ICO Analysis: White Rabbit | Hacked.com

ICO Analysis: White Rabbit | Hacked.com

The creation of the internet enabled the potential for consumers to have a media paradise, where they could consume only the content they wanted, when they wanted, how they wanted.

If that doesn’t sound like the way things actually shook out, you might be on to something.

The problems stopping this vast potential from being realized have been around in some form since the 1990s but they are only getting worse as traditional movie/television studios and networks dig their heads in the sand (while at the same time Netflix, Amazon, HBO, and their ilk bend the entire industry to their will (creating massive problems themselves in the process.)

The issues with the current approach both decades ago and today can be together summed up in five short statements.

1. Media content is not convenient or cheap enough for consumers to consume it.
2. Consumers turn to pirating media content out of frustration with the status quo.
3. Businesses double down on these failed models which leads to continuously increased piracy rates.
4. Content creators make less and less money out of creating content.
5. The quality and range of available content head towards the gutter.

Rinse and repeat until the end of time.

But does it have to be this way?

White Rabbit thinks not.

White Rabbit is an ambitious proposal to solve all the issues of streaming media content once and for all using blockchain technology.

It attempts to do this first and foremost via a few unique methods.

1. A universal browser plugin that can recognize streaming media content regardless of where it is being streamed (including illicit p2p sites), and send rights holders a native cryptocurrency token (WRT) via smart contract in exchange for the legal ability of the consumer to stream the content wherever and whenever they desire.

2. The Rabbit Hole: A portal for high-quality versions of streamable content, extras, behind the scenes/deleted footage, fan and filmmaker interaction (via VR and other methods), and third-party content, personalized to the user.

3. White Rabbit approved partner streaming sites that will curate unique content and UI to form tailored streaming communities for consumers.

So how does all of this actually work in practice?

Once WRT is accepted by the CRH (content rights holder), it opens access for fans to the high-quality version of the film in the Rabbit Hole, plus all the extras, behind-the-scenes, deleted scenes, fan and filmmaker interactions and third-party innovation.

WRT can, of course, be used to access all of this additional content.

When a film or series is popular enough among fans, it will be difficult for CRHs to resist pulling all the collective tokens on offer (by entering into a smart contract with White Rabbit).

WRT basically enables users to gently nudge the CRH to join White Rabbit and give users access to their art and entertainment but on the fans’ own terms.

According to the white paper, the film industry should not demand fans to change their habits, but instead, adapt themselves to those habits.

White Rabbit believes that the collective power of their token holders will force this long overdue adaptation.

WRT thereby gives users the power and responsibility to prove their willingness to pay and show the industry that it´s a matter of access and convenience.

In fairness to White Rabbit, they do have some data on their side.

In their whitepaper, they cite British and Australian research that interviewed 10,000 illegal streamers.

The research showed that 60% of those interviewed were willing to pay if they had convenient access to content. These same streamers have also been proven to spend significantly more on content than those that do not stream illegally.

What this means is that they are not really pirates, but fans without enough access to content.

This suggests that it is not that content producers “can’t beat free” but rather that a majority of frustrated fans who don’t see a viable alternative in the current streaming environment pirate begrudgingly.

So what are the true benefits to all parties within the White Rabbit ecosystem?

For Fans & Consumers:

  • Freedom to stream on any P2P site: Paying directly to rights holders regardless of where the consumer is watching content.
  • Freedom to pay: P2P is legalized by guaranteeing payment for streaming with the White Rabbit Token (WRT).
  • Freedom to access more content, more artists, and more fan experiences in the Rabbit Hole: This brings consumers closer to the art, artists, and entertainment they love.

Producer:

  • Revolutionary business model: No longer necessary for producers to wait months and years to receive revenue for their content. Instead, they receive payment minutes after the fans pay.
  • Data: Access to all the non-personal consumer streaming data related to your film or series.
  • Control: Price and territory can be adjusted while content relevant steaming sites focus on targeting audiences interested in specific content.

Streaming Industry:

  • White Rabbit revenue shares with streaming sites that agree to their Partner Streaming Sites code of conduct.
  • Illegal streaming sites are encouraged to legalize by a rewarding revenue model (which will, in theory, lead to new legitimate players entering the market.)
  • This incentivizes innovation in UI, search and recommendations, improving the streaming experience and the creation of clear streaming brands, to the benefit of both fans and content creators.

Creatives:

  • Interaction: Talk to their fans directly in the Rabbit Hole. Tell the fans about them, their film and their upcoming projects.
  • Monetization: Offer additional content to the fans’ favorite film and series, Q&A´s, VR screenings and more.
  • Transparency: Receive what they’re due as user payments are written in the immutable blockchain ledger.

In short, The Rabbit Hole tears down the many barriers that keep fans apart today, ensuring fans and filmmakers are able to interact and transact such that revenue and engagement are maximized on all sides.

