N.B: In the spirit of full transparency, the following Coin Report is the third Sponsored Post on my blog. The Bismuth team recently contacted me with a request to write up a Coin Report on the project. After they had agreed to my sole stipulation that this report would conform to the rigour of the previous reports, with all strengths and weaknesses being explored and evaluated, I agreed to write the report. Regarding future Sponsored Posts, I have 2 spots open before the end of January 2019. If you would like a Coin Report written for a project, please ask the team to get in touch. Further, next week’s Coin Report will be selected via community choice: vote here to choose which altcoin you want featured.



Welcome to the seventh Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of Bismuth. This will comprise of an analysis of a number of significant metrics, an evaluation of the project’s community and development and an overview of its price-history. The report will conclude with a grading out of 10. (These reports were previously graded out of 5.) I have also included a spreadsheet with any significant figures and metrics from previous reports at the end of this one for cross-comparative purposes. The previous reports will have a grading out of 10 assigned, too. I hope you enjoy the read!

Introduction

Bismuth is a project that has been on my radar for quite a while now for a multitude of reasons that I’m sure we’ll delve into later. The primary reason, however, is that it is one of the rare cryptocurrencies that has been entirely written from scratch, and one of even fewer cryptocurrencies that is truly innovative in its form.

Having now completed my research for this report, there is much I am excited about and much I would like to address regarding where I think the project is falling short. I believe this report will serve to illuminate what I feel is strong development, in particular, that is flying under the radar, and weak marketing, as we’ll discover. Overall, I hope it will prove objective concerning the facts and fair with regards to more subjective aspects of the report.

If you’d like to find out a little more about Bismuth prior to reading on, here are some primary links:

Fundamental

General:

Name: Bismuth

Ticker: BIS

Algorithm: SHA224

Sector: Decentralised Applications Foundry



Exchanges: Cryptopia, Qtrade & TradeSatoshi

Bismuth was launched in May 2017 with no ICO and no premine, and was written from scratch in Python; the first cryptocurrency of its kind. The coin operates on a Proof-of-Work consensus mechanism under the SHA224 algorithm, with Hypernodes that operate on a separate, secondary blockchain under a Proof-of-Stake consensus mechanism. The Proof-of-Work phase will last ~13.5 years post-launch. Much like Dero, from the previous Coin Report, Bismuth has a progressively diminishing block reward. We’ll get into how this affects supply emission in the following section.

Having been launched over 18 months ago, Bismuth has a little more meat to its price-history than many of the coin I’ve recently written reports for. It has experienced a full market cycle, finding its peak of ~64k satoshis in January 2018, as the vast majority of alts did. Bismuth has since followed the trajectory of the entire market and experienced a slow bleed from those highs to the prices we see today. More on this a little later…

As a project, Bismuth seems very much focused on attracting the more technical users in the space, at least for the time being, as I’m sure you’ll agree as we traverse through this report. In their own words, “Bismuth is trying to be the blockchain lego… Bismuth is trying to be modular, extensible and as simple as possible with only about 2400 lines of code.” This is a developer’s dream, one would imagine, but it does come with some difficulties for the layman, as we’ll discover. Let us take a look at just how well Bismuth is doing after ~18 months in existence:

Metric Analysis:

Below are listed a number of important metrics, all of which are accurate as of 4th December 2018. For anyone reading this who has yet to read a Coin Report, it might be worth reading this section of the first report, where any potentially unfamiliar terms are explained. For any terms or metrics specific to this post, I will provide explanations besides the figures.

