Hello steemians, I'm @valueup who barely recovered the secret number of steemit from broken HDD in 5months. It's a bit late but Happy New Year~! :D
Which criteria are enough for me to suggest Warren Buffett, the Guru of investment, buying Cryptocurrencies?
Today, I would write on about the Valuation, Cryptocurrency, and Centra Coin(CTR).
The greatest difficulty for coin investment, after the decision to transfer some of my assets from the stock market to crypto world, was that which point was the reasonable target price of coins, and what was the logic.
Of course I could buy and sell coins based on the moving average, bollinger band, and empty-dreamful white papers. However, they were not enough for me to invest in. Because just with those technical analysis or line of words, just one single tweet of Mcafee or one photo with some CEOs or one big bloody candle was enough to make me smile and sad like non-sense comedy.
The key was the valuation. The point was about evaluating the income or reward from the coin with 'fiat money'. The more I probe coins, the more felt like they were kind of 'Self-replicating Ponzi Schemes'. Because many coins, whichever POW/POS/DPOS, were promising their rewards to investors with their own coins which could fluctuate just like the weather.
Many white papers look like world business plan competition, no legal responsibilities even scams, brought me the doubt that "does this business plan necessarily for blockchain? or "are they possible technically? or "just must I believe them because of their brilliant-wonderful careers of developers?"
At least to confidently suggest Buffett buying coins, in terms of value investment not speculation, it is necessary to understand and represent the possibility of the project, to estimate the future income/reward, and to compare the present value of the future income with the invested capital.
Unfortunately, I am not sure for most coins to have technical value or not in some days. Their rewards are planned to pay out with their own currency not related with exchange rate to fiat money, so it is impossible to measure their value reasonably. Do I have to agree with Buffett's Opinion that "the cryptocurrencies are in a bubble with no productivity of value"? So confused.
But, at last, I found the one that make possible to show and explain the business model vividly, make possible to estimate the future income/reward with some fiat money. That was the 'Centra Tech Coin' which installed the unique system to create the definite value of connecting the crypto world with real world.
1. KEY INVESTMENT FACTOR
A) Business Model:
At the same time it makes possible to invest in cryptocurrencies, and to use the crypto portfolios in the real world with no transfer fees.
card/wallet/chain/market = payment of debit card + on-line commercial market + exchange market based on cryptocurrency.
B) Economic Moat:
CCE(Currency Conversion) Module = the system which convert blockchain assets into fiat money instantly, with the core competence, CTR established 'A big picture of strategic alliance' for a solid business base camp.
In other words, they could use the crypto investors' assets with the alliance of the main digital cryptocurrencies(BTC/ETH/XRP/DASH/LTC/XMR/ ERC20 ETH family and so on), they could use the consumer channel of real world with the alliance of VISA and MASTER cards which dominate the world credit/debit card with over 80%, they could expand the business with the alliance of Bancorp bank which has one of the most profitable customers(Bancorp's main shareholder is Berkshire Hathaway of Warren Buffett; 'hello Buffett~ we are already connected with. Willy-nilly. lol),and could cooperate with many financial companies safely and legally due to the registration of MBS(which allow non-bank company to conduct financial service) in the U.S.A where is a major target for card payment market on cryptocurrency.=>establishment of win-win system.
Against the competitors of Tenx and Monaco, Centra is differentiated in point of view in the usable assets and service area, with the number of alliances of cryptocurrency, dual cooperation with both VISA and Master, legal basis in the North-America. I think theses alliances based on the technical excellence would bring the first mover advantages to Centra in the payment business area where put on the importance of two economic moats, 'Network Effect' and 'Brand Value' make possible produce sustainable competitive advantages.
C) Preference Policy for Investors
Total Supply: 98,272,765
Circulating Supply: 68,000,000
The amount CTR holds : 30,272,765
Card User Reward: 2%(black card),0.5%(gold card), 0.2%(blue card) CTR Rewards back on every purchase
CTR Holder Reward = Network Reward: if you are both a card & token/coin holder, receive "the total revenue from Centra card in the world * 0.8% * the percentage of coins owned"
(The company would fulfill the payment with the CTR coin amounts the company holds, and then if not enough, would buy in the market to cover)
=>To see the effect of Holder Reward check out the #4. valuation part
Give the number of 0.8%~1.5% as agent fee revenue from affiliates where card customers use in the U.S.A, I think, the 0.8% Network Reward number is pretty high.(Considering the massive initiative advertisement costs, a little bit worried.)
But, the minimum cost for customers to issue Centra card is 50 CTR(Blue member),10,000 CTR (gold),100,000 CTR(black). this membership fee would cover to use for the early costs about advertisement and so on.
2. KEY RISK FACTOR
A) Chronic scam issue and R&D ability
The doubt for the realization of technology and the selling of the participants invested in pre-sale season pulled down the price of Centra Coin almost to the 1/10 compared to the price of the IPO. But from the 4Q of 2017 to the recent, the company shows the evidence of their technology with the delivery of cards to CTR holders. They are uploading their card payments videos on YouTube with astonishment. And also the recent alliances with cryptocurrency, network card companies and banks are dissipating the scam doubts off considerably.
