Hello Icon! Lets Hyperconnect the World
By: Crypto Quantamental
Tags: Blockchain, Altcoins, Crypto, Bitcoin, Cryptocurrency

Summary

ICON ($ICX) attempts to “hyperconnect” truly independent blockchains with independent governance systems via a decentralized network. I would rate ICON has having the premier decentralized network in the crypto space.

The experienced team behind ICON has strong corporate backing.

ICON, via theloop, has extremely strong partnerships across Korea. Many of these partnerships include building private blockchains operating today.

The roadmap for ICON is robust, promising 2018 to be a milestone year.

Relative price target for ICON is to be between the 5th and the 10th largest market cap coin, which would require a 5x from current price levels (holding the total crypto market cap constant).

The price target is set based upon a crypto leading margin of safety and clear pathway for adoption.

Current Price

ICON (token $ICX) is currently valued at $2.10 with a market cap of over $800 million according to coinmarketcap as of this writing (Sunday). Trading volume is generally between $25-$50 million dollars per 24 hours.

Project

Most people identify cryptocurrency as Bitcoin, or a payment service, fiat replacement, or potential store of value. However, the vast majority of cryptocurrencies are not attempting those goals. ICON attempts to create a worldwide decentralized network by connecting multiple blockchains together through the use of their loopchain technology and the use of smart contracts. ICON is the glue that connects these various blockchains together allowing for seamless transactions between them. The blockchains that can connect to ICON include purely independent third party chains such as Bitcoin or Ethereum, projects built directly onto ICON itself, or ICON created customized private blockchains for institutions such as universities, hospitals, or banks.

The Team

One of the strongest arguments for ICON is the strength of its team and corporate backing. Many blockchain start ups feature enticing projects, interesting partnerships, but still give the feel of “working out of the basement.” One of the biggest fears of a cryptocurrency investor is that the project dies after the original team makes their money. That fear can be immediately put to rest with ICON. ICON features one of the strongest backgrounds in the crypto asset class, although it can be a bit difficult to decipher.

The ICON foundation boasts 52 members to its team. The team is broken up by the foundation council (leadership), blockchain tech, blockchain business, AI, and Design/Communication/Security. The depth and credentials of this team rivals any in the blockchain space. The director of the foundation is Min Kim. However, the team behind ICON is called theloop, which is part of the DAYLI Financial Group. DAYLI, through theloop, has provided private blockchain solutions for multiple years. DAYLI, itself a multi billion dollar venture, has over 50% of its ownership owned by Yello Mobile. Yello Mobile is one of the fastest growing companies in Korea with investment in multiple industries. One such investment, in this case under the DAYLI umbrella, could be relevant to ICON. That investment is the 2nd largest crypto exchange in Korea, Coinone.

Ultimately the competitive edge with ICON is not only the strength of its core team, but the strong corporate backing behind the project. The fear with such strong corporate backing is centralization, but ICON is structured in such a way to maintain decentralization.

Partnerships/Clients

ICON easily has one of the most impressive partnerships/client bases in the crypto asset class. Much of this stems from their work in private blockchains via theloop. This experience in the private sector is critical as nearly all blockchain projects focus on the tech first and foremost. ICON is different as they’ve first focused on the consumer. This has allowed them to build up such strong partnerships across multiple industries. Ultimately these private blockchains should connect to the public ICON network, although technically they do not have to. This is one risk, although ICON and each private blockchain is incentivized to be networked into the public chain. In fact there is little downside for a private chain to not connect into the public network, as the private chain will maintain its own individual governance and maintain its data privacy.

So what does ICON actually do?

First some ICON definitions:

Community is blockchain, or a group of blockchains with a similar governance structure. This could be a private company, a group of universities, or Bitcoin.

C-Node is what connects the Community to the ICON Nexus.

C-Rep is the representative of the Community for ICON as a whole. They are responsible for their Community.