Metrics:

General:

Price: 6906 satoshis ($0.28)



Exchange Volume (24H): $18,197



Circulating Supply: 14,124,968 BIS



Total Supply: 14,838,112 BIS



Maximum Supply (After PoW phase excluding 10% Dev Fund rewards): 63,922,918 BIS



% of Max. Supply Minted: 23.21%

Network Value: 975.47 BTC ($3.925mn)

Network Value at Max. Supply: $17.764mn

Category: Midcap

Exchange Volume-to-Network Value: 0.46%

Average Price (30-Day): $0.47

Average Exchange Volume (30-Day): $15,388

Average Network Value: $6.533mn

Average Exchange Volume-to-Average Network Value: 0.24%

% Price Change USD (30-Day): -49.6%

% Price Change USD (1-Year): –73%

USD All-Time High: $8.94

% From USD All-Time High: -96.8%

Premine % of Max. Supply: 0 (10% Dev Fund Rewards)



Premine Location: 4edadac9093d9326ee4b17f869b14f1a2534f96f9c5d7b48dc9acaed

Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 0.753 BTC



Liquidity-to-Network Value %: 0.08%

Amount Available on Exchanges: 693,273 BIS

% of Circulating Supply Available on Exchanges: 4.91%

Staking & Masternodes:

Note: Bismuth masternodes are referred to as Hypernodes, and are available with collateral of 10k BIS, 20k BIS or 30k BIS. For the purposes of these metrics, I am using 10k BIS collateral for the calculations. Further, I have used https://hypernodes.bismuth.live/?page_id=21 for masternode data. For more info on Hypernodes, see https://github.com/bismuthfoundation/Bismuth-FAQ/blob/master/Hypernodes/HyperNodes_FAQ.md.

Masternode Price: $2,779.03

Masternode Collateral Size: 10,000 BIS

Masternode Count: ~430

Masternode ROI (Annual): ~9.78%*



Masternode Reward / Block Reward: Rewards proportional to collateral. 0.8 BIS per block attributed to Hypernodes. 1152 BIS per day.



Supply Locked in Masternodes: ~4,300,000 BIS

Masternode Network Value: $1.194mn

MNV / Network Value: 30.44%

*To calculate minimum annual ROI for Hypernodes: Annual Hypernodes Emission / Supply Locked in Hypernodes = 420,480 / 4,300,000 = -.09778 = 9.78%

Supply Emission & Inflation:

Note: I have used https://github.com/hclivess/Bismuth/blob/master/bismuth-supply.md for supply emission information. Bismuth supply emission is quite unclear across different sources but this was provided to me by the team as the most updated source. The table at the bottom of the link is useful.

Block Reward Schedule: Diminishing block rewards from 15 at block 1 to 0 at block 7,100,000. Current block reward is ~12.32. Total supply from PoW phase = ~63.9mn BIS + 10% for Dev Fund = 10.371 BIS average block reward during PoW. 0.8 BIS reward per block for Hypernodes, starting at block 800,000 and taken from PoW block reward. 420k BIS per year emission post-block 10,000,000.



Average Block Time: 60 seconds

Current Block Height: 936575

Annual Supply Emission: using the current block reward of 12.32 BIS to provide a maximum annual supply emission: 12.32 * 1440 (blocks per day) * 365 = 6,475,392 BIS (447.19 BTC at current prices). Note that this is a maximum figure for emission, as rewards decrease with each block.

Annual Inflation Rate: 45.84%

Circulating Supply in 365 Days: 20,600,360 BIS

Note: below are printed two inflation curves sourced from the Bismuth Bitcointalk ANN:

Distribution:

Address Count: 2566

Supply Held By Top 10 Addresses: 49.11% (the top address is Cryptopia)



Supply Held By Top 10 (minus Cryptopia): 16.44%

Supply Held By Top 20 Addresses: 53.96%



Supply Held By Top 100 Addresses: 71.27%



Inactive Address Count in Top 20 (30 Days of No Activity): 14

Analysis:

Now, there’s a lot to get through here, and much that is more difficult to untangle than in previous reports. As stated in the section on Staking and Masternodes, Bismuth operates using its own custom-built Hypernodes, which vary in collateral. As such, I have used a 10,000 BIS collateral-equivalent for the purposes of metric calculation. Further, Bismuth is particularly difficult to find clear and updated supply emission information for, as they have recently reduced inflation plus some sources are out-dated.

