With corporate backing, a working product and respected management, the TenX debut was a shining beacon in the choppy waters of the 2017 ICO. The crowdsale reflected this — it raised a whopping $67 million in 10 minutes.

I understood its dividend model was based on transaction volume, but I almost didn’t bother doing the math. I figured investors were smart enough to do this themselves and thus, if the ICO was dust in 10 minutes then it must be an absolute steal, right?

Lets take a closer look. The payout model will look like this:

worldwide TenX transactions * .005 / 200,000,000 * number of tokens held

Keeping in mind the token hit the markets at $1, TenX would need $40 billion worth of annual transactions worldwide before investors even get $1 a year in dividend (up until now they have done around $500k total!).

In order for it to hit $40 billion, 1 in 100 debit card transactions would need to be done with a TenX card^. As certain as the future of cryptocurrencies seem, I think we’re a long way off TenX achieving that kind of prominence. Although they do have a working product, it could be replicated by another well-funded startup. Or Visa. Or Mastercard. Or any of the banks for that matter — a quick look at their career sites will tell you that they won’t be sitting on their hands when it comes to blockchain!

[^assumes similar average payment volume for each card. Source: https://www.federalreserve.gov/newsevents/press/other/2016-payments-study-20161222.pdf]

TenX’s growth expectations

I understand that, in the example I used, a 100% dividend compared to entry price (and perhaps a 500% price increase reflecting that dividend — as the two will be directly correlated) would be terribly high compared to stocks, but if you consider the risk profile of PAY compared to the average stock, its only fair that investors see such a return somewhere on the horizon. Even if TenX overcome the many hurdles to attain such ubiquity, it could be 10 years before that happens — despite their ambitious 3 year plan (above; if that works out then the ROI is fantastic but, again, highly ambitious). In the former case, 5x price over 10 years would be a mere 18% annual return on your investment, hardly gigantic for an early-stage investment - and that’s without accounting for risk.

You’ll notice that I haven’t factored in the 0.1% PAY token reward for their card users. The team plan to actively buy PAY tokens from the market in order to reallocate these to customers. However, this would only have an upward effect on price if neither the user nor (if the user spends PAY) the recipient business exchange their PAY tokens. If all of them exchange it for something else, then the demand effect will be offset by a matching supply effect on price. In other words there won’t be any net effect.

In fact, yesterday evening, PAY tokens hit the exchanges for the first time (why I don’t consider HitBTC an exchange is a story for another time) and the 50–60x exuberance that it had seen in the IOU markets quickly died off. As of this writing, it sits at around $1.15; not a huge premium considering how many people were kicking themselves when their ICO transactions didn’t go through. Perhaps if they’d have known they were only taking a 15% hit, they wouldn’t have cared too much. Perhaps now that the panic has ended, I’m not the only one doing the maths.

Even if you think I’m wrong (its happened before!) and you expect it to skyrocket now that its on the open market— you don’t have to be in too much of a hurry to get your money in. As you can see above there’s already a large “sell wall” of ICO investors ready to get out at a 20–30% return; this will eat up much of the demand in the coming days — dampening any price boosts.

I should say that I still do think TenX are still comparatively decent long-term bet when you consider the quality of most ICOs. If they continue iterating on their product and forming corporate partnerships at the rate they have until now, they will be a force to be reckoned with in the crypto card market. And, unless something better comes along, their transaction numbers will serve as a fantastic proxy for the success of crypto for day-to-day purchases.

Just don’t expect a huge return on your investment anytime soon.