ICON attempts to connect different blockchains via a loopchain based blockchain called Nexus. Nexus allows each Community to have decentralized governance yet remain connected to rest of the ecosystem. What connects each independent blockchain to Nexus is called a Portal, or a C-Node, which is run by a C-Rep (community representative). The resulting is a DPoS, delegated proof of stake. Given Nexus is built via loopchain the consensus is driven by a LFT (Loop Fault Tolerance) algorithm which is an enhanced version of the BZT (Byzantine Fault Tolerance) algorithm. This form of consensus does not allow for forks. If you wish to dive deeper into LFT, I suggest checking this out.

ICON claims they can achieve real time transactions based upon two major features found on the loopchain: SCORE (Smart Contract on Reliance Environment) and BSI (Blockchain Signature Infrastructure). SCORE is a smart contract process that runs directly on the node without the need of a virtual machine. As an example smart contracts on Ethereum utilizes a virtual machine. The key benefit of SCORE is that it does not require data migration after every smart contract update, which results in a faster and more efficient process. BSI is the process of nodes authenticating transactions.

What gives value to the ICX Token (current ERC20) and future ICX Mainnet Coin?

ICX is the gas that connects all the independent blockchains together on the Nexus. In order for one blockchain to interact with another they must utilize ICX. An example would be through the decentralized exchange. If a user on the Bitcoin blockchain wished to easily transact via Ethereum the user could make the coin swap via DEX which would use ICX as a transaction fee. Simply put, as more blockchains and dApps join the Nexus the demand for ICX coins will rise. Value is then created given the circulating supply of ICX is limited, and the inflation (additional ICX into circulation) will be low.

Future Plans and Roadmap

ICON again is unique as much of their roadmap is tied into true functionality within business. They separate potential private blockchain between securities firms, insurance, banks, universities, and hospitals.

Within securities they are focused on clearing, settlement, trading, and ID theft through a consortium of 26 Korean securities firms.

Within the insurance industry they are focusing on an automated claiming service via loopchain.

ICON’s focus within banks is through a pre-paid digital payment system.

Within a series of Korean universities ICON is setting up smart vending machines to allow for payments and transfers.

Their work within hospitals is focused on secure and private information sharing.

ICON also has your standard technological roadmap that includes air drops, token swaps, ICO platform, decentralized exchange, governance improvement, and smart contract improvement.

Now- The ICON wallet, ICONex, was recently launched at the end of February. This is the ICON wallet you can store ICX mainnet coins and other ERC20 tokens. As of now this can be accessed via a Chrome extension on a PC, but will be available on mobile devices (Android & iOS) soon. Within ICONex is a service called ICONick. This is where you can create an easy to remember user name to access your wallet. In the crypto world this relatively simple enhancement is unique, as most wallets require you to enter a phrase or a long combination of letters and digits.

March 2018- The major event taking place here is called a Token Swap. This is where current ICON tokens (ICX as a ERC20 token) can get swapped to ICX Mainnet coins. Owners of the ERC 20 token will have multiple months to make the switch. Currently an airdrop is being conducted, which can be thought of as a bonus for early adopters via the ICO.

April 2018-The ICON ICO platform is going live with 5 planned ICO’s and dApps. The DApps are Stove, Bluewhale, TINK, Silkroad, UPPSALA, and AD4th. ICON has been traveling with some of these teams in March promoting the upcoming launches. Stove is a social platform that produces and distributes digital content, Bluewhale is an ecosystem for the sharing economy, TINK is a social profile application, Sinkroad aims to reform the semiconductor supplychain, UPPSALA is a security intelligence platform, and AD4th is an advertising platform. Ultimately ICOs increase the value of ICX by increasing demand for the coin. The dApps themselves will require ICX, but any chain linked to ICON will need ICX to access these dApps.

April 2018-The ICON Incentives Scoring System (IISS) will be launched. This is an AI based scoring system that will help determine the optimal incentive structure as well as voting rights for C-Reps.

2nd Quarter 2018- ICON will launch a decentralized exchange (DEX) for use on the ICON network. This is a critical component of the ICON ecosystem as participants on other blockchains, such as Bitcoin or Ethereum, must be able to quickly and accurately convert their coins in order to access other blockchains on ICON.

