I started to look at OmiseGo because it’s in the Exodus wallet as a supported cryptocurrency (meaning that I wouldn’t need to look at downloading yet another wallet to store it on), and also because it’s has a high market cap (currently 12th on coinmarketcap.com).
Current Price: USD 9.07 as at 23 September 2017
What is OmiseGo?
Omise is a company that facilitates payments across borders in South-East Asia.
Omise held an ICO to fund the development of OmiseGo, a project based on the Ethereum framework. The ICO issued tokens called OmiseGo or OMG.
What problem is it trying to solve?
Its target market is people who are left out by traditional banking services in South-East Asia. Think of the migrant worker in Myanmar or Thailand who needs to send money home. Omise wants to give these people the ability to send and receive money.
Omise thinks that 73% of all people in South-east Asia are ‘unbanked’, ie have no access to banking services.
It also targets the remainder by providing a better service than traditional existing banking services.
Does it solve the problem?
Unclear yet. The main product will be an e-wallet that interestingly serves both fiat and cryptocurrencies.
I’m guessing that you would need a smartphone to run the OmiseGo e-wallet.
- Would the 73% of unbanked people above have a smartphone? Maybe OmiseGo could partner with a low-cost smartphone provider to give out to people.
- For security, maybe you wouldn’t put large amounts of value on your e-wallet, as it wouldn’t be a hardware storage solution like Trezor or Ledger.
Should you invest in the OMG tokens?
The OMG tokens were used as a fundraising security.
According to this Techcrunch article:
Under proposed terms, 65 percent of all coins will be released during the sale. A further 20 percent will be retained by Omise for future costs and expenses with 10 percent left for the company’s team. The remaining five percent is set aside for “airdropping,” which essentially means that small amounts will be given to people who already own Ethereum’s Ether coin to stoke interest and widen engagement.
The company isn’t planning to make another token sale in the future, representatives told TechCrunch, in order to prevent dilution.
So we can infer that there will be a cap on OMG tokens, meaning that the risk of dilution is minimised. That’s not the same as it is with Bitcoin, which will by nature of its code, stop at 21 million Bitcoins.
With OMG, we would have to take the word of the company that they wouldn’t issue more tokens that would dilute and reduce the value of the existing OMG tokens.
This next Techcrunch article is reassuring as to the intentions and integrity of the Omise company:
Hasegawa said the firm could easily have raised more than $100 million from pre-sale interest, let alone with others following on when a public sale began, but it instead wanted to keep the figure low and be “responsible.” Likewise, Omise wanted to guard against a few wealthy backers taking all the spoils, as has appeared to happen with other sales.
In response to that demand, it canceled the planned public sale in favor of a more stable and managed sale. Omise forced all backers to register themselves with a handful of brokerage partners ahead of time in order to participate, while it also limited how much each participant could buy.
“We limited the OMG sale to KYC [people who can be identified] in order to prevent a very real possibility of one or two rich people buying almost all the tokens, as happened with [Brave’s] Basic Attention Token (BAT) sale,” Hasegawa explained in a statement.
“Unlike other sales, we didn’t want to raise our sale cap past $25 million because we don’t expect we need more money to accomplish our goal,” he added. “It is both irresponsible and counterproductive to take more than we think we need.”
Isn’t that great? They only asked for the amount they needed for the project.
What do you get for your coins?
You will get some fees for helping to validate transactions on the blockchain. The size of the fees is yet to be determined. Also, if the tokens are held outside of a node (like in an Exodus wallet), how will you be able to validate transactions?
Why would the price of OMG increase? The key driver of price increase will be its percerption as a store of value (like Bitcoin). This will depend on the supply being limited, which isn’t hard-fixed, unlike Bitcoin.
Will I buy any OMG?
Yes I will but not a lot yet. The price is down currently from its high of around USD 12:
So buying it now, and if it regained to USD 12, would return 33%. That’s a solid gain.
Long-term, I’m not sure about where the price could go with OMG tokens, but it’s fair to say that they could go to a few multiples of its current price of USD 9.
The company raised USD 25m in ETH from the sale of the ERC20 tokens and I’m guessing that most of this was used to fund the development of the project, which would pay for things like salaries and expenses in either ETH or USD or other local fiat currencies. The sale document for the tokens said that 10% of the tokens issued would be held for the team members. It’s hard to see that they would envisage a situation where the OMG tokens were reduced to zero value.
Overall thoughts on OmiseGo
- I love the project for what it’s trying to do. It’s a noble aim to try and bring people into the financial world.
- If it works, I can see it spread to the rest of the world.
- I love the founders’ integrity in not having uncapped ICO, when there was clearly appetite from investors for a lot more than they raised
- They have a lot of support from big players in the Ethereum space like Vitalik Buterin.
- I can’t wait for the first release of the wallet