Today, producers, filmmakers, and their investors are not able to do this effectively because they are not maximizing the true potential of digital streaming. They are not in contact with their fans.

White Rabbit and the Rabbit Hole closes that gap.

Streaming media content is expensive, users have less choice than before, revenue for rightsholders is neither transparent nor reasonable, and White Rabbit argues that by not accepting users’ streaming habits, the industry itself encourages piracy.

Example of unique Rabbit Hole content experience:

1. A cult film with 20,000 fans in 50 different countries could hold a VR cinema screening in the Rabbit Hole with half a million fans from all over the world. Filmmakers and fans could interact live in the VR cinema, merchandise could be bought, and new fans could join.

What was once a niche film that was difficult to monetize due to geographical and regulatory barriers suddenly becomes a viable business model given open access.

White Rabbit by its very design does not seem to distinguish between the rising star and the established filmmakers.

The film itself, its resources within its own habitat, its ingenuity or cash, it´s fans and the campaign strategy of the film will make the difference between success and failure, not uneven control over distribution.

In White Rabbit’s vision of the future, success is no longer about who you know, it´s about what and how you deliver. It´s about innovation in communication as much as technology.

White Rabbit plan to create the Airbnb experience for the content streaming industry.

This, in theory, allows UI designers, branding and film buffs to create streaming sites catered to every and any taste.

Ultimately, producers can release content to specifically target their audience by way of streaming sites that match their content.

To Recap:

Challenge 1

Too few filmmakers make money from digital distribution. There is less choice of content as closed server subscription services produce more of their own and buy less.

Challenge 2

Revenue lacks transparency, accountability and quick transferrence to content creators.

Challenge 3

Fans are forced to break the law to see their favorite film or series because they can´t pay for content.

Challenge 4

There is less choice of content as closed server subscription services produce more of their own and buy less.

Challenge 5

The digital distribution paradox – a lack of competition in global digital distribution slows UI innovation. Yet, more subscription services mean more logins and passwords for users.

The White Rabbit ecosystem brings together users, content rights holders and creators, partner streaming sites, third-party developers and White Rabbit themselves.

By offering users a personalized content library — the Rabbit Hole — and a browser plugin, White Rabbit can fix the content issues plaguing the media industry once and for all.

The White Rabbit plugin recognizes the content being streamed enabling users to offer White Rabbit Tokens (WRT) as a guarantee for payment to content rights holders.

Each time a user streams content a smart contract deducts the tokens from the user’s account and transfers it to the rights holders.

If a smart contract does not exist, rights holders may enter into one and accept tokens or reject. If they reject, the tokens which are kept in an encrypted distribution pool are returned to the user, securing their anonymity.

The Rabbit Hole is user’s personal content library where they can access all the content they have paid for and enjoy exclusive materials, extras, director’s cuts, merchandise, and interviews.

In addition, the Rabbit Hole enables users to interact directly with the creators behind their favorite films, enjoy film screenings in VR together, and use other available third-party applications.

By separating distribution from payment, White Rabbit offers one payment system, but infinite viewing and fan experiences.

Token

The WRT token is the key that unlocks the entire White Rabbit platform.

When streaming their favorite films or series, smart contracts deduct a WRT payment from users and transfer this immediately to rights holders. Utilizing blockchain technology, rights holders are also ensured complete financial transparency.

The token distribution is as follows:

  • 40% Token sale
  • 31.5% White Rabbit Reserve
  • 16% Team (First 1/3 vested to the team after 6 months, second 1/3 vested after 12 months, final 1/3 vested after 18 months)
  • 6% Partners
  • 5% Advisory Board (vested After 6 months)
  • 1.5% Bounty Campaign

Tokens are allocated to:

1. CRH – the first time they accept tokens for content, a 10% bonus on aggregated tokens at time of smart contract commitment

2. Users – loyalty bonus, promotion bonus, allocating space for content, new incentives
Streaming sites – incentives and rewards for development and accomplishments

3. Third party applications in the Rabbit Hole rewards for development and accomplishments

4. Acquisition and Investment in content

Team

The White Rabbit team is absolutely phenomenal.

Not only is it a fairly large team, but each member brings highly specific and relevant experience to bear on the creation of the White Rabbit ecosystem.

Although I hesitate to throw the term “superstar” around, an argument can certainly be made that this team fits the bill.

Highlights of the team’s collective achievements:

  • Worked as producers and sales agents on over 800 films.
  • Won best film awards in Cannes and Venice, sold films to over 70 countries including best selling foreign film 2015 in the U.K. and Australia.
  • Software entrepreneurs behind Milbros Chemical Information System, the industry standard for the safe transportation of chemicals at sea, a $2.3 trillion dollar market. Installed onboard hundreds of chemical tankers and operations offices worldwide.

