AnalysisNews

The Best Low-Risk / Big Upside Cryptocurrency Play of Early 2018

In 2018, smart investors looking for the best quality crypto-stocks will look for companies that have exposure to cryptocurrencies but are not simply holding tanks for Bitcoin, Ethereum, Dash, etc.

The problem with a LOT of Blockchain deals is—you are not really investing in cryptocurrency, which is where the action is. You have no upside to the rising cryptocurrency prices. And I do believe these cryptocurrencies are going a lot higher in 2018.

Instead, you are often investing in a group of developers or executives who have a plan to invest in some of sort of blockchain-y and/or mining technology that they THEMSELVES haven’t quite figured out yet.

Chance of revenue in the next two quarters? Close to zero. Net Asset Value? Again, close to zero.

As an investor you want exposure to cryptocurrency right now, especially in this pull-back.

I have taken a position in Neptune Dash Technologies Corp. (TSXV-DASH) via investor financing. It started trading TODAY, as in a few minutes ago. It has the potential to be as or more lucrative than the cryptocurrency mining plays coming into the market but with ALMOST NO operational risk.

Even better, it’s not just me that likes this company. The major investment firm Fidelity likes Neptune so much they bought more than 10% of the company, according to SEDAR (document listing January 16th).

Neptune Dash has great leverage to the currency DASH, but NOT as a miner. That makes it much different. It is in the business of building DASH Masternodes.

Let me explain what that is:

DASH is a digital coin/currency much like Bitcoin and Ethereum. Its market cap is about $7 billion US ($9 billion CAD). Like many other cryptocurrencies, it has gone up astronomically over the last year:

The blue line is the price of DASH in US dollars. It’s now worth about $830 US or more than $1000 CAD

The orange line is the price of DASH compared to Bitcoin. In last 3 months DASH had a huge bull run just like Bitcoin.

The green line is market cap, which is more than $9 billion CAD.

Note the bar charts in the lower right hand corner. That’s the number of daily transactions. It has skyrocketed in the last two months—showing great market adoption.

If Bitcoin is the choice for investors and Ethereum is the choice for developers to build applications, then Dash is the choice for people who actually want to use digital currency for transactions aka Digital Cash – DASH.

So What Does DASH do Better Than Bitcoin?

Dash was designed from the ground-up to ensure fast transactions time, meaning you can send Dash anywhere in the world in thirty seconds or less using the Instasend feature of a DASH Masternode. You have to pay an extra transaction fee but the fees are MUCH lower than Bitcoin fees.

There’s an inherent structural advantage with DASH over Bitcoin with regard to transaction speed. With Bitcoin, a new block is propagated every ten minutes.

With DASH, it’s 2.5 minutes so even if you don’t want to use the Instasend feature of a DASH Masternode, it’s much quicker than Bitcoin (transaction will take less than 15 minutes).

In the cryptocurrency world, transaction speed is becoming crucial to conducting crypto-arbitrage and the use of DASH is skyrocketing as more and more transfers are occurring between exchanges.

You can read my post “Buying Low and Selling High with DASH” if you want to know more about crypto-arbitrage.

DASH was launched on January 18, 2014 under the name of Xcoin and then Darkcoin so it’s been around for almost 4 years. It’s creator, Evan Duffield, designed DASH keeping in mind to avoid the flaws that were already apparent in Bitcoin.

First and foremost, DASH is self-funded. A portion of each block—currently 10%–is allocated to the Network Development and Promotion Budget. This means Dash developers and promoters receive payments for their contributions. This is so important to the long-term future of DASH.

Contrast this with Bitcoin where contributions are voluntary and unincentivized.

To be frank, the Bitcoin governance system has turned into a gong show, with hard forks (i.e. splitting of the code base) every three months when the miners and the Bitcoin Core development team can’t agree on necessary changes to optimize the system.

Finally, DASH has gained wide market acceptance. There are at least 123 crypto-exchanges around the world that accept DASH. Among the major exchanges, only Coinbase does not have a DASH listing.

Now I would tell you that this is one of the major reasons to get exposure to DASH now. I think it’s possible that DASH could be added to Coinbase in first quarter 2018. And when it does, history says the value of DASH (and therefore the stock DASH-TSXV) will have a pleasant jump.

