The team -
Quantum Project is more than a company or token, it is an initiative to craft the ideal business model. This article will explain Quantum Project’s ideal business model, but it would be a waste of your time to continue reading if not for the trusted names behind this project. Stories of successful companies begin with investor confidence. When a company’s leader is well-known, investors are more comfortable with their investment, as some investments take much patience in the early stage. From the outside looking in, it may seem as though the company isn’t doing much, when in reality the early stages of the startup are often the busiest, yet not opening marketed. Positive future guidance of the company can fall on deaf ears if there are trust issues among investors. A trusted CEO can make or break a startup, especially during the early stages. It is during this very early stage where smart money find and invests in the company. Smart money enters before institutional investors or the mass public learn of the potential. Smart money is often attracted to startups that are founded by already-successful people. Quantum Project’s founders are Nejc Bukovec and Damian Merlak. Nejc has made a name for himself as business analyst in the financial industry. Nejc cofounded Quantum and leads the daily operations of the business and its development. Damian first cofounded BitStamp in 2011 and has now cofounded Quantum Project. Damian oversees Quantum’s liquidity pool, and is also busy working diligently on the Tokens.net trading exchange. Sebastjan Stucl is the community manager for the project. Sebastjan is the common investor’s connection to the project, providing answers daily on the project’s progress and roadmap. For many investors, the crypto world is full of uncertainty and risk. Having these names behind the project should speak volumes to its credibility and potential.
Understanding inflation, deflation, supply, and demand -
Inflation is very normal and found in most economies. Normal inflation occurs when there is widespread increase in the cost of goods and services; meanwhile there is also more currency being produced, both attempting to stay relatively in sync with one another. Healthy inflation occurs when they both increase similarly and gradually. Hyperinflation is said to occur when a government mass produces currency, and the rest of the economy simply cannot keep up.
Economists usually agree that healthy inflation in the economy is the lesser of two evils when compared to deflation. This thought process is derived from economists who have always lived in a state of widespread inflation of some degree.
Deflation occurs when the inflation rate is 0% or less, and it occurs due to a combination of the following four reasons:
— The circulating supply of the currency decreases
— The demand for money increases
— The supply of goods or services increases
— The demand for goods or services decreases
Understanding the above four reasons for deflation, we can see how deflation in an economy would be a bad thing. For example, if the supply of wheat increased and the demand for wheat decreased, wheat prices would fall. If this pattern was found widespread in multiple sectors of goods and services, deflation would certainly be a bad thing for most companies and their employees. Luckily, we live in a world with almost constant gradual and healthy inflation. Goods and services are constantly increasing in price; likewise currency is constantly being produced by governments.
Currency is no different than wheat. Just as the value of wheat is based entirely on supply and demand, so is the US dollar. The dollar is only worth what someone is willing to pay or trade for it. In this same fashion, Bitcoin’s price is also based entirely on supply and demand. However, unlike the USD, the supply of Bitcoin is fixed. Bitcoin in actually undergoing inflation at the rate of 9% per year, but since this is a fixed rate and well below the % increase in demand, Bitcoin will never be in a state of hyperinflation, or unhealthy inflation. In the year 2140 Bitcoin supply will be capped at 21 Million, but until then, there are more Bitcoin added to the circulating supply every 10 minutes. Demand must continue to overcome this increase in supply.
Everything in economics eventually boils down to supply vs. demand. Keep this in mind.
So, if it is widely accepted that both hyperinflation and deflation are bad, how can Quantum Project, which claims to be a deflationary currency, be a good thing?
Simple —
1) The entire economy is not undergoing deflation
2) The deflation is not governmentally initiated
3) It is only for those fortunate enough to know about it — we are “smart money”
Only those that know about Quantum and hold QAU will benefit from the deflationary properties of it. The world will not be in deflation mode, but the QAU that you hold will be more and more valuable as Quantum continues to destroy the circulating supply. Normal currency is worth less and less every day, even in a healthy inflation setting. Quantum reverses that.
Quantum Project: Phase 1 Master Supply –
Quantum Project completed its ICO May 15th of 2017 raising 2417.33 BTC, for a value that day of 4,122,708 USD. 82,454,023 “QAU” tokens were distributed to ICO investors.
Quantum Project became profitable immediately. The BTC raised during the ICO was placed in a “liquidity pool” which is used to generate steady low risk income. The liquidity pool makes money via market making, price arbitraging, and lending to exchanges for margin trading. Quantum project then takes all profits and buys back QAU tokens on the open market. All tokens bought back are sent to a black hole address and permanently destroyed. The destructions are verifiable on etherscan at the following link: Destruction Address. The first destruction event was just one month after the ICO closed. Since then, 6,363,005 QAU have been destroyed, or 7.5% of the circulating supply.
