponentially into the future as they deliver cost-effective platforms which enable people to buy and sell their power without going through the traditional power grid.

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There is an inconvenient truth facing the traditional energy supply industry: at some stage, it will be cheaper and more effective to self-supply than to rely on the network to provide low-cost and reliable and clean energy.

For those whom this statement is not true about, it will still be increasingly true over time that peer-to-peer markets offer much better prices for consumers. Ultimately legacy, vertically-integrated companies are embedded in the power grid, and so even if they begin to cede control to the decentralized and distributed networks of tomorrow, there will still be tolls and such owed to them. Disruption does not always mean the disrupted are without a parachute. According to a 2015 Deutche Bank study that Power Ledger notes in their whitepaper, in much of the developed world it is already the case that self-generated power is equal or less to the cost of delivered energy.

Brief Overview

In Power Ledger, we have a direct competitor to Suncontract. MyBit also has designs on this market, and others are sure to follow. They all are creating essentially the same product. Luckily for both of them, the budding market of “bi-directional energy flows” is large enough to sustain these two and many more to come. Their execution could be better than Suncontract, or not, and yet it could still turn out to be a prosperous endeavor. For those that have yet to investigate Suncontract or read our report on it, we’ll give here an overview of the concept:

As more and more people create their own energy, a growing class “prosumers” emerges. These are people who both buy and sell, based on their own lifestyle choices. An investment property owner might offset some of his costs by using huge portions of his rooftops for solar panels. More and more people will reach a point where it becomes cheaper for them to invest in the hardware to have their own solar operation, and doing so will create greater surpluses of energy. Currently when people do that, they do not have a great bargaining position – they can sell it for whatever the grid is willing to pay, or they can just not sell it. Power Ledger and similar plays aim to create marketplaces where people will be able to sell their energy to those who need it more – electric vehicle charging stations or even cryptocurrency miners might find particular use in such a market. To partake in said marketplaces, they’ll have to acquire the token of exchange in these markets, which is where the value of such tokens is derived – from the demand for such tokens.

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Trends Support Notion

While it’s true that home consumption from the grid proper will only continue to decline, studies of the energy industry have shown that current levels of production as well as delivery networks may likely not be adequate to keep up with demand brought on by increasing reliance on electricity as opposed to other forms of energy. People will be creating their own energy, and selling surpluses to industries which need ever more of it. Bloomberg says 7 trillion dollars will go into renewable energy over the next decades. The Energy Information Administration recently announced that renewable energy production has surpassed nuclear energy for the first time. According to Power Ledger, their idea is ironically a way to give the legacy energy industry a new lease on life. By becoming participants in decentralized, trustless marketplaces which happen to be centered on an industry with which they are deeply familiar, revenues for traditional power companies could actually increase.

What Makes Power Ledger Unique?

Power Ledger is already in operation. This is the first key piece of information. In 2016, they launched the first peer-to-peer energy trading platform in Australia. The platform works by allowing individual markets to exchange fiat currencies for Sparkz, which can be used to exchange for POWR tokens. POWR tokens are the base unit of the ecosystem, whereas Sparkz are earned and sold in practice by the energy producers and buyers. Earlier this year, they were able to get banks on board for this purpose. Also earlier this year, they were able to strike a deal with a large retailer in New Zealand to demonstrate the abilities of the Power Ledger platform. Since their first successful experiments, they’ve only increased the number of other companies interested in leveraging some aspect of the Power Ledger platform.

Power Ledger is maximizing use of decentralization. Rather than giving itself an endless mission of improving the ecosystem, Power Ledger would like to see applications developed on top of its, for lack of a better word, protocol. While they are developing applications in a number of categories themselves, others could develop competing efforts which made use of the system. Having a plug-in style base is better when trying to approach large, established companies about working with you – often enough, they might be willing to work with a new outfit if they believe they can be mostly autonomous. Therefore, being able to simply develop their own stuff on top of the API is better for all.

Notable Applications

Artificial intelligence and remotely deployed properties come to mind when thinking of increased energy demand moving into the future. One application that Power Ledger has in mind is what they call autonomous asset management. Imagine being able to deploy a vending machine virtually anywhere, not even having to include the cost of its energy use in agreements with property owners? Power Ledger can enable this by allowing your machines or a separate machine which could handle it for you, to purchase their own energy. This goes in tandem with several other unique visions of the future, including automatic restocking.

Most of the rest of its applications are more energy-industry facing, but consumer-facing applications usually follow industry-facing ones anyway. Having generated so much activity and buzz around their product already, and having a minimum viable product long before they’ve even bothered to ask us for any money, is a huge plus for Power Ledger.

