Vertcoin Investment Analysis

in #vertcoin6 years ago

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Vertcoin is one of the first altcoins that caught my interest when I began to do research coins other than Bitcoin. There are a handful of reasons for this and I will explain all of them within this article.

Before we get started, please do not take this or anything I say as investment advice. I’m just sharing my thoughts and please do your own research before making any investments.
My Research Criteria

When I’m researching a coin I will look at a handful of different criteria to determine if I’m interested in investing. The criteria I look at is as follows:

Coin Basics: Basic coin information and details
Unique Selling Proposition (USP): What makes this coin unique?
Team: Determine the quantity and quality of the team
Transparency and Communication: Do they keep investors in the loop?
Community: Determine if there is a active community around the coin
Competitor Comparison: How does the coin compare to its competitors?
Investment Potential: How big could this coin be in the future?

This analysis will take a look at each one of the above aspects and see how Vertcoin does. Let’s get started!
Coin Basics

Created January 2014
84 million coins
$17.1 million market cap
Proof of Work
ASIC resistant
Segwit Activated

What Makes this Coin Unique?

There are a lot of coins to choose from in the crypto sea so one of the most important things I look for are features that make the coin unique. If a coin doesn’t have anything to separate itself from the competition I’m not interested in investing (usually).

What unique features does Vertcoin have? Let’s dig in.

Lightning Network Partnership with Litecoin

This is one of the biggest reasons why I’m bullish on Vertcoin. In Litecoin’s roadmap it is explicitly states that they are going to be working on cross chain atomic swaps with Vertcoin.

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This means that as soon as the lightning network is implemented on Litecoin, Vertcoin is going to be the first coin that it’ll be working with. This would mean that anywhere Litecoin is accepted Vertcoin would be able to be used. I expect this to create a lot more use for Vertcoin and overall higher adoption.

With Bitcoin activating Segwit, that means that Bitcoin is also starting to work on implementing Lightning Network as well. I imagine that Bitcoin, Litecoin and Vertcoin will all benefit the most from this.

I’d expect Vertcoin’s price to rise every time more news gets released surrounding the Lightning Network and for this to continue as the release nears.

Bottom line here, the Lightning Network benefits Vertcoin in two major ways:

It will be a major price driver up to the point of being implemented
Once LN is implemented, Vertcoin should become a lot more adopted and widely used

However, it is worth mentioning that full implementation of the Lightning Network is still a ways off. I’m going to quote Vertcoin’s lead dev’s response from Reddit below regarding the Lightning Network:

However, initially, it will require running both a *coin full node and an LN node on your computer. You’d then communicate out of band with your counterparty to agree on a trade (1 VTC for 100 BTC, say) then execute the trade via a command in the LN CLI. You would either have to each have an existing channel in both currencies with funds available on the sender’s side for each half of the pair, or create a new channel to do so. The trade would then execute trustlessly, once you both agree after a prompt from the LN CLI.

Eventually, there will likely be an “exchange” whose job is simply to play matchmaker between traders, unlike current exchanges which provide both matchmaking and trade settlement (which requires custody of your funds). You would announce your trade proposal on said exchange, and it would either match you with another trader automatically or you could get a list of all offers allowing you to choose manually. The trade would then take place, using the same methodology as before.

Even further into the future, once multi-hop LN channels and atomic swaps are implemented, you would no longer need to have existing channels with the trading party. Instead, you would only need an existing channel in each of the currencies in the trading pair with anyone. The LN would route your trade via other channels in the network to its destination.

So at least initially, the LN and atomic swaps won’t help with point of sale much, and will be used via a client (or one hosted in a web portal by a company, like coinbase) to exchange coins in a way similar to the way you already do. The underlying exchange method will just be different. However, eventually hardware and software point of sale applications will be developed that will take advantage of the instant settlement properties of LN. This will allow you to simply use an LN address to pass around “valuein the abstract, irrespective of the coin types involved.

The above quote gives you a good idea of what to expect in terms of what can and cannot be done with the Lightning Network. It is going to take some time before people can use it to its full advantage.

ASIC Resistant

Vertcoin prides itself on being one of the most decentralized coins out there and they accomplish this by being ASIC resistant. This means that mining on their network is fair and people that have custom mining rigs (such as ASICs) don’t have an advantage.

By remaining ASIC resistant, almost anybody can mine Vertcoin and this is one of their major selling points. This attracts a lot of first time miners and is a great place for them to start.

Being as decentralized as possible has a lot of advantages and removes the issues of having a handful of parties controlling the coin (such as Bitcoin).

Fantastic Devs and Community

I will talk more about these two aspects in a minute, but I was very impressed with Vertcoin’s team and the community when I first started researching. Since then I have only become more impressed.

The lead dev is extremely active in Slack and on Reddit and is willing to answer any questions. A lot of devs shy away from interacting with the community so it is awesome to see all of the team members deeply ingrained into the community.

The Vertcoin community is great as well and is one of the main aspects I look for in a coin when investing. A good community that cares about the coin can be the one thing that makes all of the difference.

Final Thoughts on Unique Features

By far the biggest thing that gives Vertcoin a huge advantage is their partnership with Litecoin. Being on the roadmap of a top 10 coin is a huge stamp of approval. I expect this partnership and the Lightning Network to be a HUGE catalyst moving forward and will help drive the price up as more details emerge.

Combine that with a fully decentralized coin, anonymous payments (coming soon) and a great dev team and Vertcoin looks extremely undervalued at $17 million market cap.
The Team

Vertcoin was created way back in the beginning of 2014 so it is much older than the majority of the coins still active today. With the age of the coin comes team changes. A lot of the original team members are no longer with Vertcoin, however, that doesn’t mean a whole lot as long as they had qualified replacements.

The current team is led by James Lovejoy who is currently attending MIT and is an undergraduate researcher with the MIT Digital Currency Initiative (MIT DCI). The MIT DCI is the program that is behind the Lightning Network so James (and Vertcoin) have a huge advantage when it comes to implementing the Lightning Network.

This also gives proof that James knows what he is doing and is fully capable of leading the development of Vertcoin. He is also has a very active Github and you can see he consistently works on Vertcoin, which is a great sign:

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There are currently 6 other members on the Vertcoin team who all help in various aspects of growing Vertcoin. However, the majority of them are developers but a few of them are also very active in the community and help on the marketing side of things.

One thing I want to mention is that all of the team members are volunteers. None of them are paid to work on Vertcoin and Vertcoin is entirely ran off of donations. With this in mind, it’s obvious that the current team members want to work on Vertcoin because they love the coin and want to see it grow. However, not having any financial incentives is probably why a lot of the past team members have moved onto other projects where they can be paid for their work.

A possible issue that might arise in the future due to all of the developers being volunteers is that James (lead dev) might have to leave Vertcoin and find a paid gig once he graduates from MIT. This is something I am keeping my eye on.

Final Thoughts Regarding the Team

I’m very confident in the current team’s ability to continue to innovate Vertcoin and keep it up in terms of the tech. They have a very, very solid lead dev who is active in the Lightning Network community and will always have in the inside track, which is great for Vertcoin.

My biggest concern is that all of the team members are volunteers. I would love to see a way for them to be paid for their work in a way other than donations. Not sure how this would happen, but I think it is something they should think about.
Transparency and Communication

These are two things that are super important to me as an investor because I want to be kept in the loop with what is going on. This is also one area where a LOT of coins could improve on and it would go a long way in helping them grow a community.

With that being said, Vertcoin does a really good job of both of these. Let’s dig into a few of the main reasons why.

Bi-monthly Development Updates

Two times a month Vertcoin releases a dev update and shares with us what they are currently working on. I love coins that give consistent updates and it shows that they are consistently making progress.

Public Roadmap

Vertcoin’s roadmap does a greta job of letting people know what is being worked on, what’s coming up next and what to expect in the future.

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They have a solid track record when it comes to completing items on the roadmap as well.

Their roadmap is hosted on Trello and they do a great job of updating the roadmap as they accomplish projects. A lot of coins have a static roadmap that never gets updated and it can be confusing what they have and have not completed so far. This is not a problem with Vertcoin.

Transparent Fund Usage

As mentioned above, Vertcoin runs solely on donations to the Development Fund. VTC is 100% transparent about how they use these funds and keeps everyone in the loop.

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Each month they give an update on their fund usage along with how much in donations they received. You can donate to their fund by sending Vertcoin to this address: VpBsRnN749jYHE9hT8dZreznHfmFMdE1yG

Team Members are Active on All Platforms

The team members, including the lead dev, are active on all platforms such as Reddit and Slack and are willing to answer any questions people have. They don’t shy away from hard questions and are truthful in their answers.

