Cryptocurrencies find themselves in this weird limbo between a currency and a stock. They tend to be neither one or the other and yet retain characteristics that represent elements of both. Many speculative investors have been attracted by the volatile momentum that has sent profits surging for early investors. As the large number of available currencies continues to expand, the race remains to find the next big thing.
I’m not here to tell you that Quantum is that next big thing, but I do believe that it currently serves as one of the most undervalued cryptocurrencies to date based on its future potential. Quantum (QAU) has started off with a very limited amount of exposure, and its ICO closed to little fanfare. It closed its ICO on May 15, 2017 to raise $4.12 million in bitcoin through 486 investors. http://www.newsbtc.com/2017/05/16/ethereum-project-quantum-closes-ico-4-12m-funding/
A look at the website would seem far from impressive, but it is the simplicity of the whitepaper’s concept which should stand out. Speculative investors must understand the underlying premise that Quantum is basing itself on. The project aims to do the following:
- Raise capital by slowly introducing QAU (total supply is capped).
- Use raised funds in other currencies to provide pool liquidity to the exchanges.
- Use the profits to buyback and destroy QAU.
The first and third steps are essentially self explanatory. Ultimately, the currency will be using raised capital in other cryptocurrencies to generate profits to further reduce the supply of its own currency. As added fiat currency continues to accrue value in QAU and as the total supply of QAU continues to decline, the value of QAU itself should continue to appreciate as the currency continues on its path as a true deflationary currency. Now typically, deflation might be seen as being “bad” for most currencies that have economies revolving around them. Yet for QAU, achieving deflation is exactly what is intended – to provide an investment vehicle that benefits both the currency investor and supports the underlying mission of the exchanges in the crypto markets. QAU serves as a stepping stone in providing stability to the crypto markets.
Now how this stability is achieved is based on the second point stated above. It is this point that is less understood by investors. Institutional grade liquidity essentially allow for value to be parked thereby reducing the fluctuations found in movement. What the Quantum Project intends to do is to use its raised funds to participate in what are essentially risk-neutral arbitrage opportunities in order to generate profits.
The markets operate by buyers and sellers. But what is often just as important are those who buy on margin and short-sell as well. It is the latter that provide counterweight trading to the former. Just as is the case in the stock market, margin and short-selling in the crypto markets is expanding as a way of providing leveraged opportunities for traders to place their bets. How the Quantum Project remains involved in this is through their ability to lend out their raised capital in exchange for interest. For example, if a trader wants to borrow bitcoin in order to short it, the trader would take that bitcoin from the pool and return it at a later date while also paying interest for using it. For the pool, the risk remains limited and income is generated.
There are many novel ideas out there that remain for the crytpo market, but there is a vast difference between an innovative concept that can succeed using a stable currency and a currency that is modeled to generate a return for the investor. Most currencies will ultimately not appreciate heavily because doing so will fundamentally begin to degrade the underlying platform it was designed for. As for QAU, because it was designed as a deflationary currency, it’s success is built on the design of rewarding investors in the token in order to further provide stability for the crypto markets as a whole. I end with the currency’s first destruction event, shown below. Cheers, for more to come…. every month.