Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Is Qtum a Good Investment?

Qtum (QTUM) has been attracting a lot of attention lately with events as diverse as a satellite launch and a blockchain-based video game.

Qtum established the world’s first orbiting node or transfer point for blockchain with the launch of the Zhangheng-1 satellite on 2 February 2018, Cointelegraph reported. The node will be part of Qtum’s global ecosystem for its next-generation decentralized applications (DApps).

A more modest but potentially lucrative development was the launch of Qtum Heroes which is described as “the world’s first blockchain game with specific gameplay. Qtum Heroes features include collection, simulation, and a multiplayer arena.

Qtum Heroes is the creation of Qtum, Chinese gaming company Mob Arts Entertainment Corporation and 777.Bingo. 777.Bingo is a blockchain entertainment platform built by Mob Arts. It is envisioned as a marketing and distribution for games, videos, and other entertainment products.

Is the QTUM Cryptocurrency Worth the Price?

Investors have noticed Qtum for a very different reason its cryptocurrency is doing very well right now.

QTUM achieved a Coin Price of $18.07 and a Market Capitalization of $1.337 billion on 12 March 2018. That led to a Market Volume of $115.807 million making Qtum one of the most traded altcoins.

All this was achieved on a circulating supply of 73.944 million QTUM and a total supply of 100.434 million QTUM, CoinmarketCap data indicates. Qtum is one of the best performing cryptocurrencies on the market but is it worth the price.

So what is QTUM Anyway?

Qtum is an attempt to create a lighter and better smart contract that is supposed to operate with mobile wallets and the Internet of Things (IoT).

Qtum’s smart contracts are supposed to be easier to scale and transmit because they are built with the Unspent Transaction Output (UTXO) protocol. The Qtum team believes this would enable the creation of smart contracts that can operate on mobile devices such as smartphones, a whitepaper indicates.

Obvious uses for UTXO smart contracts or predetermined smart contracts include games and operating systems for IoT devices. A long-term goal will be the building of QTUM Virtual Machines algorithms that can perform specific tasks such as accounting functions. These solutions would be similar to Aitheon’s Digibots.

Potential uses of Qtum’s technology include building a blockchain for smartphones and an app store for blockchain-based solutions. Another is the operation of robots, autonomous vehicles and other devices through the blockchain, something already demonstrated by Aitheon.

Some of the markets Qtum might tap could be huge. Gaming seems like a big opportunity; there were 1.815 billion video game players in 2014, Statista estimated. That number grew to 2.210 billion in 2017; and is expected to grow to 2.341 billion in 2018, and 2.725 billion in 2021. Qtum is involved in 777.Bingo’s effort to build a blockchain app store for games.

Why does Mr. Market like Qtum?

Cynics will note that there are lots of efforts to build better smart contracts out there including Universa, NEO, and Rootstock (RSK) to name just a few. They will ask what makes Qtum different from those efforts.

A good answer might be friends in high places, in Beijing. There is circumstantial evidence that Qtum has some support from the government of the People’s Republic of China. It was able to get China’s National Space Administration to launch a satellite for example.

Qtum’s partner in 777.Bingo, Mob Arts Entertainment Corporation has received investment from the politically-connected social media giant Tencent Holdings (HKG: 0770). Mob Arts was the first company to get permission to release games across all of Tencent’s social media platforms.

This indicates that Qtum will not have to worry about a Chinese crackdown on cryptocurrency because it is in bed with China’s government and the Communist Party. Instead, it might be one of a number of cryptocurrencies allowed in the People’s Republic.

Does the Chinese government Love Cryptocurrency?

Developments at Qtum indicate the Chinese government might be encouraging the development of blockchain and cryptocurrency. They also point to an almost schizophrenic attitude towards crypto in the People’s Republic.

China’s government seems to be encouraging blockchain technology development while trying to discourage cryptocurrency at the same time. The Communist Party does not want to suppress cryptocurrency and blockchain, it wants to control them.

China seems to be following the same strategy with blockchain that it used for the internet. Build a local version of the technology it can control while keeping out disruptive foreign variations.

The Communist Party has encouraged the homegrown Baidu (NASDAQ: BIDU) search engine while keeping out the open sourced Google. Baidu accounted for 93.2% of the searches in China but only 1.2% in the United States in September 2017, Statista data indicates.

Similarly, the Chinese government is trying to keep out foreign open-sourced blockchain solutions like Ethereum and Bitcoin while encouraging homegrown alternatives it can control. The policy worked with the internet, so they are trying it with blockchain.

Will Qtum Play out of China?

That indicates Qtum might be lucrative in China, but uncompetitive elsewhere. Baidu has the advantage of the great firewall of China keeping Alphabet (NASDAQ: GOOG) out.

An obvious danger to Baidu and Qtum would be a sudden political change that opens China up suddenly, as the fall of the Soviet Union demonstrated Leninist regimes like that in Beijing can collapse quickly and unexpectedly. Another is that they will uncompetitive in truly open markets. Tencent’s WeChat has been unable to compete with Facebook’s WhatsApp outside the People’s Republic.

Political upheaval in China might be imminent because the Chinese government seems to be imitating the cultural and political model adopted in the United States and the United Kingdom in the 1950s. That is centralized, government-sanctioned media, promoting a homogenous national culture and suppressing dissent and diversity.

Betting on China on the Blockchain

This model; exemplified by the BBC in the UK and the monopoly enjoyed by the “Big Three” TV networks in the United States, failed to achieve stability.

The shallow conformity of the 1950s was followed by the cultural chaos and social upheaval of the 1960s. The counterculture that swept the English-speaking world in the 1960s can be seen as a populist revolt against centralized media and government-sanctioned conformity.

A likely development in China over the next few years will be social and cultural unrest that the Communist Party cannot control. That is likely to pull the rug out from under companies like Qtum.

That means an investment in QTUM, like Baidu, Alibaba Holdings (NYSE: BABA), and Tencent is a bet that the Chinese government can keep a lid on things in the People’s Republic. If it cannot, these companies’ monopolies are likely to evaporate. The real test of such companies will be their ability to compete globally which is unproven.

Investors must understand that by buying certain stocks and cryptocurrencies they are betting on the success of the Chinese Communist Party. If the party fails or falters these investors might lose a lot of money.