However, the two facts, 1. there are few open-source projects updated on the github(might be developing on closed-system,kindly ..) 2. the tight plan that release the CBAY which would be the on-line commercial market based on cryptocurrency and own chain, and exchange market in 2Q of 2018, are still on with both doubt and expectation for investors.
- If those doubts are solved, and then connected with the SNS-based cryptocurrencies just like Steemit, flourishing in with Steem Dollar, the new commercial system called CBAY would make a new wave in the cryptocurrency market as leading on with the topic of commercialization along with Steemit.
B) The possibility of competition and dissonance with network card giants & big financial companies.
On 5,Jan, 2018 Visa suddenly cracked down on Bitcoin debit cards of three card companies(BitPay, Cryptopay, Bitwala) in Europe announcing that due to non-compliance with operating rules. It is the one case of the world giant card network companies, Visa and Master. They are huge controllers with over 80% in the card network area whole world. In the future, Centra could meet this kind of situations, meaning that decrease of profitability and increase of uncomfortable risk on business permanence in the process of fee negotiation with card network dinosaurs.
Also, the SBI holdings which is the Japanese financial company as a main shareholder for Ripple(XRP), and the Unionpay which is the Chinese card company as the last resistance over Visa&Master in the world are making preparation for crypto-payment wars. They are not the Tenx or Monaco with small business roots and coins, but the latent competitors with the many branches over the world with tremendous capital. So Centra must upgrade own forth as a first-mover Jedi over the upcoming groups.
Especially, the high premium of the cryptocurrency price gap in the Asian market relative to others, called kimchi/sushi premium, would block down the growth of cryptocurrency-payment market in Asia despite the highly-speedy conversion system of Centra. (That is, How many Asians are willing to buy and use crypto-conversion system actually with the burden over 30~40% premium to their local money?!) And under the business model, CTR focus on not the credit card but only the debit card. So in the estimation for CTR revenue, we must cut down the range of regions & types of crypto card industry.
3. KEY MONITORING FACTOR
A) The smooth release of ecosystem-reinforced products, and the safe arrival on the market.
Therefore, CTR needs three, the ability to propagate in the wild world against the dominant card network companies, ability to cope with the hidden huge capital competitors, ability to solve the high-cost premium problem in the Asian market(If CTR could make the system to help arbitrage using on the kimchi-premium, all the investors would come into with endless money)
So, Additional product mix is needed. Real-time exchange system with no/low fees, on-line crypto-market to own commercial channel, wide range of financial crypto-products. If the plan to make own crypto rco system were postponed, or if new competitors came into with the better products, the disaster would come with the result of waste of money as just-called pioneer, as to without no trophy.
It is time to focus on the additional products, following the roadmap, for own chain based on DPOS, CBAY Market as well as promoting new customers of CTR card.(planned on 1Q+2Q in 2018)
B) New alliances with some hidden competitors and cooperators, to change the risk factors into the opportunity factors
Apart form own development of various systems, the expanded alliances with such as Kybernerwork(KNC) which makes efforts to new-concept crypto-exchange, or ETHLend which specializes in crypto-lending would be a relief pitcher. That would be another key to response with the risk of the CTR business.
If CTR made new alliances with the Unionpay which is the last warrior in the world card network, or with the Alibaba which is new king on Asian online-market, If the release of new product line with a high-quality come along with the roadmap of CTR whitepaper, the risk factors could be transformed to the new opportunity factors to lead the CTR into the upper level.
CTR, with the first-mover advantage and Sustainable network reward level, has 50% up-potential relative to the present price!
A) Essential Logic
It makes sense as a logical ground, If the present value of the sum of the rewards(represented as fiat money) for investors were higher than the market cap.
The income model for investors of CTR, for now installed on = Network Reward + Card Usage Reward.
(Because of uncertainty, exclude the additional income model of DPOS, exclude the effect of reducing in cost on Cbay/Exchange in 2018. And exclude the Card Usage Reward, is too small. We would focus on the network reward in this posting.)
Network Reward = (retained coins/total supply) * 0.8% * Total payment of Centra card in the world
A total payment of Centra card in the world = the amount of Centra card membership * annual payment based on cryptocurrency per 1 Centra member
B) Main Assumption(Basically, approach with a conservative view to the total crypto-card market size, and with a positive view to the growth of it)
- the number of Centra card membership =the number of issuers of crypto-card among the total crypto-users * the market share of Centra to crypto-card market
The total crypto-users = estimate to 10,000,000~13,000,000 people (=2,000,000/20%~)
(=Korean users are roughly 2,000,000, the percentage of South Korea to the whole crypto market volume is around 20%)
(Recently reported that average investment capital per 1 Korean person is $4,694, one day volume of Korea is $9,389,671,362)
(On this posing time, based on coinmarketcap, the world volume is $61,032,863,850.
