Flipside Crypto has added Coinbase and Digital Currency Group — two of the biggest names in the U.S. digital-asset industry — as investors.
The Boston-based blockchain data-tracking firm argues that it offers a fresh approach to valuing individual cryptocurrencies that, to date, mostly trade on public sentiment and industry-specific news.
“The cryptocurrency market is maturing and institutional and retail investors are becoming more sophisticated, seeking information beyond market cap and pricing data to understand cryptocurrency projects,” said Dave Balter, Flipside Crypto CEO in a press release. FCAS [Flipside Crypto Asset Score] provides a simple, easy-to-understand way to go 100 times deeper than before.”
The FCAS is a score given to a single crypto asset based on a host of data pulled from various blockchains and smart contracts, which is derived from three inputs: A project utility score, a trading signal score and a developer activity score.
The project utility score is quantified by pulling network activity data from blockchains and smart contracts, that Flipside said gives them an understanding whether or not customers are participating in the network — the more customers participating, the healthier the crypto asset, the company believes.
“Customer activity is the canary in the coal mine. You can look at prices all day long, but you’re not looking at fundamentals,” Balter told MarketWatch.
The trading signal score tracks traders patterns that can help investors understand trends and volatility, and the developer activity score measures the work being done on the particular blockchain or smart contract by developers, which Balter said can help measure the long-term viability of the project.
“If you can understand that stuff, you can work out it’s a business and you’ll be able to get through this [bear market] and prove you’re an actual company and not a speculative asset,” he said.
Both Coinbase and Digital Currency Group said as the market matures, data is becoming more important in measuring the performance of the still nascent industry.
“We think that Flipside Crypto and its unique approach to tracking utility and developer activity for cryptocurrencies will have a significant and beneficial impact on the industry as a whole,” said Emilie Choi, vice president of corporate and business development at Coinbase, in a press release.
Travis Scher, vice president of investments at Digital Currency Group added: “Crypto exchanges and blockchain networks generate massive amounts of raw data, and the volume of such data will explode in the coming years as the technology sees broader adoption.”
The company plans to have their FCAS scores distributed in a number of outlets early into 2019.
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