Petrodollar and Crypto Series #2 of 3: A Practical Price Prediction for the BST
In our previous article we outlined the theory behind why we actually like the petrodollar playbook when it comes to pricing a crypto coin. Specifically, we think of valuable crypto coins as “hard coded mini petrodollars for X” where X is a specific use case.
That specific use case doesn’t have to be as geopolitically grand as that of the original petrodollar. But it does have to be specific, and there has to be demand for it!
In this article, we’re going to get practical. We are going to use that theory, supported by some rough calculations, to estimate where the BST — the BlockStamp blockchain’s native crypto coin — is headed.
We’d like to remind you, however, that these predictions are for informational purposes only. We want to illustrate how to apply the petrodollar playbook to a real-world cryptocurrency. Obviously we like the BST and think there is huge potential for its use cases. But that doesn’t mean that investing in BST is right for everyone or that everyone will necessarily get value out of its use cases. Please do your due diligence!
And so on to the BST use cases.
The BST is a hard coded mini petrodollar for radically fair gambling.
Blockstamp Games is an online casino platform offering native betting functionality hosted on the BlockStamp blockchain.
The goal of the platform is to offer gamblers a completely fair casino where there is no house and no system to benefit from players’ losses.
Because the casino is totally fair with odds entirely based on probability, it offers a 1 mln BST jackpot that can be won on every round, anytime. All transactions and all bets can be easily verified and there is no chance for any tampering. A detailed blockchain explorer and the fact that the project is open source should easily satisfy even the most suspicious users.
There is no online or offline casino that can offer such benefits at the moment, hence it is expected that the popularity of the casino will grow rapidly. And with the popularity of the casino, the BST will gain value. How much? Let’s do a quick calculation.
The online gambling market is estimated to bring in $50 billion a year in revenue. We all know that other casinos earn on players’ losses. If we assume that half of bets result in player losses, we can conclude that the actual turnover must be twice the revenue.
So let’s say $100 billion is the annual turnover of all online casinos around the world, and that BlockStamp Games can capture just 1% of this overall global turnover, i.e. $1 billion. As there are only 105 million BST planned to be in existence, each BST would be priced at approximately $10.
Note, however, that it is planned that only 30 million BST will have been mined within the next two years. That would mean that the BST would be priced at $30.
The block reward will be adjusted to ensure reasonable supply and to keep up with the actual cost of mining.
In the meantime, we can make a conservative estimate that BlockStamp Game’s share of the online casino market will grow to $5 billion in turnover. So in two years time, it is expected that with the minimal popularity the casino deserves, the BST will be at around $166.
A bit bolder estimate would be that BlockStamp Games takes over 10% of the online gambling market. We are doing our best to spread the word about the platform and make that happen! If so, the BST price would increase to $300.
But gambling is just one of the demand drivers for the BST.
The BST is a hard coded mini petrodollar for a P2P Domain Naming System.
The BlockStamp blockchain is equipped with full functionality to support a P2P DNS. This means that BlockStamp will serve as a platform for storing information about web domains and their corresponding IP addresses. The most important driver of demand for BST here will be that BlockStamp will also support domain name trading.
Given the current trends of online content censorship, lack of web anonymity, and legislation to introduce backdoors into security solutions, we conservatively estimate that 1% of the world’s website publishers will be quick to migrate to a different DNS.
At the moment, there are no serious competing alternatives to the BlockStamp p2p DNS solution. Especially not for the customers who’d rather not move to the .onion network.
The BlockStamp P2P DNS is designed to serve as an alternative to the ICANN DNS, not TOR. It is able to host wel- known TLDs like .com or .net. The main purpose of creating this alternative solution was to give the world an option that would eliminate the possibility of shutting down websites by removing them from the centralized ICANN DNS database.
Let’s do another back-of-the-napkin calculation. It was estimated that 2018 will end with 1.8 billion domains registered in the ICANN DNS. If we assume that 1% of those web publishers would like to shift over to a meddle-free alternative, that would be 18 million domains making the move.
This is a perfect opportunity for traders who would like to potentially earn money on selling domain names. Registering a domain that has not been registered before will cost only mining fees. And trading has no price limits. If we assume that $1 is the average domain price, the 18 million domains will generate $18 million in demand for the BST.