With the upper assumption, calculating the average investment capital per 1 world person is $6,131 around over the average investment capital per 1 Korean person. So I would assume the total crypto-users are 10,000,000 )
(Issuer percentage of crypto-card in 2018 over the crypto-users = assume 3% around the penetrating level of payment cards. The North America and Europe would lead the market because of the high-premium of crypto price of Asia)
( So,Assume that the number of issuers of crypto-card among the total crypto-users = 10,000,000*3%= 300,000 people. )
the market share of Centra to crypto-card market=assume as 50%(= The Monaco which in a trouble with breakdown with network company VISA, postponed to deliver membership card. The Tenx must skip the North America because of legal issues. So the Centra would lead the whole market and get the most members.)
=> Estimate that the number of Centra card membership= 300,000*50%=150,000 people.
- Annual payment based on cryptocurrency per 1 Centra member=GDP per capita *the ratio of debit card usage over GDP * the ratio of crypto payment over the debit card.
(GDP per capita= the early market would be with North America and northern Europe. So use 2016 U.S.A GDP per capita $57,466)
(The ratio of debit card usage over GDP=use 2014 debit card ratio 13%, Asia markets are developed with credit card not with debit card. The credit card usage of Korea is 70%, Japan is 90%)
(The ratio of crypto payment over the debit card = replaced the investment percentage into crypto market over all the kind of assets market. Generally the crypto ratio is under 5% over the world asset. But the direct investors interesting in crypto market might have 20%:80%(crypto vs the other assets) structure. So I assumed the 17.5%)
( $57,466 * 13% *17.5%= $1,307/year, I estimated that $108.9/month would be used for the membership of Centra card.
=> Annual payment based on cryptocurrency per 1 Centra member in 2018 = estimated as $1,307.
*I assumed, until 2020, the membership of Centra would increase within the growth rate of 30%~50% with the help of the effect of growth of crypto market and fist-mover advantage. After 2021, the growth rate would be decrease. Also the annual payment based on cryptocurrency per 1 Centra member would go up to 30% until 2020 due to the generalization of crypto payment, and then pull slightly down.
- Use 3-year treasury bond rate, 2.5% for discount rate.
C) Valuation Implication
- I tried to do valuation with the logical methods, however, like most valuation process, this is the mixed result of assumption and estimation. To be honest, still I am confused with that what I did is scientific process or artistic massage..
Nevertheless, I would speak the valuation result digits into the words of business,
"Among the around 10 million people as cryptocurrency investors, the number of issuers of crypto-cards in 2018 are estimated to 300 thousands, 3% of world investors, as a result of the low growth rate of Asia with the high burden from price gap to other regions. The Centra based on legal sustainability in U.S.A would be expected to carve out over the 50% of market share, 150 thousands memberships with the highly developed product and the alliances of the main digital cryptocurrencies, card network companies.
Annual payment based on cryptocurrency per 1 Centra member would be $1,307 calculated from that the $57,486 average GDP per capita times the 13% ratio of debit card usage over GDP times the 17.5% ratio of crypto payment over the debit card. In other words, estimated that $108.9/month would be used for a membership of Centra card in 2018.
From now on for 3 years, expected to increase over 30% growth rate of membership number and 20% growth rate of the annual payment per 1 Centra membership, with the help of the generalization of crypto payment and the increase of profitable alliances. But after the time, the growth rate would be decreased due to the increased competition with various card companies. And the Centra would be stabilized with 420 thousands memberships with each $202.9/month payment usage through the Centra Card, 3 times of current members"
In conclusion, Centra coin has the up-side potential of 47.6% based on the analysis of the intrinsic reward value($330 billion,$4.9 per coin ) compared to the market cap.($224billion, $3.2 per coin). Also the future price to cover the intrinsic reward value for coin holders is the $10.3 which means to cover with Centra Tech's holding supply to the reward of coin holders, the price should go up to avoid using Centra's extra cash. So it is expected for Centra to make the Centra coin's value up actively.
This analysis excluded the additional DPOS rewards, the benefit of Cbay Market, and the dream of being a bank under the whitepapaers. This included only with the present execution of debit card business in with some conservative approach. For today, I am the one of coin holders of Centra Tech.
Wow.. It was not easy to combine the cryptocurrency and valuation with some information plus reasonable estimation. However, only with this kind of process, I could be waiting the soaring time with a confidence monitoring key factor (Actually to endure the sad technical correction... lol) This process might be insufficient, but I put my soul and blood into..
Thank you for reading my lengthy analysis. Any opinions are welcome to make my logic upgrade or adjust with you.
p.s. I want to say to Warren Buffett that following the logic and intrinsic reward value, the Centra on the upcoming crypto world could be the American Express + amazon that you Buffeett loved and regretted. So what about buying Centra(CTR)?
Thank you so much.. :D