Now imagine if you owned Apple shares and Tim Cook announced the company would begin taking 100% of the profits and exclusively use them to buy back shares… Apple shares would increase in value dramatically. Of course, Tim Cook could never do that, as apple has large operational expenditures and uses profits for research and development. Quantum Project does not have large expenditures, and the few operational expenditures it does have are personally paid for by its founders.
The liquidity pool that generates this low risk income and the destruction event that is held monthly is essentially only phase 1 of the project. This part of the project focus’ on decreasing the supply of circulating QAU tokens, making QAU truly a deflationary currency. Quantum Project will continue to destroy its own tokens in this fashion indefinitely. A common question from investors is what will happen when there are no more QAU tokens left to buy back. As the price of QAU rises, the destruction events will become smaller and smaller. Wouldn’t it be something if one day all of the month’s profits were only able to buy back just a few tokens…
So what are the profits really like? In column 2 of the chart below, we see that the profit made by Quantum has decreased monthly. At first this is concerning, until we factor in the information of column 1. Column 1 shows that the average price of BTC for the respective months, which has appreciated, and therefore the decrease in BTC profits is in line with expectations. Column 3 shows a very rough estimate of what Quantum’s monthly profits would be in USD based on these numbers. Again, this is just my rough estimate, and is not an official statement from the team. We can see that the profits have been steady and have been increasing the past few months.
If Quantum simply continues to average around 162k monthly profit we can expect to burn 2 million USD worth of QUA within the next year. That being said, my best estimate is that 2 million USD may only be able to destroy about 8 million QAU. I believe the price of QAU will increase substantially by Q2/Q3 2018 and therefore destruction events will begin to decrease. Of course, there are many unknowns to this such as macro crypto market appreciation, profits made by the liquidity pool due to different volatility levels in the market, and the use of Bitcoin Cash. The liquidity pool not only owns 2417 BTC, but since it was holding that BTC during the Bitcoin Cash hardfork, it also holds BCH. So far, the team has used about 329 BCH to boost destruction events. That leaves 2088 BCH in the liquidity pool still… 2088 BCH could destroy 15,750,000 QUA in one fell swoop at todays prices. I do not advocate for this, however, as it is best use the BCH spread out or at strategic points in the project timeline. It could also benefit the project if BCH begins to take market share from BTC.
Overall, the roadmap outlined how destructions would occur, and the team has produced substantial results.
Quantum Project: Phase 2 Drive Demand –
Imagine if we created our own county and its own currency. We will call this currency XYZ and we will produce only a fixed amount of XYZ currency. If no stores in our new country accepted XYZ as payment, XYZ would not have any demand or a use and therefore would be worthless. To try and increase the value of XYZ, we begin destroying some of it regularly. The value of XYZ never really increases much because it still has no demand. Finally a store opens that sells a really cool product, and accepts payment for this product in XYZ. The new demand in conjunction with the continually decreasing supply drives the value of XYZ to finally increase, substantially.
The Quantum team has recently partnered with Povio Labs (https://www.poviolabs.com/) to create a Photon.
Photon is not an exchange, but rather it is a trading gateway platform for market makers. This platform will connect to multiple trading exchanges and allow users to integrate their own trading bots to capitalise on the multiple exchanges. Users who wish to make markets will benefit from having one centralised platform connected to multiple exchanges. Market makers are normally liked by exchanges, as they create liquidity with their trading volume. For exchanges, more trading volume equals more trading fees. It will be wise for exchanges to seek partnerships with Photon. In addition to being able to link their own bots to Photon, users will also be able to create new trading strategies, use advanced analytics to track their progress, and create and test new trading algorithms. Other businesses and projects will see the benefit in using such an interlinked system for market making, which is why MoneyRebel has already partnered with Quantum and will connect its trading bot to Photon, and Quantum will provide liquidity to MoneyRebel.
So Photon will greatly benefit its users, but how exactly will Photon drive demand for QAU tokens? Photon will charge its users fees based on their trading volume. These fees will be collected in QAU. This will drive great demand for the increasingly scarce token. It is the Ideal Business Model. Profits from Photon will be reinvested in the operations and development of Photon, and will remain separate from the profits of the Quantum liquidity pool.
Tokens.net partnership-
It’s worth noting that demand for Quantum will also increase once it is added to the Tokens.net exchange, along with other exchanges. As mentioned previously, Damian Merlak is currently working to create Tokens.net trading exchange.
