The Noteworthy ICO Series
This purpose of this series is to showcase new Blockchain projects. Only projects that display a unique model, business proposition or value will be presented throughout the series.
Blockchain Technology can significantly improve many aspects of our lives, but most importantly, it is a way of achieving a more decentralized form of governance. As Melanie Swan says in one of her books: "Transnational organizations need transnational governance structures. "
As such, the Blockchain Technology represents the first step in achieving decentralized structures and organisations.
TrueFlip, the blockchain Lottery
TrueFlip's purpose is creating a new type of lottery. At this moment, most lotteries are entirely centralized or owned by governments, while TrueFlip uses blockchain in order to achieve the decentralization of the platform.
TrueFlip makes use of the blockchain to provide users with anonymity and financial transparency, among others.
Our goal is to become the most popular and transparent blockchain lottery with the largest Jackpot in the world.
The 12 Tenets
Warren Buffet has 12 Business Tenets to analyze the instrinsic value of company in order to decide wheter buying stock in that business is a good decision or not. Today we will apply those Tenets on TrueFlip.
Business Tenets
1. Is the Business simple and understandable?
TrueFlip is taking a validated business model and applying blockchain technology to it. The end result is a product we are already familiar with, built on a different architecture, thus becoming simple to understand
2. Does the business have a consistent operating history?
Since this series is about ICO's, it seems obvious that to some extent, a consistent operating history is highly improbable. What we do know though, is that TrueFlip has already had a silent pre-ICO where they raised the money necessary to start developing the project and are halfway through, with a working product and initial traction.
3. Does the business have favorable long-term prospect?
There have been attempts at building casinos on blockchain technology before, but they all failed. So what makes TrueFlip different? The foremost important thing to be kept in mind when deciding if TrueFlip has long term prospects, is the fact that every coin holder is entitled to a share of all the TrueFlip Ticket sales, effectively being a part of the business. A raise in sales prompts a higher profit share and thus strengthens the coins value.
Management Tenets
4. Is the Management rational in business decisions? (i.e: how to allocate earnings)
Depending on the raised amount of funds, the TrueFlip Team has decided to allocate different percentages to their budget. What we can easily notice though is that regardless of the raised amount, a significant amount will be spent on the Jackpot and on Development. This shows that TrueFlip understands and values both the users and the product.
5. Is Management candid with its shareholders?
The TrueFlip team realizes itself that is not yet a fully decentralized structure and admits this while also having outlined a Roadmap to overcome this and become as decentralized as possible. What I appreciated most was the responsiveness of the Team, they have created a Telegram channel where investors can discuss directly with the Management, and not only are they helpful and eager to answer questions, they are also open to suggestions.
6. Does management resist the institutional imperative?
There have been some other attempts at building similar services before TrueFlip, such as Lotto Shares or the Kibo Platform. The first one has already closed its gates, and the later one, although following a successful ICO in October, seem to have disappointed their investors after pocketing more than 70% of the funds raised.
It seems though that TrueFlip doesn't want to follow the herd, and has it's own way of doing things. They have chosen to take important decisions by peer vote, share profits with token holders and also reward early adopters with a secret lottery. But wether TrueFlip will resist the institutional imperative or not in the long-term is something that we'll have to find out, but the company culture seems to already have well defined lines.
Financial Tenets
7.What is the return on equity?
We know that the price of 1 TFL is exactly 0.0005 BTC in the ICO. Let's assume an investment of 1 BTC, that would equal a purchase of 2000 Tokens. Now, using the profit calculator from Trueflips Website we get the following formula:
Depending on Ticket Sales, the yearly profit for a number of 1000 Tokens varies between 0.05 BTC and 0.34 BTC per year. That means that for 2000 Tokens, it varies between 0.10 BTC and 0.68 BTC per year.
With an investment of 1 BTC and good financial results, one can effectively regain his investment and a 40% profit margin in a 2 year period, such bringing the Price/Earnings Rate to a good number.
If the business is not as successful though, we would be only regaining a minimum 20% on investment in a 2 year profit with the possibility of selling the Tokens afterwards at a higher reevaluation price as compared to ICO.
8. What are the company's owner earnings?
Warren Buffet believes that when the owner hold a significant stake in the business, he becomes to motivated to keep working towards the end goal that was initially set, because he stands to profit just as much as an investor would. In TrueFlip's case, the share reserved for the team is 20% of the TFL Tokens, while 10% go to Escrow, Advisors and Bounties and 70% are on sale. Compared to Ethereum for example, the share is undoubtedly smaller, but it still represents a large enough stake to keep the team focused on the end-goal.
9. What are the profit margins?
Momentarily, the actual profit margins can not be calculated since the Tokens have not been launched. But the estimated profit margin of TrueFlip should be approximately 20-30% in the beginning, with the possibility of growing from there.
10. Has the company created at least one dollar of market value for every dollar retained?
TrueFlip has proven to not only set up a system to pay dividends to investors, but also offered guidelines on how the rest of the earnings will be used to consolidate the business in a way that would produce added value to the business and automatically to the investors, thus creating market value. Whether TrueFlip will create exactly one dollar of market dollar for every dollar retained is something we will find out after TFL hits the exchanges
Value Tenets
11. What is the value of the company?
With an estimated value of 1.25$/TFL (0.0005 BTC/TFL at 2500$/BTC), and a total supply of 21,000,000, this would bring the current market cap valuation to 26.250.000$
12. Can it be purchased at a significant discount to its value?
That depends on the number of tickets sold per month and the price of a ticket, currently the price of a ticket is 0.001 BTC and TrueFlip sells more than 1200 Tickets a Day(36.000 Month), which means that TrueFlip is generating almost 100.000$ in monthly revenue without having even launched it's ICO. With the raised funds TrueFlip could start developing a more enlarging marketing campaign and speed up the development. If TrueFlip achieves even 15.000 Ticket Sales a day it would bring the monthly revenue to 1.170.000$, and TrueFlip would then be generating a yearly revenue equal to half its current market cap.
Now if we were to calculate the Market Cap vs Revenue it would be equal to approximately 3/2, at the minimum estimation offered by TrueFlip, giving the stock a ratio of 1,33. Assuming the highest estimation, of 100.000 Token Sales a day, the Market Cap vs Revenue is approximately 26/93, giving it a ratio of 0,27.
Taking a median value of the two, we got to a Market Cap vs Revenue of 0,8 which suggests that the stock can be bought at preferential price assuming a low to medium growth.
Conclusion
TrueFlip might succeed where others have failed, but we will have to find that out, the ICO starts in 2 days.
You can find out more by visiting the Token Sale Website here or by visiting the Bitcointalk ANN here.
In a horse race, you either bet on the horse or the jockey. While the horse in this scenario looks pretty good, after having had the opportunity to talk with some members of the team, this time I'll be betting on the jockey.