Team members previously developed security systems for submarines, telecom, and mobile phone industry

Verdict

White Rabbit is an incredibly ambitious attempt to fix the content streaming industry. They appeared to have thought deeply about the correct way to fix the problems and also to have drawn inspiration from other brilliant but flawed attempts such as Popcorn time.

Risks

  • Despite designing an incredibly well thought out platform, I don’t think the White Rabbit team has created strong enough incentives for consumers to actually download the plugin and begin to use White Rabbit.
  • Although users get an extra 5% token bonus for allowing their data to be monetized within the platform, that doesn’t strike me as a good enough sales pitch to get the average person to download this plugin and start paying content creators. -2.5
  • As White Rabbit themselves know well, content is king. You can create the most innovative platform, with the best features, the sleekest UI, and the perfect solution for rights holders, but if a consumer can’t watch their favorite show how and when they want to, the platform is worthless. Hulu is a perfect example of this.
  • The entire premise of White Rabbit is that a majority of people consuming pirated content are actually just frustrated fans who would be happy to pay for content legally if it was simply convenient and affordable for them to do so.
  • It was therefore incredibly puzzling that one of the terms they demanded of partnered streaming sites was to delete media content if rights holders didn’t want to participate and White Rabbit asked them to. Especially at the beginning, this could undermine White Rabbit’s entire purpose for existing and lead to users quitting the platform out of frustration.
  • Although ultimately this would still technically be the fault of the rights holder and entrenched industry players, I don’t see White Rabbit becoming the dominant force unless they are willing to break through the logjam and potentially face litigation from content holders early on. -3.5

Growth Potential

  • Incredibly low fixed token supply that should only increase in value as White Rabbit’s user base grows. +5.5
  • Incredibly reasonable solution to the current logjam that is streaming media.
  • Implemented intelligently, the incentives are aligned to allow consumers to pay for the content that they want, wherever and whenever they want to watch it.
  • This alone is a revolutionary breakthrough that blockchain technology enables that could radically change the entire industry. +6.5

Disposition

We arrive at a score of 6/10 for White Rabbit.

Although it appears to be a project with immense potential, a fantastic team, and favorable token economics, the sheer difficulty of the problems they are trying to solve adds a degree of risk to an otherwise stellar project.

But to quote the whitepaper, “When an entire generation breaks the law, it shouldn´t be a crime, it should be a business opportunity” -Alan R. Milligan, White Rabbit founder

Investment Details

  • Token Type: ERC20
  • Platform: Ethereum
  • Symbol: WRT
  • Token Price: 1 WRT = 0.13 USD
  • Token Supply: 190,000,000 Total Supply
  • Soft Cap: US$ 2,000,000
  • Hard Cap: US$ 10,000,000
  • Pre-Sale: May 7th, 2018-May 14th, 2018.
  • Public Sale: May 15th, 2018-June 10th, 2018
  • Jurisdictions Barred From Participating: USA, Canada
  • Website: https://whiterabbit.one
  • Whitepaper: https://whiterabbit.one/docs/White_Rabbit-White_Paper_v1.0.pdf

Featured image courtesy of Shutterstock.

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ICO Analysis: DAOstack | Hacked.com

ICO Analysis: DAOstack | Hacked.com

By 2017, cryptocurrencies reached their mainstream peak, where people like Alan Greenspan and Microsoft’s Bill Gates were talking about the possible value in this new digital asset class.

The current state of blockchain technology has already proven itself more than just worthy, improving the lives of many people and legal entities in various ways. However, blockchain-powered platforms require an enormous amount of computing power to run smoothly.

One of the most important gears of the current blockchain-factory is the concept of “mining” cryptocurrencies, or in a nutshell, lending your computing power and resources in order to provide the blockchain the power it needs to perform the transactions set within the network, in exchange for a portion of the transaction.

While “mining” is necessary for most of the current blockchain systems, it is also a pain in the ass for various reasons, including

  • Mining has extremely high-energy costs
  • The noise and heat generated by the machinery could be really disturbing
  • Requires a lot of physical space
  • Requires expensive hi-tech ventilation/air-conditioning systems
  • Requires 24/7 personnel to monitor the plant

That is why, over time, mining ended up being extremely difficult and concentrated in a few hands. Most mining companies disappeared or merged with similar companies and those who take mining seriously even started to move to countries with low taxes and low electricity fees.

For some countries, mining feels are very low. Take Georgia, for example, where the average rental price per a square meter is not more than a couple dollars. The price per KWh is not more than $0.05, in opposition to the average European KWh price that is currently around $0.20.

Ambit Mining is a Georgian-based start-up that has been taking advantage of these features for some time now. The company operates its own mining plant, powered by major industrial titans like Schneider Electrics, AMD, NVidia, Cisco and Kingston.

Ambit Mining is constantly evolving and are now launching their own ICO to power an ecosystem of investors and developers under the Ambit Mining roof.

