Review: CoinSpark Crypto Exchange ICO

This is my personal review of the CoinSpark ICO. In this review I will do my best to provide my insight and personal thoughts regarding CoinSpark, and why I believe this is an attractive ICO opportunity.

DISCLAIMER:

Do not take what I say as investment advice. You should always to your own research and invest accordingly.

OVERVIEW:

CoinSpark is developing a new crypto exchange that is scheduled to launch in April. The exchange will launch with 14 of the most popular coins including: Bitcoin, Ethereum, Litecoin, Ripple, Bitcoin Cash, Dash, Iota, NEO, Monero, Cardano, NEM, Tron, and Bitcoin Gold. They will also list their own coin, SPARK.

According to the CoinSpark website, the exchange has some pretty impressive features including:

• Supporting p to 1 million transactions per second
• 20+ advanced order types
• Advanced order routing
• And is vetted by independent third-party security audits

CoinSpark’s base of operation is in the Cayman Islands, and will purportedly have customer support centers in the United States. I can only assume that the company is based in the Caymans due to their issuance of a security via their ICO. Given the Securities and Exchange Commission’s (SEC’s) stance on ICO’s offering a security, it’s a smart move for CoinSpark to domicile their company offshore. In addition, their website states that U.S. citizens will not be allowed to participate in their ICO, unless they do so via a Private Placement Memorandum. (From the CoinSpark website: In accordance with Securities & Exchange Commission (SEC) regulations, U.S. accredited investors are only able to invest in CoinSpark’s ICO via a Private Placement Memorandum in accordance with SEC Rule 501 of Regulation D.) This is a good thing. Why? Because it demonstrates that CoinSpark is taking regulations seriously, and are implementing the appropriate measures to comply with existing securities laws.

It’s also worth noting that the CoinSpark exchange is being developed in partnership with AlphaPoint, a proven leader in the blockchain and crypto exchange arena. AlphaPoint’s CEO, Salil Donde spent three years at Nasdaq as an Executive Vice President.

One commonly asked question about CoinSpark is, “Who is the team behind running the company?” The company’s website and white paper do not mention the team. I wish I knew more about them. However, I’ve done a lot of thinking about this, and here’s what I’ve determined. It’s clear that CoinSpark has some deep financial resources. In order to launch and exchange, provide exchange liquidity, develop a marketing plan, and conduct and ICO is not cheap. It can cost millions (even tens of millions) of dollars to do what CoinSpark is already doing. Given the fact that their exchange is scheduled to go live in April, they’ve already had to begin working on the development of the exchange and invest some serious capital in order to partner with AlphaPoint. I can only assume that the team at CoinSpark has chosen to remain anonymous (for now) for personal and/or security reasons. (I’ve also heard rumors…and they are just rumors) that the CoinSpark team consists of former and current Wall Street traders and hedge fund players who have been involved with cryptocurrency for the past 5+ years. If this is true, then it would make sense that the team would want to remain incognito for the time being and avoid an unnecessary speculation from U.S. regulators or former employers. But at the very least, it’s safe to assume that CoinSpark has some financial firepower behind it, since their exchange will be online in less than 90 days. For me personally, this fact and the fact they’re partnered with a proven company, is enough for me to say, “Okay, I can get past this for now”.

THE COINSPARK ICO:

The CoinSpark ICO aims to sell 25M tokens priced at .0025 ETH. The SPARK tokens represent a twenty-five (25%) interest in the business, and entitle token holders to receive twenty-five (25%) of the company’s net profits in the form of a dividend. According to CoinSpark, net profits will be calculated on a quarterly basis, and 25% of those profits will be sent out to token holders in the form of ETH via their smart contract. Token holders will simply have to execute a ‘call function’ to retrieve their dividend and have the ETH added to their wallet. Token holders will not need to redeem the SPARK tokens in order to receive their dividend; they simply need to add it to their Ethereum wallet. Fantastic!

It’s also worth discussing the SPARK token supply itself. Since SPARK tokens represent 25% of the company (and subsequently 25% of the net profits) the token supply has real ‘meaning’. In other words, the supply of 25M tokens isn’t just an arbitrary number, it’s economically tied to something; 25% of the net profits. In the majority of ICO’s, the token supply is a random number that is plucked out of thin air, and isn’t linked to any real source of economic equivalency. The SPARK token supply is different; it is tied to and represent a portion of the company’s net profits. This fact alone, makes the SPARK token and the total SPARK supply more appealing in my eyes.

DOING THE MATH (CALCULATING RETURNS):

Let’s look at the potential profit returns for SPARK investors. In the following example, I’m going to base these returns on CoinSpark reaching a daily trading activity of $250M and a trading fee of .01%. (NOTE: Given the overwhelming demand for crypto exchanges, CoinSpark should have no issue in reaching $250M in daily trading volume. In fact, I’d be surprised if they don’t reach $500M in a very short amount of time.)

Daily Trading Volume: $250,000,000
Trading Fees of 0.01%: $2,500,000

$2,500,000 x 90 Days Per Quarter = $225,000,000 in GROSS PROFIT

Assuming the company’s costs (support staff, hosting fees, marketing, advertising, KYC compliance, salaries, office rent, taxes, etc, etc) is 50% of their gross profit, this leaves the company with $112,500,000 in quarterly NET PROFIT.

$112,500,000 Net Profit — 25% Payout to Token Holders = $28,125,000 or $1.125 per token. If one were to buy 5,000 tokens during the ICO, they could expect a $5,625 payout per quarter or $22,500 per year.

Now…assuming CoinSpark’s Daily Trading Volume (DTV) doesn’t increase or decrease, token holders can expect the same $1.125 payout per token every quarter in perpetuity. If the DTV rises to $1,000,000,000, then token holders can expect a $4.50 payout per token every quarter. Under this scenario, the same person who purchased 5,000 tokens during the ICO could expect an $22,500 payout per quarter or a $90,000 payout per year!

BUT WAIT…it gets better.

Keep in mind that the dividend payments do not require token holders to submit their tokens in order to receive payment. This means that after receiving the dividend, token holders still own their SPARK tokens. This means that token holders can earn 100%, 200%, 300%, etc. return via the dividend and then sell the token at the market price whenever they choose.

For example, if the ICO price of a SPARK token is $3.00, and after a year of receiving $4.50 in dividends (a 50% return) you could sell your SPARK token back at the rate of at least $3.00. This means you’ve earned at least a 150% return on your investment. Again these figures are based on CoinSpark achieving $250,000,000 in DTV. Given the crushing demand for cryptocurrencies and the need for exchanges, this is VERY DOABLE. I believe CoinSpark could easily reach $1B — $2B in Daily Trading Volume; this could generate returns to ICO investors in the neighborhood of 600% to 1,200%.

SUMMARY:

I believe CoinSpark is a solid ICO investment. The company has already begun development (pre-ICO) of their trading platform, and has demonstrated an interest in complying with regulators. They’ve also partnered with a proven and trusted parter, AlphaPoint, which says something about CoinSpark’s team and prowess. They’re offering a generous 25% dividend payment, and could easily achieve solid returns for ICO investors. As for me, I am certainly going to partake in the ICO and I hope you will consider it as well. For more information, visit their website — www.CoinSpark.io

DISCLAIMER:

Thoughts and opinions expressed in this publication are my own. Please do your own research. Investing in any ICO involves risk and you could lose your entire investment. Never invest more than you are willing to lose.