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Hi this is Roger Bryan, co founder of the Digital Currency Index and today we are doing an analyst review of NEO Coin or Antshares. NEO Coin is considered to be the Ethereum of China, which brings with it some problems from a regulatory perspective that the entire industry has been dealing with for the past month or so. You’re going to see a couple of times that they’re going to get dinged because of the fact that they’re based in China, but overall we’re going to have some great information for you about whether NEO is a good investment for you from a long term perspective so let’s jump right in.
NEO is part of the Digital Currency Index. So you’re going to see that we have that as part of our holdings inside of our fund. It was first launched back in 2014. They did a pre ICO in 2015 to early investors. Then they did their public ICO in 2016, which is where most people started hearing about it. Of course at that time, it was Antshares and then they rebranded earlier this year into NEO.
If you’re familiar with the way we do our analyst rating, there’s 27 points of data that we capture on each project. 17 of them are used to rank it qualitatively and quantitatively in order to give and analyst ranking and to give you a buy, hold or sell signal. For age of coin, they’re going to get a 5 out of 5 because they are a couple of years old.
Looking at their website … Now when we rank their website, we’re looking at what type of information it provides, not whether it looks good. They do provide great information on their website of their timeline, their project scope, the technical elements, everything that you need to make a decision on whether or not you should invest in this currency. Of course every currency you invest in, you should be doing your due diligence, looking at their website, their white paper, looking for sentiment analysis, seeing what people are talking about so that you can make your own smart decisions. So we’re going to give them a perfect score, 2 out of 2 on their website.
Now when we get into their White Paper our quant when reviewing their White Paper did ding them a little bit because it’s more of a product side, White Paper with API documentation unless of a project White Paper to give us clear transparency on exactly what they’re doing and where they’re going. I think that’s because there’s an assumption that they’re a core Blockchain Technology that we know that, but for new investors, someone new to the Cryptocurrency or Blockchain space, they might not get a full understanding of how the NEO project is going to move forward just based on their White Paper. We gave them a 7 out of 10 on that.
Now when we jump into their community, their primaries channel is on slack. They’ve got a strong following, they’ve got a very active community. They’ve got a very well managed community. So they’re going to score perfect on both the number of people in their community and the activity of their community, which is great.
Looking at their team, they have an amazing team. It’s very robust, they’ve got great credentials, they’re covering all the different elements that are needed in order for their project to be successful. We’re going to give them a 6 out of 6.
Now when we look at the number of changes that are listed on, we’ve been working on this metric to make sure that it’s the best possible score. We now have 10 primary exchanges that we look at. If a coin is listed on at least five of them, they’re going to score perfect. NEO is on five of the top ten exchanges that we monitor, so they’re going to get a 5 out of 5 there.
They are one of the top ten market cap coins, which is going to give them a perfect score of 5 out of 5.
Percent held by founders … This is one of the things where they’re actually going to get dinged a little bit because they have issued 100 million coins but only 50 million of those are actually circulating. If you look, they have documented what they’re going to do with the other 50 million, but as those come out, that could depress the overall value from a liquidation standpoint so they are going to get dinged a little bit on that. We’re going to give them a 1 out of 5.
Is it associated with illegal activity? There are certain coins that are less Blockchain oriented and more currency exchange oriented that are more associated with illegal activity. Illegal activity is not the same thing as regulatory risk so we’re going to score them a perfect 5 out of 5 because there’s no known information about it being used for illegal activity.
Now we’re going to get into a couple of things where they do get dinged. We’re looking at potential impact from regulation. It’s hard. They’re a Chinese based project and there’s a lot going on in China. When the Chinese regulators decided to ban ICOs and then started to close down the exchanges, it looked like NEO could implode. You saw a huge price drop in it, bigger than most coins through that regulatory dip that we saw last month. But they’re still around and their prices rebounded to a pretty strong level. That doesn’t mean that the regulatory risk is gone. It just means that investors see it as potentially surviving this and then once the regulators in China set the proper strategy for everyone going forward, NEO could actually flourish. That makes it kind of a risk, but they have survived this first round. So we do have to give them a 1 out of 5 on this just because we have no idea where the Chinese government is going to go. No one really knows that.
Available supply to total supply … They get a 5 out of 10. This is purely based on the percentage of coins that are available relative to the percentage of coins that were created. It’s a straight number. It’s five out of 10.
Whole value prop. There aren’t a lot of coins that score well in this category but NEO does. By buying and holding NEO, you are awarded gas. This could be considered a long term investment style dividend that actually grows as a value prop on its own, so they’re going to score a 5 out of 5.
Underlying asset association, they do own their own Blockchain and the NEO coin is used as an access point to that. So we’re going to score them a 4 out of 5 on that.
From a competition perspective, they are in a very crowded space. They’re competing Ethereum. They’re competing with Ripple. Their value prop on this and why we scored them so high is because there is a lot of pure to pure trading. They have a unique consensus algorithm and they’re really looking to be a leader in this space and with proper regulatory changes in China, they could definitely be a leader in the Chinese market, which is going to be considered to be one of the biggest for Blockchain Technology because of their adoption rate. So they’re going to score a 10 out of 10.
Their sentiment score is kind of low. It’s a 3 out of 10. A lot of that is being dragged down by Chinese regulation. There’s not really much more that we can say about that. It’s hard that a coin has to deal with negative sentiment to an overall market regulatory environment, but they do and they’re kind of at the forefront of that in China. Until the Chinese government sets a base for regulation exchanges and tokenize currency based offers, they’re going to score a little bit low on sentiment just because people are nervous. You’ve also seen major price spikes and dips from this coin based on a lot of that. But they scored 3 out of 10.
The problem with trying to solve, they’re definitely a leader in the smart economy. They’re going to score 5 out of 5.
Overall our analyst scored this as a 76 out of 100 which based on our recent change to our overall ratings is going to put them into a buy rating.
The things to watch for in NEO is … Today’s date is October 10th. The reason I say this date is because these analyst reviews are only good for about a month maybe a quarter and then they need to be redone because of the way the overall market is changing. You have regulation in China that’s going to play a big role in this. You’ve got different conferences that come up. Last year when NEO’s conference went up, they had a huge spike. Also right now, we’re dealing with the Bitcoin gold fork, which is really driving down the value of all coins while driving up the value of Bitcoin. Bitcoin is back above 50% of overall market cap as people try to buy in in order to get the coin that’s going to split.
There might be an excellent opportunity to buy into NEO now while it’s a little depressed. You’re really gambling on that investment based on what the regulators are going to do. But it could pay off. If regulation comes in NEO’s favor and maybe come the certified coin, in China you’re going to see a huge spike. If you think it’s comparable to Ethereum, you know the price of Ethereum is at $300. The price of NEO is at 30. They’re kind of serving similar products or similar spaces in the smart economy.
Our analyst rating is a buy. We would recommend you buying the NEO coin. NEO is not a security so there’s no security regulation involved with our analyst rating. Again, do your own research. Check out our overall analyst review, make your own decision on what you should do. I’m Roger from Digital Currency Index. There’s a link below to learn more about our index and we look forward to doing the next review with you. Thank you.