Having already analyzed Suncontract, we have something to compare Power Ledger to. We will try not to focus too heavily on a competing effort, but inherently one has to be a better play than the others. Therefore there are two areas we will focus heavily on. One is the technical nature of their plan – is it more detailed than the very high-level offering of Suncontract? Secondly, the team. Is Power Ledger’s team more or less experienced and competent? These factors and others will determine what the safety of Power Ledger as opposed to Suncontract.

Ledger Assets

Last year, the same group of people propelled the Ledger Assets program forward. This is an ongoing proof-of-stake blockchain for Australian companies to settle transfers and manage assets. It made a lot of headlines.

Power Ledger Team

Co-founder and Chairperson Jemma Green has a keen awareness of the needs of 21st century power consumers. “Jemma is a research fellow at Curtin University Sustainability Policy (CUSP) Institute, whose doctoral research into “Citizen Utilities” has produced unique insights into the challenges and opportunities for the deployment of roof-top solar PV and battery storage within multi-unit developments and the application of the blockchain.” Her role is more in guidance of the company, having experience in risk management.

Day to day operations are conducted by David Martin, whose two-decade career in the electricity industry lends credence to his abilities. Most his electricity career was at Horizon Power, but he also spent six years with Western Power, both Australian power providers. The insights that are developed over a career like this are valuable, and it would seem that many of the early successes of Power Ledger to date can be attributed to the connections made during Green and Martin’s careers, among others. The thing stands on its own legs, as well, but knowing who to talk to about trying something experimental, within other companies, is a valuable asset.

CTO Nuno Martins is listened concurrently as a blockchain expert and the CTO. Most articles related to him which present themselves have to do with his current endeavor. This is partly because an established professor at the University of Maryland shares his name in an also technological field of study. We were able to find a 2013 presentation made by Martins, although the contents of it were not available. This presentation is in relation to the Cloogy software, a smart home application regarding power consumption from a company called Intelligent Sensing Anywhere. The presentation lists him as a Product Manager in Portugal at that time. Martins does not give a bio, so we must mostly guess, considering his LinkedIn profile is also basically blank.

Senior software developer Garry Hasler spent twenty years at IBM in what we today called DevOps. Mainframe and large systems experience like is is absolutely a necessity for the scope of the project Power Ledger is engaging itself in, and a successful career at Big Blue is far and above anything we noted about the team at Suncontract.

POWR / Distribution Details

There are two token distribution models that come into play with the POWR/Sparkz dynamic. They draw it as such:

In the first model, where traditional power companies already have the footing and often the legal control of the grid, the model allows them to play the part of generating the Sparkz tokens, if they choose, and then selling them. People buy and sell Sparkz within the platform, as these tokens are generated by the actual token of the platform that you will speculate on – the POWR token. “Prosumers” are paid in Sparkz. Under this model, the Sparkz may then also be redeemed with the gateway or “Application Host” which issued them. As such, many people could interact with the platform and never have a clue what cryptocurrency was at all. Which is fine.

In the peer-to-peer model, POWR tokens operate on parameters defined in the smart contract and convert the tokens purchased to Sparkz tokens based on the local market. This is explained in a bit more detail:

Sparkz tokens are priced, issued and redeemed in the local currency of the Platform Participant. […] Purchasing a sufficient amount of POWR tokens allows Application Host’s access to the Ecosystem from where they can convert their POWR tokens to Sparkz and on-board their customer base. […] POWR tokens are required to generate Sparkz. Sparkz are a local market level token and are priced for the exchange market they are deployed in, e.g. In Australia 1 Sparkz = 1 cent AUD. They allow for frictionless transacting […] .

In short, POWR tokens are a proof-of-stake staking coins, and rather than generating more POWR tokens, they generate Sparkz. Existing industries are one where we can see Proof-of-Stake being a viable approach, because such industries are filled with companies who have capital they can put up as stake. The problem with many proof of stake coins has been lack of economic incentive to actually stick with the program – fluctuations in the market encourage dumping and so forth. In the case of this project, this risk is lessened by the idea that a great many of the POWR token holders will be directly invested in the economy, in that a quick exit on speculation is not ideal for them. This will also increase the long-term demand for the tokens to be taken back off the market, making it easier to sell at higher prices. Like many ICO tokens, POWR tokens will have a utility and they will be the only way to achieve it. Therefore holding a bag of them when others go in search of them is not the worst position to be in.

