Humaniq ICO AnalysisThe Humaniq ICO is underway after a successful pre-ICO funding round. This project that aims to provide banking services for the unbanked via blockchain and biometric identification systems, is an Ethereum-based initiative. Humaniq calls its project “banking 4.0”. HMQ is the token with which it will deliver its services for the unbanked. The aim is to give out rewards for all the people in the world to get after they complete a certain task, and to join the network in the process. Some of these “challenges” include having interested parties take a picture of themselves to create a biometric identity. All the rewards that participants will accumulate, will be paid out in HMQ and then the token will be used as a currency.

ICO Rating: C (Not based on financial risk. The grade scale goes from A+ to C-)

ICO Date: Starts on February 28th, 2017 and should end on April 8th, 2017.

ICO Schedule and Bonuses:

The emission model for the Humaniq ICO is full of elegant formulae, but lacks some of the basic information that investors are looking for. There are no specific funding targets on the white paper. The white paper shows an exchange rate of 1ETH per 1,000HMQ. Investment in bitcoin will be converted to Ether for exchange purposes, and then the investor will get a corresponding amount of HMQ based on the Ether amount according to the exchange rate at that point in time.

HMQ tokens cannot be divided into decimals. On the other hand, we know from our interview with Humaniq that HMQ will be issued according to a deflationary model. This means that there will be a maximum amount of tokens produced and after that amount is produced no new tokens will be released. This is much like the bitcoin cap of 21 million, except for the fact that we couldn’t find a set cap amount of HMQ tokens. If these tokens do not allow for division into fractions of a token, then theoretically if the token reaches a valuation similar to that of bitcoin, it will be impossible to make payments of tens or hundreds of dollars with it.

The ICO schedule should have the following bonus structure:

Investment Time StampBonus
1st Day49.9%
1st Week33%
2nd Week20%
3rd Week14%
4th Week7%
5th Week0%

Bitcoin Chasers’ Analysts Notes on this ICO:

There is no doubt that providing banking services to the unbanked is one of the most pressing issues of our time. It can also become a very lucrative business if the Humaniq ICO succeeds in turning the 2 billion or more unbanked people into a ‘captive audience’. Nevertheless there are some issues that Humaniq needs to clarify or change in order to improve its grade on our vetting mechanism.

Exchange Rate

The exchange rate is fixed and the token supply is also supposed to be fixed, but we still do not know how many tokens there will be in circulation and how the capping will be calculated. We also do not know what the investment threshold of the project is. We are still waiting for clarification from Humaniq in order to understand economically how their project will look like.

Returns on Humaniq ICO

Calculating the returns according to the bonus schedule above should be easy. The problem is that we have seen conflicting information on the Humaniq website. We took the bonus schedule from the white paper, but we noticed a different bonus schedule on the website. We have asked Humaniq to clarify this for us.

Other Issues with the Humaniq ICO

Looking back at our email interview with Humaniq, we noticed that the developers were reluctant to explain exactly how Humaniq works. They chose to reply to our inquiry with the following: “I don’t really get why someone wants to understand in every detail how Humaniq works. Most people who fly on airplanes don’t have any idea about how the engines work”.

We would like to point out that the argument in that answer is fallacious. These are the reasons why:

  • Humaniq is asking people to invest in their project. Therefore investors are entitled to understand how it works.
  • There is a false equivalency regarding the “airplane engine” example. People fly on planes without understanding how engines work because they choose not to find out how they work. If anyone wants to understand how an engine works or how a plane can fly, the only thing they need to do is read about it on Wikipedia.
  • Our interview was sent after our analysts read Humaniq’s white paper. Our questions were designed to clarify how some aspects of the project work, and to convey those to a non-technical audience.
  • Taking the example about engines and flying further, we can confidently say that the Wright brothers who are credited with flying the first plane, proved their concept by being the first users of their own invention. Had they crashed, the only people that would have gotten hurt from their mistakes would be the Wright brothers themselves. Investors cannot be expected to assume the damages if Humaniq crashes, when they do not know how the invention works.
  • Airplanes are also generally flown by experienced pilots and have decades of science behind them. Cryptocurrencies barely exist for a single decade. Therefore we encourage Humaniq to give us all more details. We cannot expect people to opt into an economy which they do not understand, whether they are investors or they are the users that Humaniq seeks to empower.

Other Concerns

Furthermore, we are concerned about the structure of the Humaniq ICO. We know that some people participated in a pre-ICO dubbed the “survey”. These investors were given the privilege of getting a higher bonus for their investment. They enjoyed an exchange rate which was 50% higher: 1ETH to 1,500HMQ. Humaniq also gave these investors higher bonuses of up to 70% depending on the time stamp. During this round of funding, a total of 31824818 HMQ tokens were disbursed and Humaniq earned 99.002855 BTC and 3122.362977 ETH.

Now a second funding round, the ICO is underway and it will create a different class of stakeholder in the Humaniq economy, a poorer class. The unbanked will effectively be the third class of stakeholder in the Humaniq economy, and the poorest of them all. This means that the project is reinforcing global wealth gaps, putting the already poor unbanked in a situation in which an economy that is supposed to serve them, is potentially dominated by investors who got rich based on information asymmetries.

Humaniq Response

We urge Humaniq to respond to these issues as quickly as possible. We will publish any and every rebuttal that they give us regarding every point we raised.

*Bitcoin Chaser is not responsible for any of your investment decisions.

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