Edward W. Mandel
Oct 29, 2018

Let’s start by admitting I’m being a little disingenuous with that headline. It’s a zero, not the letter O. The cryptocurrency market’s flavor of the week is pronounced “Zero-Eks” rather than “Oks”. That explains its “ZRX” trading symbol. If you already knew that, great. But much crypto trading is done by very private individuals who don’t engage in much conversation on the topic. So I take pleasure in knowing that I just helped somebody, somewhere, avoid embarrassing themselves at their next blockchain Meetup.

And I guarantee that, wherever crypto enthusiasts gather in real life over the next couple weeks, 0x will be the main topic of conversation.

There are two reasons for that. The most obvious is its recent price performance, which saw a sharp spike followed by a significantly less sharp retrenchment as the market calibrated its fair value. The other reason has to do with why we on the BQT.IO team are particularly interested in 0x. This has more to do with what it does than with how it trades.

Getting technical ...

In finance, “technical” is a technical term. Technical analysis is the art (those who charge money for it call technical analysis a science) of predicting the future price of an asset by examining historic prices and volumes.

And the technicians are having a field day with ZRX. This one guy on YouTube has his O-face (or is it 0-face) likes to talk about the coin’s “parabolic run-up” and “spike” and “correction”. The Crypto Analyst, who has 3,400 followers and offers very little information about his own expertise, isn’t wrong about any of his claims, nor is he wrong about the news to which these gyrations can be attributed.

The active trading in ZRX this month is almost entirely a factor of its being added to Coinbase, where it is now easily tradable for fiat currencies. More precisely, fiat currencies are more tradable for ZRX, providing an entry point for people whose lives don’t revolve around crypto.

And this insight can be helpful, if your strategy is to play “Who is Coinbase adding next?” The Crypto Analyst names stellar lumens and zcash as the next likely candidates. Others add cardano and BAT. Ripple remains the perennial bridesmaid.

... as opposed to fundamental

But BQT.IO is unlikely to add tokens just because another exchange does. That said, we’re taking a hard look at 0x, but only after our own, independent analysis.

That is our own, independent, fundamental analysis. While technical analysis examines how much an asset is likely to be priced, fundamental analysis seeks to determine how much it’s actually worth. And by that standard, ZRX could be far more impressive than a lot of the spoonfuls of alphabet soup floating around.

And that has little to do with the additional hype of 0x being the first ERC-20 token to be added to Coinbase. ERC-20 is a good standard for establishing smart contracts underlying the minting of new tokens on the Ethereum chain, but it’s no magic wand. There are already more than 100,000 tokens out there that comply with the standard, and I venture that 99,990 are worthless.

No, it has more to do with what 0x does than how it’s built.

The whole purpose of 0x — and I firmly believe that a cryptocurrency or anything else that has a price tag should have a purpose — is to facilitate the creation of decentralized exchanges.

You know, like BQT.IO.

Coinbase alumna Linda Xie wrote an excellent primer on the subject here on Medium. What’s particularly fascinating about Xie’s description is the date on it: July 3, 2017. It holds up, with the only subsequent news since then being Coinbase’s decision to list ZRX.

Wait ... Coinbase? What?

It should be said that ZRX’s recent performance hasn’t been as dramatic as some professionally effusive “influencers” would lead you to believe. According to CoinMarketCap.com, the coin launched in August 2017 and, after an immediate spike, it settled into a stable range of about $0.18 to $0.22 per ZRX until January 2018, during which the entire crypto market was obscenely oversold. 0x even outpaced bitcoin and, since then, has tended to outperform that market-cap leader.

Its January peak hit $2.37. Since then, it rallied to $1.92 in May, then traded mostly in a broad range of $0.50 and $1.00. The October 11 news that Coinbase was entertaining the notion of listing ZRX shot the price up from $0.65 to $0.80, then the actual October 16 announcement ratcheted it up to around $0.98. It’s now holding steady at around $0.90. So it’s had an impressive short-term gain, but nothing close to record-shattering.

The most interesting part of the story, to those of us on the BQT.IO team at least, is how Coinbase is positioned here.

Coinbase is the apotheosis of centralized platforms. It’s a fee-based site that serves as a trusted intermediary between buyer and seller and thus bears more resemblance to the Nasdaq than it does to most crypto exchanges. To curry favor with the sovereign authorities, it makes it a point to stack up all the licenses and certificates it could ever need, and pointedly adheres to all anti-money laundering, anti-terrorist financing and tax reporting requirements. If the crypto market were a high school social studies class, Coinbase would be that suck-up who sat in the front row, always had the book open to the right page, always stuck their hand up whenever Teacher asked a question, and stayed behind after the bell to clean the blackboard.

But high school is over, and that teacher’s pet is probably driving a better car than you and took a more attractive date to your last class reunion.

In Coinbase’s case, that’s because most people still equate fiat money with “real” money, and only centralized exchanges — with their amicable relationship with the same authorities that print that money — can translate cryptocurrency into such denominations.

What’s emerging, then, is an ecosystem in which new or particularly cautious crypto traders will continue to prefer the familiarity and official sanction of a centralized exchange. Meanwhile, more experienced or aggressive traders will favor the less restrictive private market engendered by decentralized exchanges.

And, since 0x’s whole reason for being it to enable these decentralized exchanges, Coinbase pretty much just proved the point.

Edward is an Ernst and Young Entrepreneur of the Year Finalist, Blockchain Enthusiast and visionary behind many successful organizations. An avid entrepreneur, Edward has a knack for designing distinctive business models complemented with superior technology to deliver unparalleled service and profitability. Edward also has been advising and consulting for various successful Blockchain technology and ICO projects and recently launched his own BQT.IO. io P2P exchange helping traders connect with each other to leverage their crypto assets.

BQT.IO has been in development since March 2017 and its ICO launched September 18. The information can be found online at BQT.IO. io and on Twitter as @BQT.io_ico.