With Bitcoin continuing to surge with the next halving approaching, plus a new era of blockchain, artificial intelligence (AI), metaverse and Web3 are Coinsilium in the right place at the right time?
“…But after tumbling from the vertiginous highs reached in at the height of the 2021 Bitcoin boom, when the company’s value (very) briefly touched 34p, COIN may be set for another run priced around 3p as the crypto stars once again align..”
Coinsilium (AQSE: COIN), the very first blockchain company to IPO – as long ago as 2015 – has been retooling for the future over the past 18 months or so, building a portfolio of interests in the fast evolving Web3 economy. But for investors it continues to serve as a vehicle for riding the ebb and flow of the cryptocurrency market, currently rising on one of its cyclical surges.
COIN invests in Web 3.0 and AI powered technology start-ups, and offers strategic blockchain advisory services to companies looking to issue digital tokens. Before exploring COIN’s expanding portfolio of interests, some preliminary words may be useful to briefly define the rapidly developing technologies with which the company is engaged.
Web 3.0 on the horizon
Web 3.0, often styled ‘Web3’, refers to a cluster of related digital innovations further extending the economic and social possibilities opened up the internet. Following Web 1.0, the first generation of read-only ‘static’ websites, and Web 2.0, the dynamic, interactive world of social media and e-commerce that has transformed our lives, Web 3.0 is focused on the potential the blockchain offers for direct peer-to-peer transactions that bypass traditional intermediating institutions.
Applications include Decentralised Finance (DeFi), the exchange of value in the form of tokens that advocates say removes the need for central authorities such as banks and payment processors, storing all information on a distributed ledger outside the remit of any controlling entity, and Decentralised Autonomous Organisations (DAOs), collectives sustained through the exchange of immutable contracts over the blockchain, rather than traditional hierarchical structures of executives, boards, and investors. Blockchains also permit the exchange of Non-Fungible Tokens (NFTs), unique digital assets that have so far mainly been used for the exchange of artworks but which have the potential to verify and represent any kind of intellectual property.
COIN is working to position itself to capitalise on rapid growth in the Web3 market, which the company says is projected to grow from $0.4bn in 2023 to $5.5bn by 2030, at a CAGR of 44.9pc. More immediately, it is seeking to leverage the continued resurgence in cryptocurrency prices. Bitcoin and Ether were up 148pc and 88pc in 2023, the former trading above $50,000 earlier this month for the first time since 2021, the rise largely driven by a new generation of Bitcoin ETFs offering institutional and retail investors the opportunity to enter the market without having to manage crypto wallets or private keys that many find technically challenging. More than $3bn has flowed into the new funds so far as previously wary investors make a space in their portfolios for products that can be bought and sold as easily as any other passive tracker.
The omens for further gains – so far as predictions can ever be made about cryptocurrencies – are good. Central banks are expected to lower interest rates this year, making risk assets more attractive, and the next Bitcoin ‘halving’ is expected in April, a slowdown in circulation that promises to boost the token’s price. Bitcoin’s protocol specifies that only 21 million coins can be mined, with the rate at which new coins can be created decreasing by half every 210,000 blocks, a milestone reached every four years or so – the last halving took place in May 2020.
COIN’s developing portfolio
COIN’s portfolio showcases the range of blockchain start-ups in which the company has invested, encompassing the worlds of DeFi, banking, social networks, gaming and fashion.
COIN has near-term hopes for Indorse, developing a range of blockchain applications designed to ‘address many of the functionality and User Experience challenges currently hindering mass Web3 adoption’. COIN and Indorse, together with several digital advertising and blockchain industry partners, are developing Byzant, a new Web3 social network ecosystem that will showcase Indorse’s applications. Last month the partners announced a significant milestone, the launch of the ‘Testnet’ version of the network, scheduled for the end of 24 March, through which transactions will be settled with ‘test tokens’ that bear no financial risk for users. A live version for commercial transactions will follow.
COIN is set to receive ‘a material stake in new project tokens at the founding member level’. The company has also signed Heads of Terms to increase its interest in Indorse from 10pc to around 25pc. COIN described the transaction as ‘a major development milestone’ expected ‘to be highly value accretive for shareholders over the years to come’. Given ‘the complexity of the proposed share acquisition transaction and the time required to complete the necessary due diligence work’ the partners have put the negotiations on ice, but say their ‘intention is to revisit this once Byzant is more advanced and with less operational pressure on both companies’.
Another COIN investee is also moving ahead, Silta, aiming to use AI to offer tools to ease the often byzantine process through which infrastructure projects apply for finance. Silta wants to ‘revolutionise the feasibility study and financing process for green projects’, using AI to analyse vast amounts of data automatically, swiftly evaluating a project’s potential, feasibility and risks, slashing a preparation process that currently can take up to three years to complete.
