The ZrCoin ICO is coming up at the end of April, with an underlying commodity underpinning the offer. The aim of this ICO is to get funding for an industrial production operation in Russia that will produce zirconia – zirconium dioxide. This compound has a number of industrial applications, including ceramics, refractory material and insulation materials. Those characteristics make the ZrCoin ICO the first one of its kind in many categories. Ultimately, investors and the cryptocurrency crowd will have to change the way they think about tokens to understand this ICO and decide whether to invest or not.
ICO Rating: B (Not based on financial risk. The grade scale goes from A+ to C-)
ICO Date: Starts on April 25th, 2017 and should end in May 2017.
ICO Schedule and Bonuses:
As complex as the assessment of the ZrCoin ICO might be, the emission of the token itself is easy to understand because it is simple. The idea is to give investors an initial 50% discount on what the token should be worth by the end of an 18-month period in which the token will have a monthly yield of 5.5%. This means that there is not necessarily a fixed amount ZrCoin tokens. The final amount will depend on how many tokens the investors will buy during the ICO. The exchange rates of the tokens during the ZrCoin ICO is fixed, regardless of the final number of tokens. Investors will be able to buy these tokens at $1.40 USD initially. During the ZrCoin ICO, the discount will steadily decrease from 50% to 45% according to the table below:
The white paper for the ZrCoin ICO also gives some detail about how the company will handle the investment. There is detailed information about what the funds will be used for, token buy back schedules and how many funds will be allocated to do so. After the ICO, the company is scheduled to start buying tokens back on the 8th month after the ZrCoin ICO is over. There will be at least $700,000 USD available for buy-backs every month, and the money from the ICO will be invested in building the plant to synthesize zirconium dioxide. During the buy-back, the company will pay for the tokens according to that 5.5% monthly yield schedule, so investors will know how much their tokens will be worth at each point. ZrCoin will nonetheless become a tradable token subject to market prices on exchanges, which can trump the fixed yield.
Bitcoin Chasers’ Analysts Notes on this ICO:
This is an interesting ICO. Nevertheless, investors will have to deal with many variables that they might not be used to with this project. The ZrCoin ICO basically works like a bond in traditional markets. A company needs to finance itself, so it chooses to issue a bond that yields 5.5% monthly. Although the amount sounds high, especially in a low interest environment, it is apparently difficult to get financing for this project in Russia, where the factory and the company will be based.
ZrCoin ICO Caveats
This means that investors will have to manage risks that are absent from other ICOs. These include:
- Political risks.
- Industry specific risks.
- Exchange risks.
- Labor and other local risks.
Additionally, investors will have to do a lot of research about the zirconium dioxide industry to understand what they are investing in. Investors must also know that the ZrCoin ICO will take place on the Waves platform and that the company will eventually switch out of crypto and move onto a classic model in which they sell stock in the stock exchange.
What does this mean?
Starting with the risks, investors must consider that through the ZrCoin ICO they are investing in an industrial endeavor located in Russia. They will have to find out what the market for zirconium dioxide is there, or where will it be exported. Then they will have to understand if there is another zirconium dioxide producer elsewhere with access to more attractive markets or opportunities due to location.
Russia is also currently under sanctions from EU countries, the US and their allies elsewhere. That situation could worsen, so investors will need to understand how that can affect access to markets and exchange rates. After all, investors will not necessarily be willing to receive payments in Russian Rubles and will probably want to get their returns transferred to a bank of their choice. Further sanctions and a bad exchange rate can both erode potential profit and make it harder or more expensive to move funds out of Russia.
ZrCoin ICO Appeal
The ZrCoin ICO is not a pure cryptocurrency play at all. Nevertheless, it might be appealing to those who believe that currencies or tokens should be backed by commodities. Many cryptocurrency investors are also big on investing in commodities in the market. With that, potential investors must understand that this investment is based on industrial production that will eventually turn to mainstream markets. This ZrCoin ICO might be a good opportunity, but it will require investors to do a lot more due diligence on it to see if it is worth it.
ZrCoin ICO Transparency
Although the ZrCoin ICO seems like a classic opportunity to carry out a large-scale scam, our analysts found that the people involved in this project are working transparently. They are accessible and will be holding a series of live events to explain their project further. Investors must make their own minds about the credibility of this project, but at a glance, it seems that the people behind it are sincere.
Click here to read the ZrCoin white paper.
*Bitcoin Chaser is not responsible for any of your investment decisions.