The Georgian company not only is one of the most promising, according to their latest transparency release, but they have ties to governmental institutions in Georgia, understanding both local and international markets with a solid and modern business plan.

Unlike most mining plants with a business model, that rent you specific hash power, Ambit Mining gives you the opportunity to be part of the business model by releasing 85% of their total token supply to the public.

Ambit Mining uses both ASICs and GPUs to diversify risks. They have a modern plant and they keep expanding. Ambit Mining unites mining, cloud, and hosting services into one decentralized platform, guided by the community shareholders.

The company is part of the economic free zone of Tbilisi, capital of Georgia and they have an interesting and transparent history when it comes to mining. Their latest project achieved 100% ROI in just five months.

Token

The AMBT token is Ambit Mining ecosystem’s native currency. It can be used to purchase mining contracts, computing power, or even cloud space. Each token has a value that can be translated as a vote on significant community events and updates.

At the same time, naturally, you can swap your AMBT for ETH, or any other major cryptocurrency and find shelter in fiat or other altcoins.

The total token supply is set to 104,000,000 AMBT, 85% of which (88,000,000) will be accessible during the public sales.

Ambit Mining, unlike most ICOs, will require only 3% to be reserved for the company, while 9% is distributed to team and advisers, and the final 3% will be given to bounty participants.

The starting price of an AMBT token is approximately set around $0.5 per unit, which is ultra cheap, if you consider that projects with a similar total supply cost between $10 and $200 at the moment, with Ethereum (~99 million total supply) being the most expensive per unit at $585 US dollars.

Team

Beka Vashakidze (Founder & CEO) is the CEO of BF group holding Company operating on mining in Georgia. He is involved in numerous different industries including Fintech, Digital Media, oil and gas among others.

Giorgi Inashvili (Chief Operational Officer) is behind numerous projects around marketing, sales, and logistics areas. He is talented in business planning and project management.

George Khmaladze (Chief Financial Officer) is currently a professor and lecturer at Georgian Technical University. He is an important figure in Georgia, having served director and chairman in various organizations in his country.

In the board of advisers, we can find Karan Khemani, CEO of Spectre, Miguel Palencia, Chief Information Officer at Qtum Foundation and Andri Matiukhin, Chief Technical Director at Hacken among others.

Overall, the Ambit team consists of professionals with years of experience in the mining scene. A big portion of the initial team is native Georgian, acknowledging the benefits of the grounds they live in.

Verdict

Mining is a crucial part of most blockchain-based technology companies. The more companies adopting distributed ledger technology, the more mining will be required. Ambit offers its services as a solution to this problem, with specified facilities and reduced mining costs.

Indeed, Ambit has favorable synergies that could be very beneficial for someone looking at mining seriously. Within its years of operation, Ambit has managed already to create a 1 MW diversified mining facility in Tbilisi where it’s based. This facility has managed to achieve 100% ROI in five months.

This indicates that the operation is up and running, proving it can grow, provided that the terminals are put into place and running. Having the whole of the investment concentrated on one spot means that the service team will be able to respond very fast in case something goes wrong.

Ambit plans to grow its operation to 20 MW through this project, having mining enthusiasts on their side and the support of the high-end technology manufacturers affiliated with the company.

While mining is very important for most blockchain-platforms, there is a new wave of decentralized distributed ledgers that have a pre-established number of tokens, pre-mined and they use variations of the PoW protocol, eliminating the need for miners.

Risks

From an investor’s perspective, the following facts are important to consider when weighing Ambit Mining:

  • While Georgia may be friendly to mining at the moment, it still is a very expensive and energy-consuming “sport” that might be changed or even faded away in the future. -1.5
  • Mining nowadays is not as easy and profiting as it was during the “golden” days of the blockchain. Major mining companies have already established plants that work for years, having a standard client database. Ambit Mining will have to work hard to attract new investors into their network. Even with the lowest prices of the market, that is a challenge. -2
  • In general, mining facilities are extremely vulnerable to natural disasters, and that does not exclude Ambit Mining from the list. For an example, an earthquake can be devastating for the company itself as the whole operation is relying on a single geo-location. -1
  • Ambit Mining’s native token, AMBT, does not offer anything out of the box, as there are infinite options already doing what AMBT is created to do. -2.5

Growth Opportunity

  • On the other hand, if considered seriously and programmed with technical craftsmanship, mining can be still one of the most profiting sub-sectors of blockchain technology. Ambit Mining seems to understand the specific market well with a series of transparency reports backing this fact. +2.5
  • Finding cheap operational fees in the sector is not a walk in the park. Whether Ambit Mining has chosen Georgia as their base due to the fact that it is their home country or the fact that it has cheap taxes, and electricity fees, it is one of their best key points for the moment. +3
  • Unlike most mining plants that are “decentrally centralized,” keeping almost half of the total token supply for the company, Ambit Mining is in position to share 85% of the total token supply with the community. +4
  • $0.5 per AMBT or any other token with a logical total token supply is more than just fair and it could bring an easy x4 to x5 just after the token enters the mainstream markets. +2.5

Disposition

Ambit Mining could be a profitable model for ICO investors or even blockchain investors, but we should consider the fact that mining will have to eventually upscale its model into a less consuming, energy-efficient platform.

