Originally written in November 11, 2019 @ medium.com/tuoyuanresearch

SUMMARY

The Ravencoin protocol has presented itself as a very unique blockchain project. No ICO. No premine. No negative publicity. All decentralization. And in it for the long game. Ravencoin’s potential is almost certainly reliant on the tokenization trend that we are seeing being played out in almost every aspect of crypto. Irrespective of how it’s own native token price unfolds, or more so to what direction Bitcoin goes towards, the Ravencoin protocol is a project that genuinely sets out to provide value to the crypto world.

“The aim of Ravencoin is to do one thing and do it well: help users issue tokens and digital assets securely,” Chainstone Labs CEO Bruce Fenton explained. “Tokens, particularly securities tokens, are a promising area for blockchain technology.”

And in this primer, I would like to be able to give an honest, truthful view of this high flying (no pun intended) project in Ravencoin, the market it looks to address, and a rough back of the napkin valuation with the respective nuts and bolts explained. The project has backing from Bruce Fenton and Medici Ventures, as well as strong a support community that is drawn to its altruistic commitment to the crypto ethos. There are a lot of positive things about this below the radar project and we look forward to its development.

THE TOKENIZATION MARKET

The line between the digital world and the physical world is becoming less and less defined. We are all now more or less coordinating our activities in the physical world through the digital realm. Email first became a dominant form of communication and then there was a guy who convinced us that buying books online was a great idea. Then eventually a few more people convinced us that the internet was the best place to offer DVD rentals, buy plane tickets, talk to friends, order food, and the best place to set up a one stop shop for drugs and former special forces turned mercenary for hire.

So yes, I would say at this point that every aspect of our lives is somehow connected to the internet. The question then becomes so what’s next? If it seems like our entire lives are basically already on the internet, so what other business model can possibly be disrupted by the internet?

The answer surprisingly is basically almost everything finance related. While it might seem like finance went through its own digital awakening, in reality things haven’t changed all that much. Bitcoin is just starting to attack the Western Union business model of charging people 30% to send their 100 dollars back to their starving families in a third world country.

So where do things go from here? At this point, tokenization appears as if it will have the potential to truly transform the way we trade assets. Tokenization simply enables investors to access a larger world of assets. The tokens that are created on a blockchain platform can represent a share in a company, a coop, partnerships, antiques, art, wine, etc. The possibilities are endless.

With current blockchain technology it is now possible to not only take assets and make them tradeable, but also to improve every step along the value chain. Tokenization, through distributed ledger technology, can bonify the security value chain starting with security issuance, to trading, and then to post trading processes. It provides unparalleled transparency, it offers a high degree of automation (removing the need for registrars), and it eliminates the need for reconciliation since participants all hold most updated information. In addition, tokenization allows for the fractional ownership of digital and physical assets. For example, it enables issuers to take even a common stock, and enable the fractional ownership of a single stock.

RAVENCOIN BACKGROUND

Ravencoin was launched on January 3rd, 2018 and is an open-source project designed to enable instant payments to anyone around the world. Ravencoin’s original goal was to create a blockchain optimized specifically for the transfer of assets such as tokens from one holder to another.

Ravencoin is a fork of the bitcoin code just like how Litecoin is a fork of the bitcoin code. The main differences from bitcoin is that each block reward is 5000 RVN, its block time is only 1 minute vs 10 for bitcoin, and the total coin supply is 21 billion.

It also uses a different mining algorithm called x16rV2, which allows it to be ASIC resistant. There was also no premine, no ICO and no coins held for developer or founder rewards. Ravencoin currently has no centralized organization that manages the daily operations. Finding someone that “works” for Ravencoin is like finding someone who “works” for Bitcoin. This was the original vision and the project remains to be a community driven open source project.

Ravencoin metrics taken from OnChainFX.

KEY TAKEAWAYS

I could go into the really technical details of Ravencoin but there are a few other blogs that already go into the technical details. Our goal is to provide an understanding of the general market, the coin/blockchain, and the potential. In short, the best way to describe Ravencoin is that it is positioning itself to be the fastest way to create your own unique token/asset to back other physical or digital assets.