I expect DASH will be a big winner in 2018, first because of it’s transaction speed and ability to scale, and secondly, because its development team actually get paid and there is a governance model which is highly functional.

The cryptocurrency world faces HUGE scaling issues in 2018 and the digital platforms of these crypto-coins will have to adapt and upgrade and that’s why DASH is the coin of choice for the tech crowd.

What is A Masternode and Why is Neptune Buying Them Up?

In the Dash ecosystem, there are two kinds of servers that secure the blockchain: nodes and Masternodes. Nodes do the mining that create new coins on the Dash network, and Masternodes perform specialized transactions like instasend and private send.

These are servers that are authorized to send and receive Dash. They work independently of the miners and their sole purpose is to facilitate transactions.

Masternodes are also responsible for the governance of the DASH ecosystem, an individual (or company) gets voting rights upon purchase of a Masternode.

You can obtain a Masternode by installing Masternode software on a server and showing proof of ownership of 1000 DASH.

Cost of a Masternode? The price of DASH today is about $1000 CAD so it’s one million plus the cost of buying (or renting) a server that runs the Masternode software.

To value a company that invests in Masternodes, it’s really quite simple. Take the number of Masternodes, times that by a thousand, and you have the VERY LIQUID assets of the company right there in front of you.

This is a very unique value proposition. Neptune has assets that very quickly (almost instantaneously) can be converted into cash. A Masternode can be de-installed and 1000 DASH can be sold on the open market in less than one business day.

Why is Fidelity a Major Shareholder?

It bears repeating over and over that Neptune Dash (DASH-TSXV) is quickly deploying its IPO equity raise. As soon as the company gets any infusion of cash, it buys DASH though it’s wholesale brokers, within 30 days.

There is no DEAD MONEY.

You see there are lot of crypto-plays out there that have raised a lot of money and the money is just sitting in the company’s bank account because:

1.     The management team doesn’t know what to do with all the money they raised.
2.     They can’t spend it fast enough on development salaries.
3.     They have ordered equipment and waiting for it to ship.
4.     They are waiting for permitting.
5.     Etc.

With Neptune Dash, they can raise money and within 30 days, it’s all deployed. Nobody can beat that.

So why don’t big investors like Fidelity buy DASH on the open market? They can’t.

As I wrote in my newsletter just before Christmas, you just can’t run out and buy $10 million of DASH. You need to have the connections and the relationships with the crypto-exchanges to buy large amount of DASH (or any other cryptocurrency).

Think of it this way. – Nasdaq is a broker/dealer market, and the NYSE is an auction market. Buying retail cryptocurrencies is like the NYSE but buying big blocks is like being listed on NASDAQ – you better know the market makers.

And what if you are a large institution that can’t buy crypto-currency directly because of regulatory constraints? But you can buy stocks on the TSX Venture exchange.

Neptune Dash is the answer for Fidelity.

Capital Structure 

There will be 38,793,329 initial listing and another 41,400,000 upon conversion of debt. That makes for 80,193,329 total shares out upon listing

 

With regard to warrants, there are only broker warrants, 3,239,360 @ $0.50 Mid-Jan, 2019 and 800,000 @ $0.20 Nov 10, 2019. Nice clean structure!

All shares are free-trading upon listing (today) so the stock should be less volatile then some other cryptocurrency listings we have seen in the last few months.

I expect this stock to trade between $1.00 and $2.00 out of the gate. I know I have consistently under-estimated first day performance of these stock but again, it’s all free-trading so we should find the true market price relatively quickly.

Remember that Fidelity owns 8,770,000 shares and I don’t think they will be selling anytime soon. There are large institutional investors here, very little retail.

But Wait—I Didn’t Mention the Dividend

The DASH ecosystem rewards the owners of Masternodes as well as the miners with new mined DASH. Forty-five percent of new DASH goes to the miners, 45 percent goes to the owners of DASH Masternodes and ten percent goes to the DASH governing body.

To figure out the DASH payout per Masternode on a daily basis, we need to know:

Dollar value of DASH (plus transactions fees) mined per day divided by number of master nodes times forty-five percent.