The Verdict

So very much to like about Power Ledger. Definitely one to watch. They are running an ICO in the coming months in order to expand global operations, and details are still forthcoming on that.

Risk

Risk here is significantly less than with Suncontract. We have a working, minimum viable product. We have an in-depth plan of execution. We have working technology, rather than theory. Regulatory pushback could slow Power Ledger and Ledger Assets down from realizing their potential in the short-term, but long-term they will probably overcome as many obstacles put before them, like most innovators are forced to do.

Another potential risk is that the entrance into the ICO market, and the issuance of new tokens for sale with the purpose of raising funds, could destabilize the market they’ve already got going. This probably explains why they are approaching their ICO stage very carefully.

For this relatively minor problems, we deduct a 1 point for the unknowns.

Growth Potential

Limitless. In the future there will be more robots than human beings. It’s not crazy to say that analyst predictions on energy consumption are even conservative, being that the rise of cryptocurrency mining doesn’t play a serious role in their calculations, but a sustained push in this direction could make it a cultural normality to get your power from a decentralized market and use some of it to mine decentralized currencies which you spend on other decentralize markets as well. Power Ledger has the right execution and great timing. Their growth potential is massive. We give them the same 5 points granted to Suncontract, plus 2 more for having a minimum viable product with a lot of buzz around it, plus a half-point for ingratiating themselves with literally dozens of partners in the industry they seek to disrupt.

Disposition

Thus we reach the conclusion of 6.5 out of 10 on Power Ledger. This is a great opportunity if it’s within your interests, but probably not a low-hanging fruit. Despite everything going right, actually being able to liquidate any tokens you might acquire during their ICO could prove problematic once the market has its way with the influx of tokens. Long-term profitability is probably there, though, with little reservation from the author in that statement.

Investment Details

Hacked reached out to the team at Power Ledger, and they said they should have more details within “the coming weeks” regarding their ICO. If Power Ledger has piqued your interest, you’re encouraged to get on their mailing list.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Analysis

Bitcoin’s Record-Breaking Rally Continues as Prices Cross $8,100

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Bitcoin surged to new highs on Sunday, as the world’s largest crypto by market cap continued to generate bids following the cancellation of Segwit2x.

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BTC/USD Price Levels

The value of a single bitcoin reached a daily high of $8,110.59, its best level on record. At press time, BTC/USD was valued at around $8,002 for a gain of 4%.

With the gain, bitcoin’s market cap now exceeds $133 billion. That’s roughly $100 billion greater than Ethereum, the market’s second most valuable cryptocurrency.

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Bitcoin has added more than $1,100 over the past five sessions. It was down around $5,600 just one week ago.

Bitcoin Cash (BCH), a digital currency alternative that broke away from the original blockchain Aug. 1, was down 5.1% at $1,185. BTC and BCH locked horns earlier this month after the Segwit2x hard fork was abandoned.

$10,000 and Beyond?

Institutional clearing platform LedgerX has initiated its first long-term bitcoin futures option, which is set to expire Dec. 28, 2018. In setting up the option, LedgerX is assuming a price of $10,000 at the time of expiration. That’s a 25% premium on current levels.

Investors who buy the option are essentially saying they believe prices will exceed $10,000 by the time of expiration.

Bitcoin is being helped by growing institutional demand for the digital currency, as hedge funds, day traders and other mainstream investment outfits look to access this burgeoning asset class. CBOE and CME Group have each announced plans to integrate bitcoin into more conventional investment vehicles in the coming months.

The rush of institutional money into bitcoin is a sure sign that the digital asset class is becoming too big to ignore. The value of all cryptocurrencies in circulation has already exceeded $230 billion, with more than a dozen coins valued at $1 billion or more. Nine others have a market cap of $500 million or greater.

Coinbase Responds

The rise of institutional capital has also compelled Coinbase to introduce a custodial service targeted at account holders with more than $10 million in assets. This service targets hedge funds and other institutions that have remained largely on the sidelines of the crypto revolution.

In a recent blog post, Coinbase CEO Brian Armstrong announced that the new service will launch sometime next year.

“When we speak with these institutions, they tell us that the number one thing preventing them from getting started is the existence of a digital asset custodian that they can trust to store client funds securely,” Armstrong wrote.

In addition to maintaining the minimum $10 million asset requirement, institutions must pay a $100,000 setup fee to gain access tot he Custodial program. In response, institutional investors will receive assurance that their assets are secure.