Earlier this month Silta received an investment from ‘a top 10 global infrastructure development bank’ as part of a strategic partnership agreement to build a climate financing marketplace. The partnership ‘aims to help support governments, infrastructure developers, and financial institutions to reach their goals of deploying $800bn towards Climate Financing by 2030’. COIN has an option take a stake of up to 6.7pc in Silta worth $0.5m.
Two digital finance initiatives, Greengage and Yellow Network are also moving ahead. Greengage offers clients, including SMEs, high net worth individuals, and digital asset firms, e-money account services, and access to a B2B lending platform for digital sources of money. Earlier this month Greengage signed an agreement with a new regulated partner to bring forward the launch of currencies including the US dollar along with FX and SWIFT payments for its clients. Noting ‘there still remain very few “crypto friendly” payment providers offering USD accounts’, Greengage is also exploring collaborations to progress a new line of SME digital debt offering with potential partners. COIN’s stake in Greengage, as at 30 June 2023, was worth £652,549.
Yellow Network is building a peer-to-peer trading infrastructure allowing crypo exchanges, brokers and trading firms to securely exchange liquidity and facilitate trading, clearing, settlement, and compliance, which the company says ‘solves the problem of liquidity fragmentation’. Its unique ClearSync smart clearing protocol facilitates a system for traders that reduces counterparty risk and helps settle trades quickly and efficiently using blockchain smart contracts. Traders deposit collateral into an adjudicator smart contract to guarantee trade settlement, ensuring a secure and transparent way to trade without recourse to traditional clearing houses. Earlier this month Yellow Network updated its roadmap for Yellow Token’s public launch and token listing, a ‘critical milestone’ scheduled for Q2 2024. COIN is entitled to $0.2m worth of future Yellow Network digital tokens to be distributed throughout a vesting period.
COIN has other DeFi and green economy interests. Carbonds provides a user-friendly platform for individuals and organisations to purchase high-quality carbon offsets and make environmental data more accessible. UniLayer offers a blockchain ‘meta’ service that connects independent blockchains, validating transactions natively on those networks while also facilitating cross-chain transactions. UniLayer says that ‘while many aspects of blockchain technology have undergone significant growth and development, there still remains an essential need for secure, direct, cross-chain operability’.
COIN also has stakes in a group of start-ups with interests that will seem rather more exotic to those unfamiliar with the blockchain universe. Gaming company GGs, which has developed a particularly strong presence in Latin America’s 140 million-strong gamer community, is seeking to facilitate the process by which blockbuster Web 2.0 games transition to Web3 platforms. This month GGs announced a partnership with Off The Grid, ‘one of the most highly anticipated games in Web3 gaming’, according to which GGs will help the game scale across the LatAm economy. COIN is entitled to $0.1m worth of future GGs digital tokens.
COIN has interests in the metaverse, the developing virtual online environment, and is an advisor to Meta Yachts ‘the premier yacht provider in the metaverse’, providing eight fully-functional 3D yachts, ‘each the height of meta luxury, bringing … virtual and real-world utility’ and VERTIKAL, ‘the tallest metaverse in the world celebrating digital art, life, culture and its artists’. Floating 555 feet above Central Park in New York, standing 1.6 miles high and offering ‘the best views in town’, VERTIKAL offers metaverse spaces for blue-chip NFT collectors (BAYC, CryptoPunk, Azuki, WOW and many more) to showcase their personal collections. COIN also has a Master Collaboration Agreement for Web3 initiatives with global fashion brand Blvck Paris, known for its ‘All Black’ clothing and monochrome aesthetics. Blvck founder and designer Julian O’hayon also offers a collection of 9,998 avatar NFTs.
Outlook
COIN’s most recent set of results, for H1 2023, stated cryptocurrency assets – including rights to future tokens – of £1,071,553 (the company had cash of £608,355). Indeed, very recently the Company announced a strategic fundraising with Director participation.
The value of its cryptocurrencies will have continued to rise over the past few months, with the hope of further gains as Bitcoin continues to surge as the next halving approaches. COIN continues to accumulate new tokens in payment for its advisory services: the company signed an agreement with DeFi exchange platform LC Lite last week. COIN will advise its new partner on a token launch planned for Q4 in return for a fee denominated in cryptocurrencies or in project digital tokens. COIN said: ‘The timing of this new advisory agreement reflects the marked improvement we are seeing in the global cryptocurrency markets and growing strength in demand for Coinsilium’s advisory services.’
COIN has risen sharply this year, up from 1.35p in January to 3p at the time of writing. In time-honoured crypto style that rise hasn’t been smooth, encompassing at least one sharp downturn. But after tumbling from the vertiginous highs reached in at the height of the 2021 Bitcoin boom, when the company’s value (very) briefly touched 34p, COIN may be set for another run as the crypto stars once again align. Proceed with caution, but with its growing portfolio of Web3 investments COIN may offer a decent longer term bet, as well as an opportunity to ride the next crypto wave.