As of yesterday there were 4522 active Masternodes.

The total value of DASH mining fees + transactions fees produced over the last 24 hours was $1.61 million USD.

 

Therefore daily revenue for a Masternode is ($1.61 million/4522*45%)= $160 USD ($200 CAD).

But REMEMBER the payout is heavily dependent on the price of DASH and the number of Masternodes (as well as mining difficulty).

Will daily revenue from Masternodes be higher or lower in 2018 than in 2017? I really couldn’t tell you. But as Neptune Dash acquires more and more Masternodes, the revenue should begin to snowball.

Therefore, if you want to take a reasonably large position in DASH, it make absolutely no sense just to buy DASH on the open market.

If you buy Neptune Dash you get:

1.     Exposure to DASH
2.     A management team that will handle the operational details of buying DASH and securing DASH and dealing with other administrative and taxation issues.
3.     Masternode payouts that will easily cover the management salaries and more. You get the management team for free.

Who is Behind Neptune?

Cale Moodie, CPA CA is the President, CEO, Director of Neptune Dash. He has a decade of experience in raising funds for TSX companies, including the sale of Underworld Resources (as CFO) to Kinross Gold for $140M in 2010. Moodie’s LinkedIn profile is here.

Kalle Radage is COO. Radage most recently served as the President of Payfirma, a leading North American financial technology company which has raised more than $26M private equity.
Radage’s LinkedIn profile is here.

Troy Wong, CPA CA is the CFO & director. Wong is a digital currency trader and blockchain startup consultant.
Wong’s LinkedIn profile is here.

Neptune Dash also has Guy Halford-Thompson, co-founder of BTL group, and Jackson Warren, ex-COO of BTL Group, on the board. (BTL-TSXv has gone from 90 cents to $19 this year).

 

Lastly, Dario Meli, co-founder of Hootsuite, is also a member of the advisory team for Neptune Dash.

Conclusion

Let’s face it, it’s a hot market out there. All these blockchain deals have huge upside because too much money is chasing too few deals.

But I am assuming you have read this far into the report because at the back of your mind, you are an investor who is worried about what could wrong.

Here is what could go wrong with Neptune Group: The price of DASH could go down.
But that’s it, there are no other risks that I can see.

Setting up a Masternodes has already been proven by the company, there are no critical pieces of equipment that must be sourced from China and just happen to be in short supply.

Security is key and having two ex Big Four Chartered Accountants as Management gives me exceptional comfort in that department.

There is no dependency on a development team that needs to hide in a dark room for six months to write some code that may or may not work.

It’s a simple, transparent deal with direct exposure to a hot top-ten cryptocurrency (DASH) that still a lot of room to run.

Look it’s pretty simple. You want to buy companies that have DIRECT EXPOSURE to price increase in the leading cryptocurrencies. You want to buy Bitcoin miners that may or may not pan out (or Bitcoin itself) or Ethereum (HIVE) or DASH (Neptune Dash).

What will be the price of DASH a year from now? I don’t know but it only has a market cap of less than $10 billion versus market cap of $90 billion for Ethereum and more than $185 billion for Bitcoin.

I WANT exposure to DASH right now and these guys have it.

Ross

Neptune management has reviewed and sponsored this story.
The information in this newsletter does not constitute an offer to sell or a solicitation of an offer to buy any securities of a corporation or entity, including U.S. Traded Securities or U.S. Quoted Securities, in the United States or to U.S. Persons.  Securities may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and applicable U.S. state securities laws or pursuant to an exemption therefrom.  Any public offering of securities in the United States may only be made by means of a prospectus containing detailed information about the corporation or entity and its management as well as financial statements.  No securities regulatory authority in the United States has either approved or disapproved of the contents of any newsletter.

Ross Pilot is not registered with the United States Securities and Exchange Commission (the “SEC”): as a “broker-dealer” under the Exchange Act, as an “investment adviser” under the Investment Advisers Act of 1940, or in any other capacity.  He is also not registered with any state securities commission or authority as a broker-dealer or investment advisor or in any other capacity.

 

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