The company, as well as the team, look really promising and wise on the sector, although relying your whole business plan on a single country, on a single location could lead to unpleasant surprises in the future.

A score of 5 out of 10 is reserved for Ambit Mining, based on present facts.

Investment Details

  • Type: Crowdsale
  • Symbol: AMBT
  • Platform: Ethereum
  • Pre-Sale: Apr. 20, 2018
  • Public Sale: May 10, 2018
  • Payments Accepted: ETH, BTC (KYC Required)

 Official Website

White Paper

Disclaimer: The writer has no position in Ambit Mining at the time of writing.

Featured image courtesy of Shutterstock. 

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ICO Analysis: HighIoT | Hacked.com

ICO Analysis: HighIoT | Hacked.com

By 2017, cryptocurrencies reached their mainstream peak, where people like Alan Greenspan and Microsoft’s Bill Gates were talking about the possible value in this new digital asset class.

The current state of blockchain technology has already proven itself more than just worthy, improving the lives of many people and legal entities in various ways. However, blockchain-powered platforms require an enormous amount of computing power to run smoothly.

One of the most important gears of the current blockchain-factory is the concept of “mining” cryptocurrencies, or in a nutshell, lending your computing power and resources in order to provide the blockchain the power it needs to perform the transactions set within the network, in exchange for a portion of the transaction.

While “mining” is necessary for most of the current blockchain systems, it is also a pain in the ass for various reasons, including

  • Mining has extremely high-energy costs
  • The noise and heat generated by the machinery could be really disturbing
  • Requires a lot of physical space
  • Requires expensive hi-tech ventilation/air-conditioning systems
  • Requires 24/7 personnel to monitor the plant

That is why, over time, mining ended up being extremely difficult and concentrated in a few hands. Most mining companies disappeared or merged with similar companies and those who take mining seriously even started to move to countries with low taxes and low electricity fees.

For some countries, mining feels are very low. Take Georgia, for example, where the average rental price per a square meter is not more than a couple dollars. The price per KWh is not more than $0.05, in opposition to the average European KWh price that is currently around $0.20.

Ambit Mining is a Georgian-based start-up that has been taking advantage of these features for some time now. The company operates its own mining plant, powered by major industrial titans like Schneider Electrics, AMD, NVidia, Cisco and Kingston.

Ambit Mining is constantly evolving and are now launching their own ICO to power an ecosystem of investors and developers under the Ambit Mining roof.

The Georgian company not only is one of the most promising, according to their latest transparency release, but they have ties to governmental institutions in Georgia, understanding both local and international markets with a solid and modern business plan.

Unlike most mining plants with a business model, that rent you specific hash power, Ambit Mining gives you the opportunity to be part of the business model by releasing 85% of their total token supply to the public.

Ambit Mining uses both ASICs and GPUs to diversify risks. They have a modern plant and they keep expanding. Ambit Mining unites mining, cloud, and hosting services into one decentralized platform, guided by the community shareholders.

The company is part of the economic free zone of Tbilisi, capital of Georgia and they have an interesting and transparent history when it comes to mining. Their latest project achieved 100% ROI in just five months.

Token

The AMBT token is Ambit Mining ecosystem’s native currency. It can be used to purchase mining contracts, computing power, or even cloud space. Each token has a value that can be translated as a vote on significant community events and updates.

At the same time, naturally, you can swap your AMBT for ETH, or any other major cryptocurrency and find shelter in fiat or other altcoins.

The total token supply is set to 104,000,000 AMBT, 85% of which (88,000,000) will be accessible during the public sales.

Ambit Mining, unlike most ICOs, will require only 3% to be reserved for the company, while 9% is distributed to team and advisers, and the final 3% will be given to bounty participants.

The starting price of an AMBT token is approximately set around $0.5 per unit, which is ultra cheap, if you consider that projects with a similar total supply cost between $10 and $200 at the moment, with Ethereum (~99 million total supply) being the most expensive per unit at $585 US dollars.

Team

Beka Vashakidze (Founder & CEO) is the CEO of BF group holding Company operating on mining in Georgia. He is involved in numerous different industries including Fintech, Digital Media, oil and gas among others.

Giorgi Inashvili (Chief Operational Officer) is behind numerous projects around marketing, sales, and logistics areas. He is talented in business planning and project management.

George Khmaladze (Chief Financial Officer) is currently a professor and lecturer at Georgian Technical University. He is an important figure in Georgia, having served director and chairman in various organizations in his country.