$18 million may not seem like much compared to the online gambling market. However, this the estimate for the first few years, when trading is not likely to be as popular as it will be later on. Still, the market for BlockStamp domains is a great opportunity for traders to get in early. Demand for domains will definitely support the price of BST over the next few years.
The BST is a mini petrodollar for a P2P proxy service.
Hprox is a P2P proxy service offering access to residential IP and an opportunity share one’s IP at the same time. Hprox’s goal is to provide a fair proxy service that compensates IP providers with the overwhelming majority of fees charged per GB of web traffic. At the same time, hprox is aims be the most cost-effective P2P online proxy service.
Note that the BST is not hard coded into the proxy service. Unlike BlockStamp’s gambling or DNS functionalities, the proxy functionality is not part of the BlockStamp blockchain.
Although hprox is an independent project, the team has has chosen to use the BST as the medium of exchange between proxy buyers and sellers. BlockStamp and hprox share a vision of offering the entirely fair and transparent services.
However, it’s not the vision alone that put us together. A reliable proxy solution is a great addition to the BlockStamp P2P DNS. When the two solutions are combined, it is impossible to block users’ access to any domain — neither by central DNS entry removal nor by a firewall. Together, we become unblockable.
However, even a great visions deserve some basic calculations. We know that there are 11.5 billion GB of worldwide web traffic every month, which makes 138 billion GB per year. And let’s say that proxy traffic accounts for about 5% this total traffic. A very safe assumption given the popularity of proxy services for business use.
Hprox’s transparency and fair pricing give it an excellent chance of beating its competitors entirely!
However, let’s conservatively assume that hprox will capture 10% of the entire proxy market. That would mean 0.69 billion GB of traffic per year.
Currently, hprox plans to charge $5 per GB of proxy traffic, which would result in $3.45 billion in annual turnover. Note that the overwhelming majority of this turnover will be be passed on to IP providers. Nevertheless, we will use this total turnover to estimate the demand for BST.
So the amount of BST mined would have to be tantamount to $3.45 billion. What we should see is then a price of 1 BST at around $115. With the current BST price at around $1, the BST price boost thanks to hprox would be around 11500%.
A bolder estimate would assume that hprox captures 30% of the proxy market — not unrealistic given hprox’s mission, vision, and pricing. In such a case, the price would reach $345 per 1 BST.
The BST is a hard coded mini petrodollar for online data sealing and timestamping.
BlockStamp will also serve as a platform for online data sealing and timestamping. The blockchain is designed to store up to 1MB per transaction, which makes it possible to store data and documents related to financial reports, terms of service, contracts, intellectual property, and much more.
Data stored in a blockchain is transparent and reliable. Documents are literally sealed and are unchangeable. There is no chance for any tampering or modification of the records, which makes it possible to reliably refer to a specific document from a specific date.
It also makes it possible to easily, safely, and affordably distribute documents across a limited group of recipients. Instead of sending documents via post, institutions can easily, quickly, and — most important — reliably inform their customers about changes in terms of services or contracts.
At the moment, the potential demand for blockchain data storage has not been estimated. Neither has the actual cost of using the service. It is likely, however, that financial institutions will be the first to adopt the solution. It is then probable that the mining fee for storing documents will be adjusted to some percentage of the actual value.
The bottom line: multiple use cases means multiple reasons for price growth.
Despite the fact that not all of BlockStamp’s functionalities be fully estimated, we believe that the most conservative price prediction for the BST is $140.
This prediction assumes modest adoption and popularity of BlockStamp applications and doesn’t take into account any future partnerships with other likeminded projects like hprox.
A more reasonable scenario over the next couple years — given the cryptocurrency’s strong use cases — would put the BST between $400 and $500, with $650 as a reach goal!
Although BlockStamp is a fairly new project, it has a lot of potential and has already gained some interest among crypto investors. The plans are solid and the BlockStamp team has already proven it can execute. It is definitely worth considering for your crypto portfolio!
About BlockStamp:
BlockStamp is a multipurpose Bitcoin blockchain fork developed by the BlockStamp Foundation, a not-for-profit organization. Designed to promote liberty, transparency, and sovereignty in areas of the digital economy where these fundamental values are most at risk, BlockStamp hosts a radically fair gambling platform, a digital tool for transparently sealing data, and a censorship-proof internet Domain Naming System.