Three Main Takeaways:

• The Ravencoin protocol is used for the creation of digital assets/tokens and any dividend payments to token holders from the assets that have been tokenized.

• The tokens can also be created for proof of ownership.

• It is different from a smart contract platform because the Ravencoin protocol is specifically designed to handle the transfer of assets. Ethereum and other blockchains were created in theory to be able to do anything. Their belief is that software is code and that any business that was controlled by a third party (crowdfunding platforms) could be programmed into a smart contract on Ethereum and automatically execute. So while a smart contract platform sounds great in theory, in practice it has serious performance issues because it is trying to be the one tool that solves everything.

What does this all mean for the future value of Ravencoin? What specific niche can Ravencoin potentially carve for itself in the tokenization market?

SECURITY TOKEN OFFERINGS

I think the first thing that needs to be pointed out is that there isn’t going to be a one size fits all solution for tokenization. Institutional grade security tokens are going to have completely different needs from a gamer trying to trade a digital asset acquired in a video game (think Ready Player One). The institutional grade tokenization market will be largely driven by regulation. In institutional grade tokens, a smart contract platform that is designed specifically for the issuance of tokens will be required.

Regulation is ultimately going to decide what can be tokenized and sold to investors. If the token entitles the holder of the token to a future cash flow or a partial investment, then there will need to be at least the same regulatory requirements that are applied to stocks today.

With these things in mind, it is hard to see how ravencoin will become the preferred STO platform for institutional grade STO’s, but it still remains to be seen.

FOR EVERYTHING ELSE….

Now for everything else, you can make the argument that speed and user friendliness are the two best attributes for a tokenization platform. Ravencoin offers the speed and simplicity that smart contract platforms simply cannot provide. For an asset holder that is looking to tokenize the asset but does not need the traditional prospectus in order to sell the tokens over an exchange, Ravencoin provides the answer.

The question then becomes, what kind of assets does this include and what is the total market for these assets? In theory, anything that is considered an asset with intrinsic value can be used to issue a security token. That description, however, eliminates nothing and only creates an image of the world’s largest garage sale.

The following are a few projects written about by CryptoBriefing that are using the Ravencoin protocol already:

NVRMOR.IO

This project allows artists to create non-fungible tokens, which are directly tied to the artist’s work. Artists can issue the tokens with their image, bio, and contact info which can be sold or gifted to art collectors. Tickets can also be issued as digital tokens for events, collectibles, or other goods and services provided by the artists.

VINSENT WINE

This wine-trading platform utilizes Ravencoin technology to allow peer-to-peer trading of wine futures. Unlike other futures markets, there’s no intermediary: Ravencoin creates a direct connection between wineries and consumers. Users of the app get access to limited edition wines directly from boutique wineries.

GUNCERTS

Guncerts uses the ravencoin platform to solve issues surrounding gun ownership. With Ravencoin asset creation, gun owners can easily prove or transfer ownership and record repairs and upgrades while retaining privacy. Using Ravencoin’s messaging system, manufacturers can even issue important information such as recalls directly to owners.

VIRTUAL GOOD ASSETS

**“**With a blockchain system, gamers could trade virtual goods securely, without developers having to manage the commerce; they could even arrange to take a cut of each trade.” This quote from the May 2019 Wired article New to Blockchain: Turning In-Game Virtual Goods into Assets, goes into detail of the potential size of the market for virtual goods.

The problem is that in its current state, players do not own the asset in the traditional sense of ownership. They purchased the asset but they essentially only paid for the pixels to show up on the screen. Blockchain technology is aiming to allow the players to record ownership of the items on a distributed ledger and allow for the development of trading on secondary markets. Virtual goods are already a $50 billion per year market and there is no effective secondary marketplace to trade these items. Gamers are increasingly dedicating more of their day on in in the virtual world so the demand for these virtual goods is slated to continue to rise.

VALUATION

Now in an attempt to value Ravencoin (RVN), along with any other crypto out there, you really need to look at it with a blank canvas. Fortunately, and unfortunately, there are no structured modern valuation techniques for cryptos set in stone just yet. Although there are many methods and ideas brought forth in the crypto community, it is still so hard to prove these tactics due to the fact that the markets are too young to have a substantial amount of historical data. Yes, one could say we have had bull market runs, and yes, one could also say we have had bear market runs, but are they truly market cycles? Considering Bitcoin was borne from the depths of the Great Recession back in 2009, has it been through an economic cycle yet?

