Are crypto debit card tokens worth investing in (yet)?

Crypto debit cards have seen huge gains in the past week(s). But what is their true value? Read on to find out!

TenX reached an all-time high (ATH) of $6.16 on August 12th. Furthermore so did Monaco, with $5.10 USD, and Tokencard which reached $1.85 as an ATH.

Although it is very difficult to value cryptos, some tokens should be more susceptible for proper valuations. This is because they are issued with a certain promise of return behind it. Let’s review these commitments for each of these popular tokens separately.

• Token card which started its ICO on May 2nd 2017, is providing a return of 1% for all transactions divided across all available tokens. Only when the cash and burn function is triggered, will investors be able to collect their rewards for holding the token;
• Monaco that started their ICO on May 18th, also provides a return of 1%. Plus it provides a 10% Cashback when using the card at participating merchants, but this becomes less significant for larger investments;
• TenX, the newest of the 3 crypto debit cards, started its ICO on June 24th and sold out in just a matter of minutes. It is returning 0.5% on the total spent divided evenly over all tokens. On top of that it provides a 0.1% cashback in the form of tokens on your individual spend with the card.

So which product is better?

Well from a customer point of view all are solid but there are clear advantages to each. TenX seems to have the lowest fees and highest popularity. Monaco on the other hand has focused on the Premium branding and seems to have captured that niche. Tokencard in turn has had the first mover advantage in terms of ICO and was therefore known in the crypto community first, which looking at BTC can be very powerful.

However in this post we are looking at the 3 cards purely from an investment perspective and we should ask ourselves would it be wise to invest in these tokens now? To answer that question a few factors should be considered in my opinion:

1. Expected return on investment (ROI). Many ICOs now fall under the supervision of the SEC, due to the fact these tokens represent the majority of attributes that stocks have. In fact some of the tokens could be considered stocks especially with issuers providing the option of token buy back, which is the case of for example the Monaco tokens. As such you could compare the ROI of these tokens to that of shares and its associated dividend. For shares generally the dividend percentages are currently ranging between 2-5%. For cryptos, arguably you would expect a higher return due to higher risk and volatility. In this case though, lets be conservative and keep the required ROI at 3% (assuming return from fees only) which is the equivalnet of stocks;
   
2. Amount of tokens in circulation. The fees are divided over the all token holders. The more tokens in circulation, the more the earnings are diluted. The more tokens one holds, the more fees one receives. This is is calculated linearly, meaning if one owns 1/5 of the tokens, he or she will receive 1/5 of the rewards;
3. Price of the token. The price of tokens influences the ROI directly as it is a direct function of required 'dividend' and price;
4. Licensing fees. Each card has its own model. The higher the licensing fee, the better the reward for the total pool;
5. Total spend on each card. If people spend more with a particular card, this will have a direct impact on the total fees received by all token holders.

The first 4 variables above are known and can be used to calculate what the spend should be per card to generate the required return. In variable #1 we took 3% as the target. This results in the following table:

Lets take Tenx as an example here:

• With the current amount of 205 mln tokens;
• And a price of $4.10 per token;
• With licensing fees of 0.50%;
• And a required return of 3%;
• We would need absolute return per token of $0.12;
• Which corresponds to a minimum spend by TenX customers of $5,043 mln per year.

For Monaco this amount of minimum spend would have to be $278 mln.

And for Tokencard this would have to be $117 mln.

Do these tokens look more or less interesting to you as an investment now?

I would love to hear your comments below.

And stay tuned of course!

References:
https://tokencard.io/
https://tokencard.io/tokencard_whitepaper.pdf
https://mona.co/tokensale.html
https://www.tenx.tech/
https://tokenmarket.net/blockchain/ethereum/assets/monaco/
Images:
http://economictimes.indiatimes.com/industry/banking/finance/banking/are-credit-and-debit-cards-becoming-a-thing-of-the-past-/articleshow/50923888.cms