In the board of advisers, we can find Karan Khemani, CEO of Spectre, Miguel Palencia, Chief Information Officer at Qtum Foundation and Andri Matiukhin, Chief Technical Director at Hacken among others.

Overall, the Ambit team consists of professionals with years of experience in the mining scene. A big portion of the initial team is native Georgian, acknowledging the benefits of the grounds they live in.

Verdict

Mining is a crucial part of most blockchain-based technology companies. The more companies adopting distributed ledger technology, the more mining will be required. Ambit offers its services as a solution to this problem, with specified facilities and reduced mining costs.

Indeed, Ambit has favorable synergies that could be very beneficial for someone looking at mining seriously. Within its years of operation, Ambit has managed already to create a 1 MW diversified mining facility in Tbilisi where it’s based. This facility has managed to achieve 100% ROI in five months.

This indicates that the operation is up and running, proving it can grow, provided that the terminals are put into place and running. Having the whole of the investment concentrated on one spot means that the service team will be able to respond very fast in case something goes wrong.

Ambit plans to grow its operation to 20 MW through this project, having mining enthusiasts on their side and the support of the high-end technology manufacturers affiliated with the company.

While mining is very important for most blockchain-platforms, there is a new wave of decentralized distributed ledgers that have a pre-established number of tokens, pre-mined and they use variations of the PoW protocol, eliminating the need for miners.

Risks

From an investor’s perspective, the following facts are important to consider when weighing Ambit Mining:

  • While Georgia may be friendly to mining at the moment, it still is a very expensive and energy-consuming “sport” that might be changed or even faded away in the future. -1.5
  • Mining nowadays is not as easy and profiting as it was during the “golden” days of the blockchain. Major mining companies have already established plants that work for years, having a standard client database. Ambit Mining will have to work hard to attract new investors into their network. Even with the lowest prices of the market, that is a challenge. -2
  • In general, mining facilities are extremely vulnerable to natural disasters, and that does not exclude Ambit Mining from the list. For an example, an earthquake can be devastating for the company itself as the whole operation is relying on a single geo-location. -1
  • Ambit Mining’s native token, AMBT, does not offer anything out of the box, as there are infinite options already doing what AMBT is created to do. -2.5

Growth Opportunity

  • On the other hand, if considered seriously and programmed with technical craftsmanship, mining can be still one of the most profiting sub-sectors of blockchain technology. Ambit Mining seems to understand the specific market well with a series of transparency reports backing this fact. +2.5
  • Finding cheap operational fees in the sector is not a walk in the park. Whether Ambit Mining has chosen Georgia as their base due to the fact that it is their home country or the fact that it has cheap taxes, and electricity fees, it is one of their best key points for the moment. +3
  • Unlike most mining plants that are “decentrally centralized,” keeping almost half of the total token supply for the company, Ambit Mining is in position to share 85% of the total token supply with the community. +4
  • $0.5 per AMBT or any other token with a logical total token supply is more than just fair and it could bring an easy x4 to x5 just after the token enters the mainstream markets. +2.5

Disposition

Ambit Mining could be a profitable model for ICO investors or even blockchain investors, but we should consider the fact that mining will have to eventually upscale its model into a less consuming, energy-efficient platform.

The company, as well as the team, look really promising and wise on the sector, although relying your whole business plan on a single country, on a single location could lead to unpleasant surprises in the future.

A score of 5 out of 10 is reserved for Ambit Mining, based on present facts.

Investment Details

  • Type: Crowdsale
  • Symbol: AMBT
  • Platform: Ethereum
  • Pre-Sale: Apr. 20, 2018
  • Public Sale: May 10, 2018
  • Payments Accepted: ETH, BTC (KYC Required)

 Official Website

White Paper

Disclaimer: The writer has no position in Ambit Mining at the time of writing.

Featured image courtesy of Shutterstock. 

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Technical Analysis: Bitcoin Tests $9000 as Altcoins Pull Back after Strong Rally

Overview

“Gaps” (as they are called in the West) and “windows” (their Japanese counterparts) have always attracted the attention of technicians – most probably because they are nearly impossible to be missed on a price chart. After all, a trading session lying completely outside of the prior day’s range, which is what gaps and windows are by definition, must carry some kind of predictive power. However, a critical question remains – are gaps and windows indicative of the beginning of a new trend (as it was the case for AAPL in Figure 1), or are they simply an overreaction and are subsequently quickly filled (as it was the case for MMM in Figure 2)? Notice how in the former case the gap stayed opened (and it still is) for more than a year, whereas in the latter case the gap was filled/closed within two months (i.e. subsequent price action in September completely overlapped the range of the gap).

Figure 1. AAPL Daily

Figure 2. MMM Daily

Note, from here on, only the term “gap” is used, even though there is an important difference between the two – “gaps” look at intraday prices when determining if they are “filled”, whereas “windows” only look at “closing” prices. At the bottom of the article, you can find references to several works on the price phenomenon, in which the difference between the two variations is discussed in-depth.