3rd Quarter 2018- The governance channel within ICON. One of the major benefits of ICON is its decentralized structure yet allowing each independent blockchain to remain truly independent. In other words each private chain has its own government structure. Each blockchain then gets a representative which essentially makes the ICON Nexus a form of indirect democracy.

4th Quarter 2018- ICON aims to continue to improve SCORE, which is their smart contract execution environment. Ethereum, which popularized smart contracts, utilizes virtual machines. SCORE on the other hand will avoid virtual machines and will allow these smart contracts to be executed independently and in real time.

Competitors

ICON is nicknamed the Ethereum of Korea. While it is true ICON has strong roots in Korea, the link to Ethereum is more as a secondary competitor. ICON is primarily about linking blockchains, in a similar manner as a parent child relationship. This makes projects such as EOS, ARK, and Cardano primary competitors. ICON is also a platform which can compete with the likes of Ethereum and NEO.

How to buy ICON (ICX)?

The primary exchange to purchase ICON on is called Binance through a Bitcoin pairing. Liquidity and spreads are reasonable on that exchange.

First you need accounts via Coinbase and Binance. The following are referral links. If you buy more than $100 in Bitcoin from Coinbase you’ll get $10 from using my link.

https://www.coinbase.com/join/5a4f9f00a03fd1014499ae9a

https://www.binance.com/?ref=20007972

Step 1: Purchase Bitcoin via Coinbase or GDAX

You can use your bank account to make a modest purchase of Bitcoin directly at Coinbase.

Step 2: Transfer Bitcoin into Binance.

Sign onto Binance, go to balances, and click on “deposit” for Bitcoin. Copy the deposit address. Go back to GDAX (or Coinbase) and click Bitcoin withdraw. Enter in the amount and paste in the address. For me the transfer usually completes in a half hour.

Step 3: Go to the ICX/BTC pairing on Binance and purchase.

Price Target

Given the strength of the ICON team and their real world experience I would rate ICON as the top project in the decentralized ecosystem space. Their ICO platform is the cherry on top.

As of this writing ICON is currently the 26th largest cryptocurrency in the world and once it hits between 5th and 10th place I would consider ICON fairly valued. That would require a 5x relative return from current levels and current cryptocurrency market cap levels. This is target is independent of any growth or contraction of the overall cryptocurrency market (which I am very bullish on, but that is a separate article).

The catalysts for this appreciation would be the launching of dApps, listing on Korean exchanges, connecting existing private chains and other blockchains to the Nexus, the upcoming token swap, and a valuation expansion based upon competitors. The price multiple expansion will be the major catalyst.

As a base case I would target a market cap of ICON similar as top 10 coins such as Ethereum, Cardano, and EOS from a relative valuation standpoint. If all goes according to plan ICON can potentially be a top 5 coin.

The risks for ICON are relatively limited. The risk of a lack of real world adoption is low (relative to other cryptocurrencies) due to their private industry experience, government support, and current client/partnerships. This builds in an extreme margin of safety for ICON that simply does not exist in nearly the rest of the crypto universe. The relative risk (regulatory risk exists for all cryptos) for ICON specifically is the private chains do not connect to the Nexus and support outside of Korea fails to materialize. The probability of that event is low, but if they occur I would then rate ICON around the 50th top crypto, similar to where ARK is currently (which I am also bullish on). Realistic downside is a niche Korean ecosystem, which should result in a similar valuation as today.

The resulting price target is a top 5 to 10 market cap coin given the very limited downside of ICON and the potential upside of a top 5 coin.

Given the speed of the cryptocurrency market this target is a realistic goal over the next 12 months.

Warning

All crypto enjoy market related risks. ICON will participate if the entire crypto asset class corrects or runs up. My price target is on a relative basis versus all other cryptocurrencies. This research does not address whether the asset class itself will grow or contract.

Disclaimer

Do your own research and don’t listen to me!