TransCrypt Rating Review

Stable+

Investment Rating

Expire date: 27.08.2018


We assign "TransCrypt" a "Stable +" rating.

The TransCrypt project aims at creation a decentralized payment system for everyday users which will handle both fiat and cryptocurrencies. With the application, anyone can make money transfers, pay for purchases and other operations.

The main advantages of the project are:

  • Relevance of the idea, which ought to be positively received by the community

  • Creation of a universal financial instrument joining three major markets (the P2P-transfer market, instant messenger market and the crypto market)

  • Integration with popular instant messengers

  • The existence of a working platform in closed mode which can be tested on request.

  • Providing users with a wide range of functions and services in the future by switching to own Tizer blockchain

  • Work experience of CEO of the project in the related field

However, the project has potential risks which are described in more detail in the review.

We recommend paying particular attention to the following points for this project:

  • The tokens created by the TransCrypt project will not have the intended significance and will not perform their infrastructural function before the blockchain Tizer is started. In the event that the team for some reason does not launch Tizer, the tokens may be depreciated.

  • According to the Road map, a wide range of the announced platform functionality will be available to users after a certain time

  • In the case of the TransCrypt project, financial documentation was not provided to us, as a result we were unable to analyze projected economic indicators.

TransCrypt is a project that tries to blur the line between the world of cryptocurrency and the convenience of conventional banking and to provide the entire range of financial instruments in one convenient application. The key advantage will be the ability to send cryptocurrency in the chat window.

The aim of the project is to conduct financial transactions (buying cryptocurrency, payment services, money transfer, etc.) with the same ease as instant messaging. The goal is to be achieved by creating a user-friendly application that brings together all the necessary functions. The project’s own Tizer blockchain will reduce operating costs.

Smart contract platform: Ethereum blockchain

Contract type: ERC20

Token: TSR

Accepted currencies: ETH, BTC, USD.

Total emission: 100,000,000 TSR

There will be no additional emission. All unsold tokens will be burned.

The token sale will be implemented in two stages: A private sale and a main sale.

Private Sale:

Start date and date for acceptance of applications: 01.03.2018

Application processing: 02.04.2018 – 08.04.2018

End of sale: 15.04.2018

Price: 1 TSR = 0.001 ETH.

Hard Cap: 10 mln TSR.

Minimum purchase amount: none

Maximum purchase amount: 2 mln TSR tokens

Bonus program for private sale participants:

TSR tokens

Bonus

100,000

2,5%

500,000

5%

1,000,000,000

10%

2,000,000,000

15%

Timings for the main sale will be announced separately.

Hard Cap: 90 mln TSR.

Distribution of tokens is as follows:

Planned allocation of funds raised:

A legal entity is registered in Estonia, we have been provided with the necessary information to verify its authenticity and legality. All project contracts are regulated and interpreted in accordance with the laws of Estonia. Any complaints, claims, disputes and cases are dealt with in Riga (Latvia) District Arbitration Court (registration No. 40003760582) in accordance with its arbitration rules.

The main objective for TransCrypt is to expand the borders of circulation and use of cryptocurrency to simplify financial operations and services for all segments of the population using instant messengers (via Telegram messenger at the initial stage).

The team has allocated plans and development goals for the project based on funds raised at the ICO. The documentation details 3 scenarios for development. The website features a detailed roadmap up to Q1 2020. According to these sources the future capabilities of the platform are the following:

  • Multicurrency easy wallet - the ability to manage funds regardless of currency. This application will be available on iOS and Android mobile devices, as well as MacOS and Windows; there are also plans to integrate the wallet into popular messenger apps.
  • Personal IBAN accounts - the possibility of obtaining IBAN ID for users of the system.
  • Decentralized Governance – this mechanism is an opportunity for the community to influence the development of an ecosystem. Decisions will be made by common vote of TSR token holders.
  • Proprietary payment system will enable the community to perform instant money transfers, whilst entrepreneurs and companies will have the opportunity to legally use cryptocurrency and perform fast transactions. Contactless debit cards without restrictions on access to wallets for payment and withdrawal of cash from ATMs are also planned.
  • Tizer blockchain will reduce transaction costs after the implementation of all functions in the market.
  • Investment in cryptocurrencies or digital assets. A special tab will be introduced in the application, enabling advanced users and professional traders to earn additional income.

In the future, the project will transfer its ecosystem into proprietary Tizer blockchain which will use the PoU (Proof-of-Use) mechanism. In addition, the project is planning to integrate as many messengers as possible into the application to expand the audience and provide services to more users.

We note that TransCrypt is at an early stage of development but according to the information provided by the team the wallet is already available in beta version, proprietary payment system works on other projects of TransCrypt shareholders and the ability to buy/sell currencies and tokens is organized as integration with the ShapeShift crypto exchange.