All the above being said, there is a lot of interesting data here to unpack. I’ll work my way through the metrics from General, before moving onto Staking and Masternodes, followed by Supply Emission and Inflation and I’ll conclude with some rich-list analysis:

To begin, let’s take a look at Bismuth’s recent volume-related data and how it relates to Network Value. Bismuth is currently trading at a Network Value of ~975 BTC or $3.925mn, but experienced a little over $18,000-worth of Exchange Volume over the past 24 hours. This gives Bismuth an Exchange Volume-to-Network Value of 0.46%. This is lower than I tend to like to see, as frequent readers of these reports will know; but, when the current market uncertainty and general environment of low volume is taken into consideration, it’s not too bad at all.

The Average Exchange Volume for the past month has been $15,388 daily, which equates to 0.24% of the Average Network Value for the past month of $6.533mn. Now, there are a couple of things to note here: firstly, it is during market conditions like this that I wish I could determine these values using Bitcoin-based data rather than Dollar-based data, as the rapid decline in BTC/USD over the past couple of weeks is undoubtedly skewing these calculations; secondly, the fact that Average EVNV is a little over half that of EVNV suggests that interest is perhaps picking up recently at current prices.

That being said, we must do some cross-comparison for further clarification: Bismuth’s EVNV of 0.46% places it in the middle of the pack, relative to previous coins reported on – it is higher than ALQO, GeoCoin and Bulwark but lower than Covesting, Stakenet and Dero. Bismuth’s Average EVNV of 0.24% is a little weaker than this, with it beating out GeoCoin and ALQO but not the others. Overall, the market interest in Bismuth seems moderate.

Now, another point-of-interest to note from the General metrics is everything related to price. Current prices of $0.28 or ~6900 satoshis are almost 97% below the all-time high of $8.94. This presents almost 3200% of upside potential if Bismuth was to ever set a new high. We’ll dive into more on this when we look at the chart later.

Lastly, from the General section, let’s look at Liquidity and the supply that is currently sitting on exchanges. Bismuth has Liquidity of around 0.08%. This is low, but likely a symptom of the current market uncertainty as much as anything else. When comparing Bismuth with coins from previous reports, it actually has the lowest Liquidity of the seven coins. Further, there is around 4.91% of the circulating supply current available for purchase on exchanges. This is higher than all three coins (Stakenet, Bulwark and Dero) for which this metric was previously calculated. The reasoning behind this may simply be that there is less incentive to hold Bismuth than Stakenet or Bulwark at present because of the higher returns offered by their masternodes. Regardless, it does seem that Bismuth is less attractive to buyers right now than other coins I have written reports on, for whatever reason. Of course, this can be a sign of undervaluation and thus a potentially profitable opportunity may be presenting itself; but this can only be confirmed once the fundamentals and technicals have been fully evaluated, and once we know what so-called ‘smart-money’ is doing with Bismuth.

Now, let’s move onto the Hypernodes. The first point to consider is the annual ROI for running a Hypernode, which I calculated to be around 9.78% using 10,000 BIS collateral. This is, as mentioned above, a lower annual return than some of the other masternode coins I’ve written about: ALQO had an ROI of 53.15%; Bulwark of 59.39%; and Stakenet of 21.32%. This lower return for running a Hypernode may, however, manifest as a positive for inflation.

Next, let’s consider the strength of the Hypernode network: there are ~430 10,000 BIS-equivalent Hypernodes online, equating to 4.3mn BIS locked in the network. This works out as $1.194mn for the Masternode Network Value, which equals 30.44% of the Network Value. This is a moderately strong figure, and is greater than that of Stakenet but lower than that of ALQO or Bulwark. Overall, the Hypernode network seems stable but with plenty of room for growth. This may also be a symptom of the fact that Hypernodes have only been integrated for a little over 3 months, as we’ll discuss at length in the Development section.

Moving onto Supply Emission and Inflation, I find it quite interesting that Bismuth has progressively-diminishing block reward, like Dero, meaning that its inflation rate drops incrementally with each new block. The current block reward is ~12.32 and the reward will taper off to 0 at block 7,100,000. I have used the current block reward to determine maximum supply emission and inflation figures, as, of course, these rewards are not static. Using the current reward of 12.32, around 6.475mn BIS will be minted at most over the next year, which equates to 447.19 BTC at current prices. This gives Bismuth a maximum annual inflation rate of 45.84%. This is lower than that of Bulwark and Dero but greater than that of Stakenet, ALQO, Covesting (an ICO token with 0 inflation) and GeoCoin. Once again, this is a moderate level of inflation, though actual annual inflation will be lower than what I’ve calculated for Bismuth.