To a greater extent, forget about using recognized valuation methods in the traditional financial markets. Both the traditional financial and crypto markets are worlds apart. People were trading stocks decades before the Father of Value Investing wrote his first book Security Analysis in 1934 and then subsequently his most well known piece The Intelligent Investor in 1949. And our beloved CAPM model, which is used to calculate the WACC in a traditional DCF, was only developed in the 1960s. Maybe, and I’m stressing the MAYBE, technical analysis, such as using candlestick patterns or Fibonacci lines, could work at times in the short term trading markets, but for this analysis, we are strictly focusing on the Ravencoin’s protocol value. The intrinsic value of what makes RVN valuable on the protocol.

Doing this maybe all just a waste of time. Trying to calculate the value of a crypto is more so of a moonshot than it is to predict next month’s PMI number will be for China. Even Nobel laureate Robert Shiller argues that gossip, half-baked philosophy, and fake news drive economics — not only numbers. But it does serve as a broad illustration of what we should be seeking and understanding when it comes to the myriad options of cryptos.

Ravencoin is a tricky case. Considering it is forked off of the Bitcoin Code, its characteristics and protocol are all very similar. Completely decentralized with no ICO fundraising. Reaching out to someone who “works” for Ravencoin is also non-existent. Nobody works for Ravencoin as there is noone working for Bitcoin. But fortunately I was able to reach out to some of their developers and community members for assistance and guidance along the way. And for this valuation attempt, I did take a page out of Chris Burniske’s book and blog. Chris is one of the first few people to structure a framework for crypto valuations.

But nevertheless, let’s get into it.

So to start, we need to think about the Total Addressable Market. In many current crypto valuation attempts, the equation of exchange of MV=PQ is used to formulate the Market by isolating the M to get to M=PQ/V. But the problem with this is that the Ravencoin Protocol is not merely addressing one particular business market, it is providing a platform to issue and integrate assets onto a secure blockchain. So it would be a tuggle to derive P and Q in this instance. Maybe further down the line this could be broken down, but for now we will disregard it.

In their whitepaper, they list a host of examples that can be used to have assets on their blockchain:

So in a way it’s allowing these physical assets to be tokenized on the blockchain for ownership rights. This means that it is basically getting rid of the intermediary that exists in today’s world of titling services, issuing securities, providing legal rights to an asset, etc. For example, according to a PwC report, a company on average, is liable for their underwriter fee equal to 4–7% of gross proceeds, plus an additional $4.2 million of offering costs directly attributable to the IPO. And this does not include the annual fees and legal fees. To issue shares of a company, represented by tokens, on the Ravencoin Protocol costs only 500 RVN. The costs of getting a land deed or house titled costs a couple of hundred of dollars. But having to quantify the value of each of these use cases would be too time consuming and prone to the mistake of not including assets that aren’t listed above. So to make things simple, I pulled some numbers from a WEF report that projects 10% of the global GDP will be tokenized on the blockchain by 2027, which represents about $24 trillion. And these are the numbers, assumptions, I used for Raven’s TAM on Row 2.

Now for Ravencoin’s supply side:

Every minute, a block is verified on the Ravencoin blockchain with the block reward currently at 5,000 RVN. In similar fashion with Bitcoin, this reward will be halved every 2,100,000 blocks, which comes out to approximately every 4 years. So I baked this into the assumptions section (shown below) to derive Annual RVN Minted in row 6 above.

Ravencoin also has a burn schedule, which is the process of “burning”, or sending RVN to unknown wallets with no trace of the private keys. This will essentially reduce supply which, in turn, increase value per RVN. Tron Black, RVN head developer, lays it all out here. To achieve this, a user on the protocol who wants to issue assets has to pay 500 RVN (at the time of writing that equates to about $14.7). I also included a decaying factor per year to account for one of the suggestions proposed in that blog of an adaptive RVN based on mining hash power. Meaning as the Ravencoin protocol becomes more adopted, more assets will be issued, more on-chain transaction will unfold, which means the mining hash power will become more and more difficult. So basically as the Ravencoin Protocol becomes more widely used, the cheaper it should be to issue assets on it which makes more economic sense rather than increasing the cost as the number of assets increases. This is reflected below and in Row 8 in the above main snapshot.