4.1 Market analysis

The global payment market is very large in scale and continues to increase in size. In 2017, the total volume of electronic payments reached 450 billion transactions.  Juniper Research has revealed the following [belretail.by]:

  • The largest volume of electronic transactions (55%) was for online purchases.

  • The P2P (peer-to-peer) money transfer segment demonstrates the largest increase in net income on an annual basis (up to $200 mln).

  • The volume of the digital payments market was $3.9 trillion in 2017, which is 14% more than in the previous year. The average amount for one digital transaction was $18.67.

  • 62% of e-commerce transactions will be performed via mobile devices.

More and more budget smartphones are available in developing countries and conquer new territories. There are more and more messenger users [Statista]. Some messengers already have built-in payment systems.

In 2017, the crypto market rose dramatically compared to other international monetary systems. At the end of 2017, total market capitalization for cryptocurrency increased 34.6 times, from $17.7 billion to $612.9 billion. The most intensive growth occurred in the fourth quarter, which led to a rapid growth in transactions on crypto platforms [cryptovoices.com]:

The total number of global crypto transactions reached 1 trillion in 2017, approximately 15 times more than the total number registered in 2016. The share of transfers of cryptocurrencies between individual users and the share of individual user transactions (from wallet to wallet) is continuously growing. The use of cryptocurrency as a means of payment is becoming increasingly popular.

Researchers from Cambridge University concluded that in September 2017 the number of active wallets exceeded 11 million, and the number of their owners is estimated at 5.8 million.

This chapter briefly describes the pace of development of three markets: P2P transfers, instant messengers and cryptocurrencies. Each of them is in a certain stage of development, the P2P transfer market and instant messengers are more mature while the cryptocurrency market is in a growth phase.

TransCrypt intends to occupy a niche in all three markets and the trends on each of them are favorable for the project.

4.2 Competitive analysis

There are an increasing number of payment systems based on blockchain, and some existing payment systems are also implementing this technology. Some popular payment systems have added new services related to the exchange and conversion of cryptocurrency. Users can not only exchange fiat funds for cryptocurrency but also pay for services using cryptocurrency, as well as send crypto to each other.

The main competitors of TransCrypt are Saifu, Paycent, Revolut and Status.im.

The financial platform Paycent is an electronic wallet that supports the use of top-end crypto and fiat currencies in a single mobile application.

The company is planning to issue debit cards which will be connected to the Paycent platform. Users of Paycentos debit cards will receive 0.1% of the amount of each purchase or payment in PYN tokens.

The company is at the stage of negotiations and acquisitions of banking organizations, which will allow users who do not have bank accounts to receive microcredits. Currently, negotiations are underway to develop and launch Paycentos Realtime Exchange, which will provide real-time pricing and liquidity for Paycentos (a crypto wallet).

The team is working to expand the ecosystem and involve new merchants, who will accept user payment in cryptocurrencies for goods and services.

FinTech company Revolut allows users to buy, sell, store and transfer Bitcoin, Litecoin and Ether on the Revolut accounts. The company promises instant conversion traditional fiat funds into cryptocurrency. Revolut will cooperate with several of the most reliable crypto exchanges, thereby saving customers from unnecessary actions. All these operations will be made by customers via the application but this function is not integrated into the payment platform.

The goal of the project is to create a unified application that will allow performing any financial transactions including loans and mortgages. The founders are engaged in the creation of this system and its improvement.

Currently, Revolut offers medical and dental insurance abroad using geolocation technology, allowing customers to pay only for those days when the user is abroad. There is also an opportunity to insure a mobile phone. It is notable that Revolut gives an opportunity for the customers to receive fast online loans at low rates.

Status is a browser, an instant messenger and a wallet. This is a mobile platform and a browser for interacting with blockchain on the Ethereum network. The users can write their own applications on this platform; the development is conducted on an open resource of GitHub.

The messenger has a built-in browser, a decentralized exchange and an application for the automatic conclusion of smart contracts. Status allows sending, receiving and storing Ether, as well as buying and selling it to platform users. The messenger allows the users to participate in the ICO. Messages will be encrypted by the network when sending. Alpha version of the platform is currently available on Ios and Android.

Status performs two main functions: a decentralized messenger and an open platform for hosting any decentralized applications. Currently, support for a large number of various applications is implemented.

FinTech company Saifu allows storing and quick conversion of cryptocurrency assets into fiat and vice versa with minimal commission. Saifu has a banking license from the Czech National Bank (CNB) for transactions with national currencies.

The founders focus on the security of the system, a technical director with 12 years of experience in Kaspersky Lab, as well as the French office Thales, which manufactures security modules for the world's largest banks participated in the project. Saifu has beta version of the project.