The Coinbase Custody website lists broad support for bitcoin, Ethereum (ETH) and Litecoin (LTC), as well as ERC20 tokens. The ERC20 protocol has emerged as the favorite for startups launching initial coin offerings (ICOs), a controversial crowdfunding model that has already overtaken early stage venture capital.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Cryptocurrencies

Is Ethereum Ready to Play Catch Up With Bitcoin?

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In mid-June of this year, the difference between the market capitalization of bitcoin and Ethereum had narrowed down to less than $8 billion. This had many market participants excited. They expected Ethereum to dethrone bitcoin as the leader, a move popularly termed as flippening.

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Key observations

  1. Ethereum has hugely underperformed bitcoin
  2. The chart pattern suggests that Ethereum is likely to play catch up in the next few months
  3. Stay on the long side of Ethereum to benefit from the bullish setup

However, fast forward five months and the difference in the market capitalization of the top two cryptocurrencies has increased to about $96 billion. This shows that while bitcoin has raced ahead in the past few months, Ethereum has hugely lagged behind.

However, is the underperformance about to end?

The chart pattern shows that Ethereum is likely to embark on a rally of its own that can carry it to $645 to $670 levels in the next few months. Let’s see how we arrived at these levels.

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Ethereum opened trading at $8.16 on January 1, 2017. It started its rally in March and by June 12, it reached a high of $420, an astronomical rally of about 5047%. Thereafter, it entered a period of consolidation, digesting the gains.

On the charts, Ethereum has formed a large symmetrical triangle, which usually acts as a continuation pattern. The breakout is generally in the direction of the long-term trend, or the trend that was prevailing before the pattern formed. In this case, the sharp move from January to June confirms that the cryptocurrency was in an uptrend before forming the triangle.

However, this is not a fool proof trade because sometimes the symmetrical triangle acts as a reversal pattern. Therefore, the best way to play this trade is to wait for a breakout of the triangle before initiating any trade.

Where can we take an entry?

Currently, the resistance line of the triangle is at about $378 levels, a level close to today’s intraday highs. The bears are likely to strongly defend this level. However, if the bulls breakout of $378 and manage to close above the resistance line, the trade on the long side will set up.

Different traders use different methods to confirm whether the breakout is valid or not. Some wait until price moves 3% above the breakout level, others wait for three consecutive closes above the resistance level.

However, we have observed that the best breakouts never look back, hence, waiting for three days may lead to a missed opportunity. Therefore, we can wait for a closing above the resistance line of the triangle and initiate the long positions on the following day.

The breakout can face resistance at $400 and $420. However, we expect the virtual currency to scale both these resistances and rally towards its pattern target zone of $645 to $670.

Notwithstanding, even the most reliable patterns can fail. Therefore, our stop loss will be kept at $340. We don’t want to hang on to the trade if it falls back into the triangle. We shall raise our stops to breakeven as soon as Ethereum breaks out to new lifetime highs. From thereon, we shall trail the stops higher to protect our paper profits.

Note

The chart pattern suggests a resumption of the long-term uptrend in Ethereum. However, this will not get confirmed until the cryptocurrency breaks out and sustains above $380. Therefore, please initiate positions only on a breakout and close above the triangle. Entering presumptive trades may result in losses.

Featured image courtesy of Shutterstock. 

 

 

 

 

 

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Analysis

Long-Term Cryptocurrency Analysis: Bitcoin Flirts with $8000 as Altcoin Bull Persists

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Bitcoin’s swift recovery was the main topic of the week, as the most valuable coin not just regained its steep losses, but hit a marginal new high towards the end of the period. The entire segment is experiencing capital inflows as the total value of the coins climbed above $230 billion for the first time ever after finally leaving the vicinity of the $200 billion mark.

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BTC breached the $8000 level before turning slightly lower on Friday, but despite the severely overbought daily chart, it is still trading near its all-time highs. As the long-term picture still suggests a deeper correction, investors should wait with opening new positions and traders should also control position sizes here. Key support levels are found at $7700, $7000, and $6700, while the recent key break-out level at $5000 still hasn’t been re-tested.

BTC/USD, Daily Chart Analysis

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Dash is still the most bullish altcoin from a technical standpoint, despite this week’s short-term correction, as the coin is trading above its prior all-time high, and this weekend, it looks ready to test the break-out high near $500. Support levels are still found at $400, $360, and $330, and as the long-term picture is approaching overbought territory, investors should only hold on to their positions here.

DASH/USD, Daily Chart Analysis

The other major altcoins are also mostly in bullish setups, with some of them already in the latter stages of this cycle, like Monero and IOTA, but elsewhere in the segment, there are still opportunities for both traders and investors. Let’s see the detailed long-term view.

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