To account for what % of Ravencoin would capture the TAM, this is at best extremely subjective so a conservative approach was best used to not exaggerate the potential possibilities. By leveraging the growth of an S-curve with the assumptions that the Ravencoin Protocol will command a 2% share of the TAM with the inflection point of the S-curve starting in 2022, Ravencoin’s market share growth would look like, well, an S-Curve:

The return % column was used to grow the number of total assets on the Ravencoin Protocol shown on Row 5 of the main snapshot above.

Row 9 is then the Net RVN in supply after calculating the # of new RVNs minted every year and the # of RVN burned every year. Then with Row 10, the number of RVN HODL’ers are deducted from the equation because I wouldn’t consider them part of the RVN exchange economy. They are merely just sitting in speculator’s wallets. For this part, I assumed an arbitrary number of 50% that are being HODL’ed.

So to derive what the hypothetical intrinsic value price would be for RVN, by taking Rows C4 (RVN Addressable Market) and dividing it by C10 (Total RVN Float (1-HODLs)), you get the price per RVN. As you can see next year in 2020, RVN could be close to $0.07, which would put it back up near its all-time highs. In 2030, it could be potentially close to $89 per RVN.

Again, this is all based on heavy assumptions and possible flawed structures, but it gives us a way of thinking this through. This is why I will also not be discounting these prices back to derive a PV because these should not be considered as cash flow and I am not here to formulate a price target. In addition, all these calculations could be thrown out the window if Bitcoin decides to parabolic growth turn to the moon or reverse and get “rekt”.

Special thanks to RVN developers Tron Black and Hubert Souisa for their advice and guidance in writing this primer.

Investing in cryptocurrencies and Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by the writer to invest in cryptocurrencies or ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions.

Originally written in November 11, 2019 @ medium.com/tuoyuanresearch

SUMMARY

The Ravencoin protocol has presented itself as a very unique blockchain project. No ICO. No premine. No negative publicity. All decentralization. And in it for the long game. Ravencoin’s potential is almost certainly reliant on the tokenization trend that we are seeing being played out in almost every aspect of crypto. Irrespective of how it’s own native token price unfolds, or more so to what direction Bitcoin goes towards, the Ravencoin protocol is a project that genuinely sets out to provide value to the crypto world.

“The aim of Ravencoin is to do one thing and do it well: help users issue tokens and digital assets securely,” Chainstone Labs CEO Bruce Fenton explained. “Tokens, particularly securities tokens, are a promising area for blockchain technology.”

And in this primer, I would like to be able to give an honest, truthful view of this high flying (no pun intended) project in Ravencoin, the market it looks to address, and a rough back of the napkin valuation with the respective nuts and bolts explained. The project has backing from Bruce Fenton and Medici Ventures, as well as strong a support community that is drawn to its altruistic commitment to the crypto ethos. There are a lot of positive things about this below the radar project and we look forward to its development.

THE TOKENIZATION MARKET

The line between the digital world and the physical world is becoming less and less defined. We are all now more or less coordinating our activities in the physical world through the digital realm. Email first became a dominant form of communication and then there was a guy who convinced us that buying books online was a great idea. Then eventually a few more people convinced us that the internet was the best place to offer DVD rentals, buy plane tickets, talk to friends, order food, and the best place to set up a one stop shop for drugs and former special forces turned mercenary for hire.

So yes, I would say at this point that every aspect of our lives is somehow connected to the internet. The question then becomes so what’s next? If it seems like our entire lives are basically already on the internet, so what other business model can possibly be disrupted by the internet?

The answer surprisingly is basically almost everything finance related. While it might seem like finance went through its own digital awakening, in reality things haven’t changed all that much. Bitcoin is just starting to attack the Western Union business model of charging people 30% to send their 100 dollars back to their starving families in a third world country.