The Saifu platform plans to make operations with crypto and fiat for consumers, businesses and banks safer and simplier.

To summarize, it should be noted that there is large number of competitors both existing and emerging. In terms of functionality, projects are trying to isolate themselves and provide new opportunities for the users. The main competitive factors are easy to use, functionality and services. The functionality of TransCrypt is wider than the declared competitors in terms of usability. In addition, each player tries to stand out in separate directions. Status will be a messenger and a browser that will allow users to develop and run applications. Saifu stands out against its competitors with its security. Revolut is an operating company which uses all its declared functionality and successfully develops. TransCrypt stands for the users’ comfort in daily financial transactions provided in one place with good quality of service.

The main staff of the TransCrypt team consists of 4 specialists.

Key positions are occupied by:

Nikita Machulis (Linkedin) – CEO

Since 2001, he has been in leadership positions in such companies as ART-Telecom (2001-2005 - Technical Director), Yandex.Money (2005-2007 - Director for the development of the iDealer project) Alter-I (2007-2011 - head of the processing department), Smart Processing (2011-2015 - co-founder and CEO), Yulmart (2015-2017 - head of direction)

Education:

  • Saint Petersburg State University of Economics - Faculty of Management, Department of Management and Production Organization.

 

Denis Dubov (Linkedin) – CTO

Denis has worked in the project since July 2017. He has been the technical director of Tsarev Corporation for 8 months since November 2014. Technical Lead of Welpy LLC from August 2014 to January 2017.

Education:

  • No information available.

 

Alexander Volosovik (Facebook) - Dev-Ops Director

No information available.

Education:

  • Far Eastern State Technical University.

 

Elena Deshpit (Linkedin) - PR & Marketing

Elena has worked for the project since December 2017. Previously, she was engaged in branding, retail and HR in Yota from 2008 to December 2013. She is a co-founder and marketer at Pochta.fi from 2014 to November 2016. She was engaged in international PR at Okko.

Education:

  • Saint Petersburg State University of Finance and Economics.

 

Advisory board: 7 people are involved as advisors:

Jon Matonis (Linkedin) - Blockchain and payment platform Adviser.

Alexander Epin (Linkedin) - Marketing & Product.  Director and owner of TMG Russia.

Alexander Voskoboinikov (Linkedin) - Business Development. CEO of JAGO, CCO of Money Online, CEO of SimplePayments, owner (2007-2014), Co-Founder and CEO of Vindata (2013-2015).

Robert Jarva (Linkedin) - President of the Corporate Resource Group.

Wulf Kaal (Linkedin) - Blockchain expert. Director of the Private Investment Fund Institute (PIFI). University of St. Thomas School of Law - Professor of Law. On the advisory boards of more than 10 projects including TokenStars TEAM, Opporty, Moms Avenue, the Token Fund, EthLend, Ties.Network, Tokenbox, Ankorus, s3entigrapH and others.

Nathan Christian (Linkedin) - Blockchain expert. Technical expert in blockchain-based accounting and financial applications. Ohio State University Fisher College of Business - Master of Business Administration - MBA (Business). He is also an advisor in more than 30 projects, such as: SELFLLERY, Gamblica, Omnitude, TimeBox, Gilgamesh Platform, Enlte, etc.

Elena Khromova (Linkedin) - Legal & Finance Advisor. Partner at BDO group in Russia. Has single qualification certificate of auditor, the Certified Public Accountant (CRA) of the State of New Hampshire (USA), the Certificate of the International Auditing (ACCA CertIA), the Qualification Certificate of the RF Ministry of Finance on bank audit, the Member of the Russian Union of Auditors (SRO RSA). Education - Lomonosov Moscow State University, Economist.

In total, the project team has more 50 specialists and work on the project has been going on for more than 1.5 years. As for the strengths of the project, we would like to note the CEO who has many years of experience in the related industry and the fact that part of the core team had previously worked together. In the future, staff expansion is planned depending on ICO results. According to the information provided by the founders, legal support of the project is conducted by BDO. The project is also accompanied by lawyers in the main jurisdictions (Switzerland, Lithuania, Estonia, Latvia, the Virgin Islands). Legal support is important for this industry since it requires licensing of activities.

A repository with a smart contract code is available on GitHub.

Token name – Transcrypt token

Symbol – TSR

Decimals – 4

Initially, tokens will be issued on the Ethereum network in accordance with the ERC-20 standard; after this, when the platform introduces its own blockchain, Tizer, existing tokens will be exchanged for Tizer blockchain standard tokens in a 1:1 ratio.

TSR is a utility token aimed at using in Tizer blockchain, i.e. performance of infrastructural functions. With TSR tokens it will be possible to:

  • Create a Tizer keynode using personal hardware resources (available if a token holder has a certain number of TSRs). Confirmed nodes that meet the requirements of the Tizer rules will receive a daily reward.

