Crypto Investment Update (Dec 2018)

In my most recent transaction, I invested $600 in the following crypto assets. Total invested amount in 2018 is 24% of total inflow of income. Still within the boundary limit of 30%.

  • 10 DGD
  • 300 PAY
  • 100 OMG
  • 0.2 ETH

There are several reasons as to why I invested in the above selections. Firstly, TenX announced that they are issuing a new TenX token for every PAY token you hold. If you hold 100 PAY tokens you would receive 100 TenX tokens, if you hold 800 PAY tokens you would receive 800 TenX tokens. This is very similar to a stock split except that the value of TenX tokens are unknown until they are listed on an exchange around end of Q1 2019.

TenX Tokens

So What are TenX tokens? The TenX tokens is a ERC-20 token combined with the features of ERC-1462. Wait… what??? That’s my initial response too. But basically, an ERC-20 token is just a standard or framework for creating tokens on the Ethereum network. Majority of the tokens are all ERC-20 tokens because a universal standard allows easy interoperability between wallet providers and exchanges. Some of the common standards are defining what should the total supply of your tokens be, calling the method of checking balance, naming your token, giving it a symbol etc.

ERC-20 tokens can be created out of thin air just by writing smart contract in solidity. All that is required is just a function that requests ETH to be sent to the smart contract address and in return you would receive back a pre-specified ratio of whatever tokens they created. That’s the reason why 2017 was a year of ICO, hypes and shitcoins.

What is ERC-1462? This is a new term that i just heard of in Dec too. But all it is is just an extension to the ERC-20 standard token that provides compliance with securities regulations and legal enforceability. PAY, like many other tokens, used to be a security token that attracted government and regulator’s attention.

But here is the problem… there are no defined regulations yet! Majority of regulators have not even heard of Bitcoin yet what more create regulatory guidelines surrounding cryptocurrencies. This led to many confusion, uncertainties and roadblocks in the crypto space. But it also opened up many opportunities and big profits for lawyers to jump into crypto. In the beginning, SEC decided to use Howey Test in determining whether a token is a security offering, but it still remain a very gray area till date. There has been recent interest and developments in security tokens offerings in 2019 though.

Anyways, to cut the long story short, PAY used to be a security token that aims to pay rewards in the form of ETH from a pool of transaction fees collected when users spent their TenX card. TenX is a crypto card company that allows people to spend crypto using a debit card.

They used to have a working card with WaveCrest but later got suspended by Visa. This was a huge blow to TenX as all their cards were rendered useless. Many who paid a deposit to order their cards did not receive it and are still waiting for their cards. The good news is TenX has found a new card issuer company, learnt their lessons, make sure the same mistake doesn’t happen again, and they have started shipping the first batch of new cards to Singapore. I have already ordered one, still in the process of verification and I will make a blog post when I received my TenX card!

To avoid getting into trouble with legal & regulatory issues, they introduced the TenX token that is compliant-ready with its sole function for reward distribution. Since PAY token is not legally-compliant to function as a reward token, a new TenX token was created. Then what happens to PAY? TenX mentioned that they are going to make an announcement subsequently to design a utility feature for PAY tokens.

Distribution of rewards from owning TenX tokens are expected to start around Q2 2019. A snapshot is taken in 30th Dec to check how many PAY tokens you hold with your private key. The more PAY tokens you hold, the more TenX tokens you receive, the higher the amount of rewards you received. That’s the reason why I bought another 300 TenX tokens. I personally see myself using TenX card and spending crypto anywhere around the world. Cryptocurrencies do not differentiate borders between countries.

I am sorry for announcing this AFTER 30 Dec 2018. The snapshot period has already passed and purchasing PAY token does not entitle you a 1-to-1 stock split of TenX token anymore. However, PAY token has dumped to $0.24, as usual, and price of TenX token is still unknown. You might be better off if you were to directly purchase 300 TenX tokens + 300 PAY tokens if the amount spent is less than what i bought. I bought 300 PAY tokens at the price of around $0.45.

I am excited for their TenX card, spend crypto buying Mac and to receive the first distribution of reward from TenX tokens in 2019.

DGD Tokens

What is DGD tokens? This is an interesting one because I have personally interned at Digix for 2 months. Whatever i said here are my own opinions and I have no affiliate relations with Digix in anyway. Digix is interesting because its the first company in Singapore to launch an ICO DAO crowdsale raising $5.5 million within 12 hours.

Digix is a asset-backed gold company that has 2 tokens. First is DGX which is a token that is pegged to real gold bars stored under their vaults. 1 DGX represents 1 gram of gold and every 100 DGX tokens allows you to redeem a 100g gold bar from the vault. The second token they offered is DGD which is a governance token known as the Decentralized Autonomous Organization or DAO.

The concept of DAO is as crazy as it sounds. Its an organization that is run without a CEO, directors or any employees. It does not have a headquarter and its not incorporated in any country. It’s virtual. Interestingly, it brings up the issue of taxation, how do you tax this organization? It’s not even existent or tangible, its just some software codes with pre-defined logic. That’s the reason why code is law and regulators are struggling to get their head around this whole idea of intangibility in crypto development. Anyone can submit a proposal on the platform and those who own the tokens are allowed the right to vote on these submitted proposals. In return, they receive rewards in the form of some cryptocurrency tokens if the proposals makes a profit.

This is exactly what DGD is. Its a governance token that allows you to vote on submitted proposals on the platform. In return for voting, you are rewarded with DGX which represents real gold stored in a vault. There is a transaction fee of 0.13% and an annual demurrage fee of 0.60% for holding DGX. All these fees collected would be pooled together and re-distributed to DGD holders in the form of DGX every quarterly.