Given that gaps occur quite frequently (see referenced materials for details), it is easy to understand how any “gap” strategy can be depicted to have predictive power. Most traditional books on technical analysis include a list of gap trading strategies followed by a few stellar charts that are supposed to prove the strategies’ validity (charts similar to Figures 1 & 2). Furthermore, given gaps’ conspicuous nature, most traditional trading strategies have their “entry” on the day the gap occurs (or Gap Day). For example, proponents of gaps being a continuation pattern would suggest that taking a position in the direction of the gap on Gap Day is profitable. On the other hand, technical analysts who believe that “all gaps get filled” suggest taking a position on Gap Day in the opposite direction of the gap. In both cases, action is taken on Gap Day.

After trading and analyzing gaps for many years, I was certain that traditional theories do not work the way they are described to. Probably the most illogical stipulation made by various technical authors was that “the gap itself should serve as support or resistance” and “once filled, gaps become insignificant”. On the contrary, I had found that the gap itself is rarely a strong support or resistance and that very often the most significant gaps are those that have already been filled. This is when, in 2016, I developed a new theory on gaps (“K-Divergence), which significantly “diverges” from traditional theories.

Before discussing what the K-Divergence theory entails, an explanation of the most popular traditional theories is presented.

Traditional Gap Theories

1. A gap is a continuation pattern.

Strategy – taking a position, on Gap Day, in the direction of the gap.

This theory is based on the idea that if, on any given day, prices jump/fall significantly enough to never touch the prior session’s price range, something significant must have occurred and changed the market’s sentiment on the company. In this case, on Gap Day, prices are assumed to reflect the changing opinion of the stock only partially, and thus, further movement in the direction of the gap is expected. In the case of AAPL’s gap (Figure 1), on February 1, 2017, the company reported better-than-expected 1Q17 earnings on the heels of record breaking iPhone sales. Subsequently, the price continued moving higher in a swift fashion, leaving the up-gap behind it. Often, proponents of this theory use support and resistance levels, or technical indicators, as a confirmation that the gap has occurred at an important juncture and that it can be trusted. For example, zooming out and looking at the stock’s price action since 2015 (Figure 3), traders who utilize gaps as continuation patterns can claim that “the breakout occurred above the interim high of the multiple bottom formation, and therefore, carried high predictive power”.

Figure 3. AAPL 2-Day Chart

2. A gap is an overreaction.

Strategy – taking a position, on Gap Day, in the opposite direction of the gap

Advocates of this theory are convinced that gaps are a result of market participants overreacting to news (or “noise”) and that once participation subsides, the gap is expected to get filled. The famous adage “all gaps get filled” is often used in an attempt to support this supposition. Similar to the previous strategy, support/resistance levels and technical indicators are expected to provide further confirmation if the particular gap is to be filled. For example, looking once again at the MMM chart (2-day chart – Figure 4), one may say that the down-gap took prices close to a well-established uptrend (green trendline) and to a key moving average (100 SMA – yellow line). Also, to further support the thesis that prices will reverse, one may point to the positive reversal in RSI (not to be confused with a positive divergence), which indicated that the correction has taken the stock to oversold levels during the uptrend (i.e. RSI making a lower low, while prices making a higher low).

Figure 4. MMM 2-Day Chart

The above two strategies are a perfect example of technical analysis being more of an “art” than “science”, where it is up to the technician’s discretion to decide what action to take after observing a gap. While, after testing both strategies (see K-Divergence section), I found that neither the simple continuation nor reversal strategies are profitable on a systematic basis, there are definitely specific situations where the probability of a gap reversing is higher and vice versa. Unfortunately, the next strategy, the one found in almost any TA book, is one of the reasons why technical analysis has a bad name among most non-technicians.

3. A gap could be either a continuation pattern or an overreaction based on its “classification”.

Strategy – an ambiguous one based on hindsight

As it had become evident that gaps cannot be all “continuation patterns” or “overreactions”, the popular gap classification system was born – where gaps are categorized as either “breakaway”, “continuation/runaway”, “exhaustion” and “common”. This classification is based on two criteria – 1) the location of the gap relative to preceding price action and 2) whether the gap gets filled or not. However, as one can imagine, there is no way to know on Gap Day whether a gap will be filled in the future. That is, the classification system is based on hindsight. Let’s prove this point by looking at an example. Figure 5 shows an up-gap after a prolonged uptrend. Based on the widely-used classification system this gap can be “runaway” (if the gap does not get filled and prices continue higher), “exhaustion” (if prices quickly reverse, fill the gap and continue lower) or even “common” (if prices fill the gap but do not reverse or consolidate). Given the colour of the candle and the long upper wick, it seems like it is an “exhaustion” gap, right?