  • Issue new Tizer coins (available if a token holder or group have a certain number of TSRs).

  • Generate new coins; a TSR holder can provide a reputation factor in exchange for a reward.

  • Express opinion on the technical development of the Tizer blockchain through a mechanism for decentralized voting - any token holder will be able to offer projects to the community related to the development of Tizer. The community decides whether the project in question will be implemented or not through a general vote.

Currently, the role of the token is to attract financing. We think that the purchase of TSR tokens will be mainly interesting for those investors who intend to wait for the launch of Tizer, which will allow the holders to receive income from the creation of Tizer keynode and the issue of TZR coins. The purchase of TSR tokens can be also interesting for the investors intended to speculate on the possible increase in value of the token after the ICO.

TSR tokens are created for the development of computing power and the TransCrypt ecosystem, and are intended for use within the TransCrypt ecosystem. TSR token holders will have privileged status, providing the widest possible access to functions of the TransCrypt ecosystem listed in the previous chapter. A minimum threshold for TSR token balance is set for each function; use of privileged functions will not be possible below these balances. The more interested technical users there are on the platform, the higher the attractiveness of TSR token will be assessed. These services will be provided only after the transfer of TransCrypt to its own blockchain.

A public beta version of the platform will be available to users in the second quarter of 2018; closed beta version is already available. After the release over the next year, the TransCrypt platform will focus on conversion of cryptocurrency and P2P markets for money transfers, purchases and sales. At the same time, the developers will not initially charge commissions for using the service in order to win an audience, in spite of the fact that fees charged for operations form the main revenue for the project.

To prevent decrease in the token price, the developers envisage the creation of a fund from investment raised at the ICO to the amount of 20%, and 10% of TransCrypt’s quarterly net profit. After 12 months, TSR holders (only investors) will be able to exchange their tokens for a proportionate share of the reserve fund in cryptocurrencies. Purchased TSR tokens will be burned. The fund will operate for 24 months after the start of the exchange ability. Burning the purchased tokens will thus reduce their supply in the market.

20% of the total emission will be allocated to the company's reserve fund for system development and motivation for the team. (The motivation of the team is sent to 30% of the volume of the reserve fund). After 36 months, the TSR tokens from this pool will be unlocked. The probability of entering the market TKS Tokens (at least 14 million tokens) allocated for the development of the ecosystem will increase significantly, which may affect the price of tokens. Since each owner of a certain number of Tokens has the opportunity in the future to deal with mining and maintain key nodes, this token function partially reduces the likelihood of the Tokens assigned to motivate the team to enter the market. Of course, this probability will depend on the profitability of mining at that time in the Tizer blockade. To calculate it at the moment is not possible

The team is planning token transfer from Ethereum to Tizer in the first quarter of 2020. All TSR tokens will be exchanged for Tizer standard tokens at a 1:1 ratio. In this case, exchange or sale will be possible in the first quarter of 2019 after the launch of the Tizer MVP. During this time, the platform will significantly expand its functionality, which will cause a positive impact on Tokens in the medium term.

The attractiveness of Tizer tokens will directly depend on their attractiveness for miners. The more people start using the services provided by the platform, the greater it helps to increase the price of Tizer tokens in the long term.

Tizer blockchain is currently under construction. According to the Road map, MVP of Tizer blockchain will be launched in the first quarter of 2019. The launch of a stable version of the proprietary blockchain is planned for the third quarter of 2019. We note the technical risk which lies in possible deviation of the implementation of the listed stages from the time periods stated in the roadmap or the failure of their implementation. Since Tokens will perform only their basic infrastructure functions after the launch of Tizer blockchain, there is a risk that without the implementation of Tizer they will be useless in the future and, as a result, depreciate in the market.

After the launch of public beta version, only money transfers will be available on the platform before the launch of Tizer blockchain. Based on the submitted Roadmap, a wide range of the declared functionality of the platform will be available to users after a certain time. At least in the first year of its life, the TransCrypt project will significantly lag behind its competitors, these risks should also be taken into account.

We also consider the non-disclosure of the financial model the projected scenarios described in White Paper are calculated on as a risk. We were unable to assess the relevance of the projected cash flows and therefore to understand what risks the project has in this vein.

 

 

The information contained in the document is for informational purposes only. The views expressed in this document are solely personal stance of the ICOrating Team, based on data from open access and information that developers provided to the team through Skype, email or other means of communication.

Our goal is to increase the transparency and reliability of the young ICO market and to minimize the risk of fraud.

We appreciate feedback with constructive comments, suggestions and ideas on how to make the analysis more comprehensive and informative.