Nejc and Damian have designed the two projects to be mutually beneficial. Damian was recently quoted “It is important to know that the both Quantum and Tokens.net will benefit greatly from each other. Tokens.net will act as the platform(exchange) and Quantum will be the market maker. Natural co-existence. At the moment I see QUA as a great buying opportunity.” Quantum will provide liquidity to the Tokens.net platform, in return Tokens.net will list QAU against major cryptocurrencies. Both of these actions will have a positive effect on the value of QAU tokens. The liquidity provided to Tokens.net will have a positive effect on Quantum’s profits; and the listing of QAU on Tokens.net will increase the use and demand for QAU. Tokens.net will be one of many exchanges linked to the Photon market making platform. It is a win-win-win situation.
Liquidity is ironic, but not for long –
The Quantum Team set out to solve a crypto world problem, low liquidity. But the project’s own token, QAU, is quite illiquid itself currently, how ironic. This will of course change when demand (use / utility) is increased from Photon charging fees in QAU; Tokens.net listing QUA against major cryptocurrencies; and other exchanges beginning to list the QAU token. The team has not prioritized the latter, which has drawn skepticism from some of the project’s own investors. Nejc and Sebastjan have both reached out to the Telegram group on this topic and have explained that listing the QAU token on numerous exchanges would not alone be a driving force for QAU’s price. Rest assured the exchanges will come; but it will be more beneficial to the price if QAU has a utility first. Simply listing on exchanges does not create demand for the token. The listing of QAU on more exchanges is an issue of strategic timing. Who better to make these strategic crypto decisions than Nejc and Damian?
QAU/XRP –
Love it or hate it, XRP has gained traction in the cryptocurrency world. Although skeptics view the project as being able to be manipulated by banks, one thing is for sure — banks are adopting it to use in real world banking applications. Ripple has partnered with 80+ banks and is quickly being adopted for its quick and cheap currency transfer capabilities. QAU trades against XRP and therefore provides liquidity for XRP. Just another example of QAU hard at work behind the scenes bringing institutional-grade liquidity to the cryptocurrency markets.
The feared 2/3 –
If you search for QAU on CoinMarketCap, you will notice only 1/3 of the QAU is available as the circulating supply. The other 2/3 of the tokens have been reserved for increases in the size of the liquidity pool. This draws uncertainty, as it does when a publicly traded company rumours a share offering. An increase in the size of the liquidity pool is currently not needed. Any increase in the size of the liquidity pool would essentially increase the profitability of the liquidity pool, and therefore increase the size of the destruction events. This may be needed as the cryptocurrency world grows. The current market cap of cryptocurrencies is just 450 Billion. Some expect this to grow to as much as 2 Trillion by the end of 2018. As the market cap grows, so will the need for liquidity, and new exchanges like Tokens.net will be busy with new users. Quantum Project needs to stand ready to also grow to meet the needs of the exchanges it provides liquidity for. The feared 2/3 should not be fear at all. I look forward to the day that the crypto world has grown to a point where Quantum needs to expand also. Some fun facts on the future prospects of cryptocurrencies from the Tokens.net Twitter page: Currently only .12% of the world’s population is involved in cryptocurrency. Year on year growth of active crypto users has increased 150%. The forex market is 1000x larger than crypto market. The stock market is 40x larger than the crypto market. As the crypto market continues to gain market share, all projects need the flexibility to grow also.
Summary -
We are early investors. We are the “smart money”. We are the insiders. We are the neighbours of Jeff Bezos (Amazon founder and CEO) when he was starting to sell books out of his garage. Quantum Project has incredible potential which has been crafted by Nejc, Damian, and their team for you and me. They set out to solve a problem of low liquidity in the crypto market, and ended up devising the ideal business model. It is a two part business model, where each phase builds upon the success of the other. The liquidity pool will continue to decrease the supply of QAU, while Photon will give utility and demand for QAU. The Quantum / Tokens.net partnership is the first of many mutually beneficial partnerships that Quantum will be a part of. In this network of partnerships and initiatives Photon’s end users win; Tokens.net and its users win; MoneyRebel and its users win; Gatehub, its users, and XRP holders win; The cryptocurrency world wins; and most importantly — QAU “HODLERS” win. Damian said it best “…I see QAU as a great buying opportunity”.
QAU is an ERC20 token and is available on Livecoin, HitBTC, Gatehub, EtherDelta and IDEX. You can follow the project on Facebook, Twitter, and join the Telegram conversation (https://t.me/QuantumProject).
by investor