So where do things go from here? At this point, tokenization appears as if it will have the potential to truly transform the way we trade assets. Tokenization simply enables investors to access a larger world of assets. The tokens that are created on a blockchain platform can represent a share in a company, a coop, partnerships, antiques, art, wine, etc. The possibilities are endless.

With current blockchain technology it is now possible to not only take assets and make them tradeable, but also to improve every step along the value chain. Tokenization, through distributed ledger technology, can bonify the security value chain starting with security issuance, to trading, and then to post trading processes. It provides unparalleled transparency, it offers a high degree of automation (removing the need for registrars), and it eliminates the need for reconciliation since participants all hold most updated information. In addition, tokenization allows for the fractional ownership of digital and physical assets. For example, it enables issuers to take even a common stock, and enable the fractional ownership of a single stock.

RAVENCOIN BACKGROUND

Ravencoin was launched on January 3rd, 2018 and is an open-source project designed to enable instant payments to anyone around the world. Ravencoin’s original goal was to create a blockchain optimized specifically for the transfer of assets such as tokens from one holder to another.

Ravencoin is a fork of the bitcoin code just like how Litecoin is a fork of the bitcoin code. The main differences from bitcoin is that each block reward is 5000 RVN, its block time is only 1 minute vs 10 for bitcoin, and the total coin supply is 21 billion.

It also uses a different mining algorithm called x16rV2, which allows it to be ASIC resistant. There was also no premine, no ICO and no coins held for developer or founder rewards. Ravencoin currently has no centralized organization that manages the daily operations. Finding someone that “works” for Ravencoin is like finding someone who “works” for Bitcoin. This was the original vision and the project remains to be a community driven open source project.

Ravencoin metrics taken from OnChainFX.

KEY TAKEAWAYS

I could go into the really technical details of Ravencoin but there are a few other blogs that already go into the technical details. Our goal is to provide an understanding of the general market, the coin/blockchain, and the potential. In short, the best way to describe Ravencoin is that it is positioning itself to be the fastest way to create your own unique token/asset to back other physical or digital assets.

Three Main Takeaways:

• The Ravencoin protocol is used for the creation of digital assets/tokens and any dividend payments to token holders from the assets that have been tokenized.

• The tokens can also be created for proof of ownership.

• It is different from a smart contract platform because the Ravencoin protocol is specifically designed to handle the transfer of assets. Ethereum and other blockchains were created in theory to be able to do anything. Their belief is that software is code and that any business that was controlled by a third party (crowdfunding platforms) could be programmed into a smart contract on Ethereum and automatically execute. So while a smart contract platform sounds great in theory, in practice it has serious performance issues because it is trying to be the one tool that solves everything.

What does this all mean for the future value of Ravencoin? What specific niche can Ravencoin potentially carve for itself in the tokenization market?

SECURITY TOKEN OFFERINGS

I think the first thing that needs to be pointed out is that there isn’t going to be a one size fits all solution for tokenization. Institutional grade security tokens are going to have completely different needs from a gamer trying to trade a digital asset acquired in a video game (think Ready Player One). The institutional grade tokenization market will be largely driven by regulation. In institutional grade tokens, a smart contract platform that is designed specifically for the issuance of tokens will be required.

Regulation is ultimately going to decide what can be tokenized and sold to investors. If the token entitles the holder of the token to a future cash flow or a partial investment, then there will need to be at least the same regulatory requirements that are applied to stocks today.

With these things in mind, it is hard to see how ravencoin will become the preferred STO platform for institutional grade STO’s, but it still remains to be seen.

FOR EVERYTHING ELSE….

Now for everything else, you can make the argument that speed and user friendliness are the two best attributes for a tokenization platform. Ravencoin offers the speed and simplicity that smart contract platforms simply cannot provide. For an asset holder that is looking to tokenize the asset but does not need the traditional prospectus in order to sell the tokens over an exchange, Ravencoin provides the answer.

The question then becomes, what kind of assets does this include and what is the total market for these assets? In theory, anything that is considered an asset with intrinsic value can be used to issue a security token. That description, however, eliminates nothing and only creates an image of the world’s largest garage sale.