Figure 5. Daily Chart (real chart, ticker hidden)

Clearly, it is only in hindsight that this gap can be classified. In this case, the gap turned out to be of the “runaway” type as it did not get filled and the stock (MSFT) continued propelling higher (Figure 6). The point is, the classification system is futile for making decisions on Gap Day.

Figure 6. MSFT Daily Chart

K-Divergence (K-Div) Theory

4. Most gaps occur after prices have moved away from a significant support or resistance levels.

Strategy – taking a position in the direction of the gap, only after prices have returned to pre-gap levels

More specifically, the theory suggests that in most cases an up-gap transpires after prices have already jumped from a key support level and a down-gap – after prices have already fallen from a key resistance level. The theory is based on the premise that before a gap occurs prices have already reached a key level and have bounced from it. It is only later on, after most market participants agree on the direction of the next move and take positions in the same direction that gaps occur. This means that it is not the gap itself that should serve as a support or resistance, but rather the range of prices preceding it (pre-gap range). The most important implications of the theory are – 1) the gap itself should not serve as support or resistance and 2) a filled gap is not “insignificant”.

So why does the K-Divergence make sense from a technical point of view? After all, if prices gapped due to “news” that nobody was aware of, this would mean that gaps are nothing more than prices adjusting to the new information. Any such conclusion should render fundamental and technical analysis useless, for it would imply that no analyst is able to purchase a security before news gets disseminated. On the contrary, the K-Divergence assumes that the most astute market participants (i.e. the best fundamental and technical analysts, quants and even “insiders”) are able to trade in advance of the gap occurring. Therefore, true support and resistance levels lie prior to the gap transpiring and subsequent filling of the gap does not render it “insignificant”.  It is best to illustrate this with an example. I will use one of my most recent predictions based on the theory, which was sent to one of my clients. First, I will describe the rational in detail with an updated chart (Figure 7), which will be followed by screenshots from the day the signal was given.

After the close on February 1, 2018, Google reported its 4Q18. The next day, the stock opened sharply lower and continued falling into the close (Feb 2 – Down Gap in Figure 7). The stock continued falling along with the market until the Feb 9 low was set. Subsequently, while NASDAQ was making new highs in early March, GOOG reached the pre-gap range (Bearish K-Divergence Range – violet horizontal trendlines) and started stalling. Due to the strong bounce by the broader markets, the stock recovered and filled the gap. However, when the stock started trading at the pre-gap range, market participants were given a second chance to sell the stock for the same price it was trading at before the 4Q18 earnings were released. Price action confirmed the bearishness of the set-up (GOOG March 13 & 16 – Figures 8 & 9).

Figure 7. GOOG Daily Chart

Figure 8. GOOG March 13

Figure 9. GOOG March 16

In order to validate the theory, I developed two trading strategies based on it (one with the gap and one with the window variation) and backtested them along with 5 variations of the traditional gap strategies discussed above. Figure 10 shows the 1-, 2-, 5-, 10-, 20-, 30- and 44-day period returns of the 7 strategies (#6 & 7 being the two based on the K-Divergence theory) and Figure 11 shows the annualized returns for the those same periods. The backtest took into account a total of 14,219 gaps over nearly a 2-year period.

Figure 10. 1-, 2-, 5-, 10-, 20-, 30- and 44-day period returns

Figure 11. Annualized 1-, 2-, 5-, 10-, 20-, 30- and 44-day period returns

The two K-Div strategies were profitable throughout all periods. The only other consistently profitable strategy was “Fading the Gap” strategy which entailed taking a position in the opposite direction of the gap on Gap Day, but closing it immediately after the gap was filled. This once again goes against traditional theories which suggest that once a gap is filled, prices should continue going against the gap’s direction as, supposedly, an important support/resistance was breached.

It is noteworthy that the K-Divergence theory does not suggest that all gaps have occurred after important support/resistance levels or that they can all be traded profitably in a similar fashion as the GOOG example. Rather, it provides a framework for analyzing the gap phenomenon, on that all active investors/traders should believe in, which assumes that some market participants are able to act ahead of major moves (i.e. prior to the appearance of gaps). Furthermore, it eliminates the use of the “hindsight” gap classification system.

For more on gaps, I recommend reading Julie R. Dahlquist and Richard J. Bauer’s “Technical Analysis of Gaps” book, where they conduct, one of the first on the topic, objective investigations of the phenomenon. For a much more in-depth coverage of the K-Divergence and my research on gaps, you can view my thesis for the Master of Financial Technical Analysis (MFTA) Program, published in the 2018 IFTA Annual Journal.

Conclusion

In the future, regardless of whether you look for opportunities to trade gaps on Gap Day (strategies 1 & 2) or decide to use the K-Divergence as part of your trading arsenal, I hope this article would make you think more critically the next time you hear terms such as the “runaway” gap. And even more importantly, will push you to analyze gaps even after they have been filled, and according to traditional theory, have become insignificant.

Happy gap trading.

Featured image courtesy of Shutterstock. 

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