ICO Analysis: Storj’s Move to Ethereum – Time to Buy In?
Storj is a decentralized cloud solution which has been in the works for quite a long time. They have gone through multiple iterations, funding rounds, and the like, and made it to market over the last couple years with a usable solution, Storj itself, semi-separated from the Storj (SJCX) token, which is used to secure the network. The token is used to compensate those who put up hard drive space for rent. The space is used by the network, and each month every renter receives payment in Storj tokens, which are currently tradeable at over 50 cents each.
A Hacked Gold Member wrote in to ask if the switch to the Ethereum platform, written about here on CCN, is a buy signal for SJCX. This is obviously a tough call to make. The author does not always want to make strong statements regarding where other people should put their money, but prefers to warn of scams and bad ideas instead. Regardless, let’s consider all the factors here.
- It is a technical pivot, moving from Counterparty to Ethereum. Counterparty is the one of a few Bitcoin-based “colored coin” implementations that is intended for some of the same purposes as Ethereum, e.g., allowing anyone to issue their own assets.
- One of the stated reasons for this pivot is that transactions fees on the Bitcoin network have made it hard to sustain and still pay “farmers” – those who rent out storage space. This would be far more reasonable, and faster, on the Ethereum network. In essence, Ethereum is technically more suited for this purpose at present, which means this pivot is a good idea.
- Those who hold tokens in the Counterparty iteration of Storj will get equal coins in the new issuance. The coins being sold in the upcoming token sale are owned by Storj Labs, the company which develops and backs Storj. So there will be no inflation.
This doesn’t exactly equate to a buy signal. Investopedia calls a buy signal:
An event or condition that alerts investors to purchase a particular investment.
Pivoting to an Ethereum-based platform will probably improve user experience, and could easily lead to expansion of the platform, which could have the tertiary effect of a higher price. Farmers could choose to withhold their tokens from market, as a result, thereby limiting supply and further driving price up. This is totally within the realm of possibility.
Therefore while we cannot safely say that one ultimately minor change to the platform is a buy signal, we can call it a moderate buy signal. Projects on the Ethereum platform have been thriving of late, the base token itself is doing great, and decentralized, encrypted storage solutions solve a major problem even for large businesses that simply want to protect their intellectual property from hackers.
The potential is there, the team is proving its versatility, and the idea that already-inducted Storj users will simply abandon the platform based on a switch to the Ethereum platform seems far fetched from here.
Bottom line: if you were thinking about buying SJCX before, this move should not discourage you.