Every proposal must follow some pre-defined conditions and format. Here are some recent examples of proposals that are submitted by the founders themselves. Digix raised 466,648 ETH during the DAO crowdsale. Not a single cent was touched and all investors’ money still resides in the DAO. The money is only released based on the proposal requests.

For example, Charlie can submit a proposal with the objective to increase Digix presence by organizing a gold carnival event. He needs $100,000 (inclusive of profits) for this ambitious plan and he layouts the details of how he is going to achieve it. DGD holders would then decide if they want to accept or reject this proposal. If its accepted, the number of ETH equivalent to $100,000 would be released from the DAO and sent to Charlie. Charlie goes ahead with his marketing campaign and more people became aware of DGX. New gold are purchased and minted into DGX and more transactions took place. Transaction fees and storage fees increase thus increasing DGX rewards. That’s how DAO would work ideally, it incentivizes people to improve Digix ecosystem and DGD holders are entitled to vote in return for DGX rewards.

I first bought DGD when it was trading around $80-90 in early 2017. It went up to a high of $500 before the crypto crash. In my most recent purchase, I got another 10 DGD at the price of around $13 to average down my cost. The reason why i bought DGD is because I believed in the future of this company, prices have sunk all-time low and their tokens are backed by real gold assets. Meaning if gold price rises, DGX will rise. If gold prices fall, DGX will fall. Value of DGX is directly pegged to price of gold (XAUUSD).

The diagram below shows the price of gold on a daily time frame. If you have read the previous Ichimoku posts, you would have immediately know that Gold is on a STRONG bull run in a single glance. Prices and Chikou Span are above ALL 4 lines of defence soaring high above sky. This might be the start of a long bull-run as Kumo twist happened around late 2018.

In December, Digix released an update that the audit of their DAO smart contract is officially completed. This is a significant development as ChainSecurity has been auditing their smart contracts for a a couple of months. Now that the back-end work has been completed, it means DGD is ready to launch ahead live at full steam. Digix DAO will be launched on the Ethereum mainnet in 2019 and I am expecting that DGX rewards through voting would happen very soon.

if you are vested in DGD, here is a good place to check on the volume and supply of DGX. Data is directly extracted from ethscan. As the demand for gold increases, transaction fees and annual demurrage fees of gold increases and this would ultimately translate to increasing rewards of DGX for DGD holders.

In times of economic crisis which can be anywhere round the corner, people flock into gold. Crypto companies are increasingly using gold to hedge against volatility of crypto market. Gold is a $8 trillion market and demand for gold will always be strong, especially now. If you are interested in adding gold into your portfolio but not sure how, getting DGX is a good way to invest in gold. You can buy 5 grams of gold and one key feature in blockchain is asset ownership. You directly own the gold assets without any middleman intervention.

OMG Tokens

If I have 2 words for this token. It would be “Dark Horse”. Omisego has very ambitious plans, big conglomerate partnerships that are still unannounced, and their team are at the forefront of ethereum scaling solutions, Plasma network. Vitalik is actively involved in Omisego and they are all working on Plasma.

The future of ethereum and blockchain depends very much on whether it is able to scale to hundreds and thousands of transactions per seconds. Ethereum right now is only able to do approximately 15 transactions in a block. This is in stark contrast with Visa which is around 45,000 transactions per second. Omisego is planning to build a back-end solution that allows inter-payment and transaction settlement without a need for any middleman. For this to happen on a large scale, it first must ensure that transactions are able to scale. 10-15 transactions per second is going to cause massive delay, network congestion and this is the bottleneck that the ethereum community is trying to solve. That’s the reason why they are working on plasma, apart from other scaling solutions such as sharding, raiden network, etc.

To be honest, I have little clue on how plasma works. It’s too complicated and technical for me. All i know its a layer 2 solution and a block on the main chain is further splitted into smaller blocks in a child chain. All transactions are would happen on the child-chain and reported back to the main chain. This would thus make it possible to increase the number of transactions exponentially, increase speed of transaction and lower transaction fees.

So what are OMG tokens? OMG tokens are staking tokens. We have heard of proof-of-work where miners have to validate transactions in a block by finding the magic nonce that matches a certain number of zeros in front of the output hash. But this is done through brute-force method, searching every number one after another which is inefficient and energy consuming.

In Proof of stake, there is no mathematical puzzle to solve. Instead of miners, now they become validators and you validate transactions by proving that you own the tokens. The higher your stakes, the higher you chances of being selected to validate the block transactions. Omisego is planning to launch staking pools and you can stake your OMG tokens in return for rewards in whatever cryptocurrencies that is decided on.

OMG is a long-term play and its either go big or go home. Their plan is big and their technical feasibility is challenging. I first bought OMG at around $8-9, then $18, $7 and $4. Now it has dropped to $1.50. OMG is way way undervalued but of course everything is relative and unpredictable in crypto. I loaded another 100 OMG to average down my cost. If I have the capital, i would buy a TON of OMG!

Closing Thoughts

My investment choices are mainly based on staking features. The coins I invested in has rewards or dividends one form or another. So far only NEO and ONT are giving returns through staking. The rest of them are still in the pipeline and some are probably going to happen this year. I am still awaiting for reward payouts from TenX tokens, OMG, ICON and DGD. That’s the reason why i bought the above assets. TenX snapshot stock split, DGD audit smart contract officially completed and OMG is way undervalued. Furthermore, nothing is cheap in stock or REIT but EVERYTHING is cheap in crypto.

By the way, TenX, Omisego and Digix are ALL in Singapore. And the Simpsons photo showed Mr. Burns holding what seems to be a TenX card. Simpsons always make eerie accurate predictions in their shows.

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