The following are a few projects written about by CryptoBriefing that are using the Ravencoin protocol already:

NVRMOR.IO

This project allows artists to create non-fungible tokens, which are directly tied to the artist’s work. Artists can issue the tokens with their image, bio, and contact info which can be sold or gifted to art collectors. Tickets can also be issued as digital tokens for events, collectibles, or other goods and services provided by the artists.

VINSENT WINE

This wine-trading platform utilizes Ravencoin technology to allow peer-to-peer trading of wine futures. Unlike other futures markets, there’s no intermediary: Ravencoin creates a direct connection between wineries and consumers. Users of the app get access to limited edition wines directly from boutique wineries.

GUNCERTS

Guncerts uses the ravencoin platform to solve issues surrounding gun ownership. With Ravencoin asset creation, gun owners can easily prove or transfer ownership and record repairs and upgrades while retaining privacy. Using Ravencoin’s messaging system, manufacturers can even issue important information such as recalls directly to owners.

VIRTUAL GOOD ASSETS

**“**With a blockchain system, gamers could trade virtual goods securely, without developers having to manage the commerce; they could even arrange to take a cut of each trade.” This quote from the May 2019 Wired article New to Blockchain: Turning In-Game Virtual Goods into Assets, goes into detail of the potential size of the market for virtual goods.

The problem is that in its current state, players do not own the asset in the traditional sense of ownership. They purchased the asset but they essentially only paid for the pixels to show up on the screen. Blockchain technology is aiming to allow the players to record ownership of the items on a distributed ledger and allow for the development of trading on secondary markets. Virtual goods are already a $50 billion per year market and there is no effective secondary marketplace to trade these items. Gamers are increasingly dedicating more of their day on in in the virtual world so the demand for these virtual goods is slated to continue to rise.

VALUATION

Now in an attempt to value Ravencoin (RVN), along with any other crypto out there, you really need to look at it with a blank canvas. Fortunately, and unfortunately, there are no structured modern valuation techniques for cryptos set in stone just yet. Although there are many methods and ideas brought forth in the crypto community, it is still so hard to prove these tactics due to the fact that the markets are too young to have a substantial amount of historical data. Yes, one could say we have had bull market runs, and yes, one could also say we have had bear market runs, but are they truly market cycles? Considering Bitcoin was borne from the depths of the Great Recession back in 2009, has it been through an economic cycle yet?

To a greater extent, forget about using recognized valuation methods in the traditional financial markets. Both the traditional financial and crypto markets are worlds apart. People were trading stocks decades before the Father of Value Investing wrote his first book Security Analysis in 1934 and then subsequently his most well known piece The Intelligent Investor in 1949. And our beloved CAPM model, which is used to calculate the WACC in a traditional DCF, was only developed in the 1960s. Maybe, and I’m stressing the MAYBE, technical analysis, such as using candlestick patterns or Fibonacci lines, could work at times in the short term trading markets, but for this analysis, we are strictly focusing on the Ravencoin’s protocol value. The intrinsic value of what makes RVN valuable on the protocol.

Doing this maybe all just a waste of time. Trying to calculate the value of a crypto is more so of a moonshot than it is to predict next month’s PMI number will be for China. Even Nobel laureate Robert Shiller argues that gossip, half-baked philosophy, and fake news drive economics — not only numbers. But it does serve as a broad illustration of what we should be seeking and understanding when it comes to the myriad options of cryptos.

Ravencoin is a tricky case. Considering it is forked off of the Bitcoin Code, its characteristics and protocol are all very similar. Completely decentralized with no ICO fundraising. Reaching out to someone who “works” for Ravencoin is also non-existent. Nobody works for Ravencoin as there is noone working for Bitcoin. But fortunately I was able to reach out to some of their developers and community members for assistance and guidance along the way. And for this valuation attempt, I did take a page out of Chris Burniske’s book and blog. Chris is one of the first few people to structure a framework for crypto valuations.

But nevertheless, let’s get into it.

