ICO Analysis: Spectre

Blockchain has come a long way in eight years, with 2017 signaling the start of a paradigm shift in mainstream understanding of the technology. Blockchain-backed currencies have caught fire over the past nine months, partly in anticipation of major disruptions in the financial industry as a result of the distributed ledger. Blockchain’s appeal has helped drive a $175 billion cryptocurrency market, where tokens are available instantly via public exchanges. Already today, brokers like Coinbase, Bitfinex, Bitstamp and Poloniex have tens of millions of traders accessing the digital currency market.

But online trading of financial instruments is nothing new. The forex industry has expanded rapidly over the past 15 years, attracting millions of retail traders into the fold. This highly competitive environment has led to a consolidation of sorts, with major brokers in North America, Europe and Asia emerging as the go-to source for online trading. They’ve spawned an entire community of white labels and affiliates designed to drive foot traffic to those respective platforms.

Although the online trading industry is still maturing, it is not immune from disruption. As demand for digital assets continues to grow, intermediation is one of the first things that could get left behind.

That’s exactly what Spectre is looking to accomplish through its forthcoming ICO. Spectre, or the Speculative Tokenized Trading Exchange, is the world’s first broker-less trading platform fully equipped with an embedded, decentralized liquidity pool.

Spectre is essentially trying to put an end to the brokerage industry as we know it. This desire isn’t exactly baseless, either. Have you read the reviews of the average online broker? Or the fact that they manipulate prices to keep traders in the red over the long term? Suffice it to say, many traders are pissed, giving Spectre plenty of scope to make bold proclamations about what it intends to accomplish.

SPECTRE, which is built on the Ethereum blockchain, removes the broker out of the picture entirely, thereby disrupting the current model and empowering the trader. SPECTRE’s aim is to disrupt the digital options and classic retail FX/equities trading industries and lead a paradigm shift. (Whitepaper)

Spectre intends to reshape online trading by upending shady brokerage practices like price manipulation, withdrawal delays and sudden IP bans. It seeks to create the first trading environment with no middleman or salesy account manager luring clients to trade more than they can afford.

It should be noted from the outset that Spectre allows traders to fund their accounts through cryptocurrency, but does not facilitate crypto-to-crypto trades. Instead, it allows you to access traditional financial instruments, such as FX, equities and options through the Ethereum blockchain.

The Token

The Spectre token utilizes smart contracts to create a more transparent environment for traders. Smart contracts will govern all transactions on the trading platform, thereby eliminating any need for brokerage intermediation.

Spectre will have two types of tokens in circulation, each trading separately on different exchanges to ensure continued compliance with regulations. One of the tokens pays out dividends that are calculated by the growth of the liquidity pool and buyback program. The other, utility token does not pay dividends, but is essential for in-platform privileges, such as higher payouts, access to all assets and trade indicators as well as the Spectre Financial Education Academy.

As an ERC20 compliant token, Spectre can be stored on any Ethereum wallet that supports the protocol. The tokens can also be traded on all major cryptocurrency exchanges.

The token may be purchased only through Ethereum. Investors can convert other cryptocurrencies into ether using ShapeShift.

The token pre-sale will begin Oct. 27 and last until Nov. 5. The ICO will commence on Nov. 17, and run for 24 days until the maximum cap in Ethereum tokens is reached. Spectre says the cap is a security measure and not a goal.

A total of 240 million tokens will be available. Any unsold tokens will be burned, with investors receiving a greater proportional share of tokens.

The Team

Spectre is headed by Karan Khemani, a serial entrepreneur who has extensive experience in finance. His career includes stops at J.P. Morgan Chase and Goldman Sachs. He also has a pair of degrees from the London School of Economics.

Spectre’s strong personnel is one of its most defining attributes. In addition to Khemani, the team employs experts in financial engineering across the forex, equities and digital options markets. Full-stack developers and blockchain experts are also retained to re-purpose existing trading platforms for the Ethereum blockchain. Developer staff are also responsible for token engineering and audit.

The London-based company has a full-fledged management team with the following roles:

  • CEO
  • COO
  • CFO
  • CTO
  • Technical Architect
  • R&D Director
  • Blockchain Consultant and Auditor
  • Solidity Developer
  • Trading Education Associate
  • Digital Marketing Manager

From the homepage, investors can navigate to each team member’s LinkedIn account for further information.

Verdict

Spectre is a thought-provoking concept that could have major implications for the online forex industry. If it succeeds, we could be looking at a more transparent market for FX and related investments.

Of course, there are important risks to consider when weighing the potential benefits. I believe the team would agree that these risks cannot be overlooked.

Risks

  • Competition in the online broker industry has never been fiercer. Depending on how you define “online trading,” most of the major FX platforms using MT4/MT5 have been around for more than a decade. (Online discount stock brokers like E*Trade have existed for more than three decades). Although none of the existing brokers offer Spectre’s decentralized liquidity pools, they do have deep pockets, millions of traders and attractive programs. They also have a track record of being malicious. How will Spectre convey its advantages to retail traders who have little background in blockchain or who haven’t yet appreciated the concept of tokenized balance sheets? Moreover, how will it deal with the parade of attacks against it, both by FX brokers and their minions? Kay, if I were you, I’d start patrolling the message boards asap for fake reviews.  -4
  • Transaction speed on the Ethereum blockchain has been cited as a concern among industry participants. Spectre’s success can mean millions of transactions processed on the ETH blockchain, which could result in processing delays. If this occurs, the company says one option is to migrate to a side-chain to ensure transaction continuity. -2
  • Given that liquidity is denominated in ether coins, currency volatility could have a significant impact on returns. If history is any indication, no cryptocurrency is immune from volatility. -2

Growth potential

  • For starters, Spectre isn’t some abstract concept, but a full-fledged trading platform you can test out right now. Simply go to the Registration page and open an account. I’ve created a Demo account and set Donald Trump as my avatar (Donald Trump avatars are included in the platform). Of course, the decentralized liquidity pool and tokenized balance sheets will come much later (the company’s Roadmap goes until Q2 2019).+3
  • Spectre’s business concept is as disruptive as they come. We can literally write ten paragraphs about how the platform will disrupt the industry, but the important thing is that traders will no longer be at the mercy of the broker. Not for fees, withdrawals or real market prices. +4
  • The team is as solid as they come. No, really. The author hasn’t come across too many ICOs that are run like a full-fledged corporation. +4
  • Spectre is applying for a regulatory license in 2018 with the FCA or another EU MifFID offering jurisdiction. There doesn’t seem to be anything impeding its successful bid. What’s more, the company has cleverly devised a way to overcome U.S. exchanges that do not welcome dividend-tokens due to SEC rules. In those jurisdictions, the company will list its utility token, which does not pay dividends. +3.5

Disposition

Having spent many years dealing with the online forex industry, the author admits to having a natural bias for Spectre. That’s not to say its success will necessarily sound the death knell for online brokers, but it will certainly force them to get their act together – something they have struggled to do since Web 2.0.

That being said, investors should back Spectre if they believe in the idea. It’s my hunch that many FX traders will gravitate toward this concept.

Against this backdrop, we are happy to give the Spectre ICO 6.5 out of 10. The author’s own conviction is higher than that based on the concept alone.

Investment Details

  • Type: Crowdsale
  • Symbol: SPEC
  • Pre-Sale: Oct. 27-Nov. 5
  • Opening Sale: Nov. 17, 2017
  • End Date; Dec. 12, 2017
  • Platform: Ethereum (ETH)
  • Total Supply: 240 million SPEC
  • Payments Accepted: Ethereum (ETH)

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