Final Thoughts About Transparency and Communication

Vertcoin does a fantastic job being transparent and communicating with their community. They make new people feel welcomed in their slack channel and a do a great job of fostering a loyal and dedicated following.
The Community

Without an active and growing community a coin is practically worthless. The good news for Vertcoin is that they have both and active AND growing community. Let’s take a closer look at their community.

Social Media Stats

Twitter Followers: 29k
Reddit Subscribers: 5,915
Slack Members: 1,788
Bitcoin Talk Announcement Pages: 29 (old thread had 129 pages)

Social media stats don’t mean a whole lot, but it is worth looking at.

Reddit

Reddit is one of the main ways the community communicates with each other. It’s also one of the first places people visit when they first hear about Vertcoin. For that reason it’s vital that the subreddit is professional and helps a newcomer get acquainted with Vertcoin as quickly as possible. VTC does a solid job of this, plus their team members are always around to answer any questions.

You can also see that the subreddit is starting to pick up some steam and has seen growth over the past few months:

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Slack

Reddit and Slack are the two main places where the community hangs out. At over 1,700+ members, VTC slack channel is always active and a place for a great discussion. People are friendly and welcome new members with open arms.

Bitcoin Talk Thread

There isn’t much activity in their Bitcoin talk thread and is mainly used for announcements. This isn’t a big deal because their activity on Reddit and Slack make up for it.

Final Thoughts on the Community

The Vertcoin community has seen growth over the past few months as more people learn about them via Litecoin’s roadmap. From what I have seen, they have taken advantage of this surge of interested people and are doing a great job of fostering a community.

The people within the VTC community are passionate and really want to see Vercoin succeed. This is what every coin needs to grow to the next level.
Competitor Comparison

The best way to compare competitors is to categorize coins by their features. The main features that Vertcoin have are:

Segwit Activated (Lightning Network)
ASIC Resistant
Stealth Addresses

Let’s take a look at some competitors that fall into the categories above.

Viacoin ($20 mil market cap) has recently activated Segwit and is also working on the Lightning Network. Their roadmap also says they are working on implementing anon payments, which Vertcoin is as well with their stealth addresses. The main difference between Viacoin and Vertcoin is that they are not ASIC resistant. This is where VTC has the advantage.

Groestlcoin ($7.5 mil market cap) was the first coin to activate Segwit and is testing Lightning Network too. They are currently also ASIC resistant because their mining algo, Grostl, does not currently have an ASIC that exists for it. There isn’t any mention of anon transactions being implemented so Vertcoin has a slight edge there. However, at a market cap around $7 million I really like Groestlcoin as an investment. They have a solid dev team and have a lot of the same ideals as Vertcoin.

Monacoin ($21 mill market cap) is also very similar to Vertcoin in that it uses the exact same algorithm (Lyra2REv2) which makes the coin ASIC resistant. Monacoin was also one of the first coins to activate Segwit and are actively working on the Lightning Network.

Final Thoughts on the Competitors

The biggest advantage that Vertcoin has over all three of these coins is that they have a partnership with Litecoin to test atomic swaps. This makes all of the difference in the world. This means Vertcoin is in the best place to take advantage of the Lightning Network (on both Litecoin and Bitcoin!).
Investment Potential

As of writing this, Vertcoin is currently sitting at a $17 million market cap. I think Vertcoin can easily get to a $30 million market cap in the short term as more details get revealed surrounding the Lightning Network. However, long term I think Vertcoin has even more potential.

They are one of the most decentralized coins out there due to remaining ASIC resistant and I think this will become more attractive as time goes on. The issues we are seeing with Bitcoin and Bitcoin Cash are a good example of why being fully decentralized is a good thing. Couple that with the Lightning Network and anonymous payments and you have a perfect coin for everyday use.

Vertcoin is in the perfect position to become the coin that is used on a daily basis by regular people in the future. If they can achieve this (or even come close), the sky is the limit for this coin.

I see both short and long term potential with Vertcoin and for that reason it is one of my core holdings in my portfolio.
Conclusion

Vertcoin is one of my favorite coins right now and is one coin that I think has the biggest upside potential. I like Vertcoin as an investment both in the short term and the long term.

With Bitcoin activating Segwit, I’d expect Lightning Network development details and updates to start coming frequently and this should have a positive impact on Vertcoin’s price.

Overall, Vertcoin is a fantastic coin that I’m a huge fan of. I’m excited to see what the future holds. I’m expecting great things!

Thanks everyone for reading my investment analysis and I will be back with another one soon. I’m mainly going to be doing write ups on the coins that I feel are good investments, but if you want to see a particular coin I’d love to hear your suggestions.