So to start, we need to think about the Total Addressable Market. In many current crypto valuation attempts, the equation of exchange of MV=PQ is used to formulate the Market by isolating the M to get to M=PQ/V. But the problem with this is that the Ravencoin Protocol is not merely addressing one particular business market, it is providing a platform to issue and integrate assets onto a secure blockchain. So it would be a tuggle to derive P and Q in this instance. Maybe further down the line this could be broken down, but for now we will disregard it.

In their whitepaper, they list a host of examples that can be used to have assets on their blockchain:

So in a way it’s allowing these physical assets to be tokenized on the blockchain for ownership rights. This means that it is basically getting rid of the intermediary that exists in today’s world of titling services, issuing securities, providing legal rights to an asset, etc. For example, according to a PwC report, a company on average, is liable for their underwriter fee equal to 4–7% of gross proceeds, plus an additional $4.2 million of offering costs directly attributable to the IPO. And this does not include the annual fees and legal fees. To issue shares of a company, represented by tokens, on the Ravencoin Protocol costs only 500 RVN. The costs of getting a land deed or house titled costs a couple of hundred of dollars. But having to quantify the value of each of these use cases would be too time consuming and prone to the mistake of not including assets that aren’t listed above. So to make things simple, I pulled some numbers from a WEF report that projects 10% of the global GDP will be tokenized on the blockchain by 2027, which represents about $24 trillion. And these are the numbers, assumptions, I used for Raven’s TAM on Row 2.

Now for Ravencoin’s supply side:

Every minute, a block is verified on the Ravencoin blockchain with the block reward currently at 5,000 RVN. In similar fashion with Bitcoin, this reward will be halved every 2,100,000 blocks, which comes out to approximately every 4 years. So I baked this into the assumptions section (shown below) to derive Annual RVN Minted in row 6 above.

Ravencoin also has a burn schedule, which is the process of “burning”, or sending RVN to unknown wallets with no trace of the private keys. This will essentially reduce supply which, in turn, increase value per RVN. Tron Black, RVN head developer, lays it all out here. To achieve this, a user on the protocol who wants to issue assets has to pay 500 RVN (at the time of writing that equates to about $14.7). I also included a decaying factor per year to account for one of the suggestions proposed in that blog of an adaptive RVN based on mining hash power. Meaning as the Ravencoin protocol becomes more adopted, more assets will be issued, more on-chain transaction will unfold, which means the mining hash power will become more and more difficult. So basically as the Ravencoin Protocol becomes more widely used, the cheaper it should be to issue assets on it which makes more economic sense rather than increasing the cost as the number of assets increases. This is reflected below and in Row 8 in the above main snapshot.

To account for what % of Ravencoin would capture the TAM, this is at best extremely subjective so a conservative approach was best used to not exaggerate the potential possibilities. By leveraging the growth of an S-curve with the assumptions that the Ravencoin Protocol will command a 2% share of the TAM with the inflection point of the S-curve starting in 2022, Ravencoin’s market share growth would look like, well, an S-Curve:

The return % column was used to grow the number of total assets on the Ravencoin Protocol shown on Row 5 of the main snapshot above.

Row 9 is then the Net RVN in supply after calculating the # of new RVNs minted every year and the # of RVN burned every year. Then with Row 10, the number of RVN HODL’ers are deducted from the equation because I wouldn’t consider them part of the RVN exchange economy. They are merely just sitting in speculator’s wallets. For this part, I assumed an arbitrary number of 50% that are being HODL’ed.

So to derive what the hypothetical intrinsic value price would be for RVN, by taking Rows C4 (RVN Addressable Market) and dividing it by C10 (Total RVN Float (1-HODLs)), you get the price per RVN. As you can see next year in 2020, RVN could be close to $0.07, which would put it back up near its all-time highs. In 2030, it could be potentially close to $89 per RVN.

Again, this is all based on heavy assumptions and possible flawed structures, but it gives us a way of thinking this through. This is why I will also not be discounting these prices back to derive a PV because these should not be considered as cash flow and I am not here to formulate a price target. In addition, all these calculations could be thrown out the window if Bitcoin decides to parabolic growth turn to the moon or reverse and get “rekt”.

Special thanks to RVN developers Tron Black and Hubert Souisa for their advice and guidance in writing this primer.

Investing in cryptocurrencies and Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by the writer to invest in cryptocurrencies or ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions.