Hi everyone
TenX is a payment company, offering debit card and mobile wallet funded by cryptocurrency. Partnering with VISA and Mastercard, TenX wallets can be used in almost 200 countries at over 36 million points of acceptance today.
The credit card companies charge the merchants 2% of the transaction amount, similar to other types of credit cards. TenX generates revenue by having a revenue share agreement with its credit card partners.
TenX cards are open for application on June 20, 2017 - I will be ordering one myself!
The company was founded in mid-2015. The idea of TenX won the DBS Blockchain Hackathan and the TenX team was rewarded 15,000 SGD.
As at May 2017, the company completed the following:
Completed a $1 million seed round in March 2017
Selected to join the Paypal incubator program in Singapore
Has a working product that has been live since early 2017
1,000 users in Singapore, transacted over $100,000 during the beta test in over 50 countries
Basically, the more transaction volume TenX processes, the more valuable PAY is. The value of this token is driven from transaction volume, not from the increased usage of the token.
Token holders will receive 0.5% of the whole payment volume that is spent through the TenX debit card. The payments to the token holders will be paid in Ether.
Unlike other ICOs where the value of the token is difficult to gauge, it is more straightforward to calculate the valuation of PAY because of how the value is driven.
The value of PAY is a function of (1) the number of TenX debit card users, and (2) average spend per user.
Assuming a valuation of 30x price to earnings (P/E) ratio, which is on the aggressive side but possible because this industry is growing rapidly, the transaction volume for TenX debit card needs to be US$940 million per annum to justify the ICO valuation.
As a reference, Visa cards processed US$8.2 trillion and Mastercard processed US$4.8 trillion in 2016. TenX probably won’t be able to achieve a volume of $940 million per year unless there is a wide adoption of cryptocurrency.
Therefore, the success of this ICO hinges on whether cryptocurrency can become a common currency used for daily spending. If it can, then with TenX’s first mover advantage, it can probably do very well.
Conclusion
Overall, I am neutral about this ICO. I like the problem that they are trying to solve and that TenX has a working product and a detailed roadmap, but the valuation is on the rich side and there are already a few competitors in this space.
My thoughts on buying the tokens for flipping and investing for the long term are as follows:
For flipping
Not good because they are raising a lot of money - $71 million at current ETH price, which brings the market cap to $141 million. Only 10 tokens are worth more than PAY’s ICO valuation.
For long-term holding
I like PAY for long-term investment. Let’s assume that (1) the cryptocurrency card transaction will eventually reach 1% of the combined transaction volume of Visa and MasterCard, and (2) TenX has a 33% market share in the industry, PAY holders will receive $215 million per year.
Of course this may not happen at all, and if it will, it is going to take many years for this to happen.
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