Let’s see how this amount of supply emission relates to Bismuth’s volume-related metrics: 447.19 BTC of annual supply emission at current prices equates to 1.225 BTC of daily supply emission, on average (or ~$4,929). Bismuth’s Exchange Volume covers this ~369%, and its Average Exchange Volume covers this by ~312%, indicating that there is ample trading volume to sustain current prices despite the daily supply emission.

To conclude this lengthy section, let’s talk about Distribution. Bismuth has 2566 holders. Of these, the top 10% control 49.11% of the supply, though the richest address is Cryptopia and so we may discount that from our calculations. The top 10% minus Cryptopia control 16.44%, with the 2nd-richest address being Development Funds. This is greater decentralisation of supply than Covesting or Stakenet but weaker than ALQO or Bulwark.

More importantly than that, however, is the activity of the richest addresses. Of the top 20 richest addresses, 14 have been inactive for the past month, implying that those holders are content with their position sizes and are not actively accumulating or distributing at current prices. The 5th-richest address has been inactive for the past month also but distributed 100,000 BIS in October. The 7th-richest has distributed 60,000 BIS in the past 6 weeks. The 11th-richest has distributed 11,000 BIS recently and the 18th-richest is in active accumulation. Overall, it seems that the majority of the largest holders are quite happy with their holdings.

That concludes this section on Metric Analysis. Onto the Bismuth community:

Community:

There are two primary aspects of community analysis: social media presence and Bitcointalk threads. I’ll begin with the former before moving on to the latter.

Social Media:

Concerning social media presence, there are four main platforms to examine: Twitter, Facebook, Telegram and Discord.

Bismuth is present on all four platforms. To begin, let’s look at the various social metrics that I calculated from the Bismuth Twitter and Facebook accounts:

Twitter Followers: 7140

Tweets: 3361

Average Twitter Engagement: 0.68%

Facebook Likes: 630



Facebook Posts (30-Day): 20



Average Facebook Engagement: 0.68%

As usual, I will be using RivalIQ‘s social benchmark report for evaluation purposes.

Bismuth is very active on Twitter, with 3x more tweets than the 2nd-most active coin from my previous reports, Stakenet. Its Average Twitter Engagement rate is also quite strong at 0.68%: this is almost 5x greater than that of GeoCoin and a little over 50% greater than that of Bulwark, but is lower than Covesting, ALQO, Stakenet and Dero. It is also 14.78x greater than the average across all industries, according to RivalIQ’s report, and ~52x greater than that of the Media industry.

Further, Bismuth seems committed to having a cross-platform audience, smaller though it may be on Facebook. They tend to post at least once every other day and, strangely enough, have an equivalent engangement rate to that of their Twitter page. This engagement rate of 0.68% is greater than that of GeoCoin and Covesting but weaker than Bulwark and Stakenet. It is also 425% greater than the engagement across all industries and 850% greater than that of the Media industry. Promising.

Now, onto the Bismuth Discord: the group has 2895 members, which is moderate in size. There are plenty of channels for relevant topics. Of these, the News channel is generally updated every other day, whilst Links contains a list of useful resources for newbies. As tends to be the way, General is where the vast majority of discussion takes place: there seems to be some sort of conversation on a daily basis, though some days are a little sparse; there are around 30 members of the group actively involved in discussion, which is around 1.04% engagement; and there’s a little support-focused back-and-forth with promptly answered queries, but much of the conversation centred on Hypernodes, which is useful in highlighting the benefits of buying and holding Bismuth for new users. It was also great to see a question about Bismuth’s utility answered with lots of insightful points about its codebase and out-of-the-box DApps.

In general, much of the conversation I saw was focused on more technical aspects of the project; there was little-to-nothing on marketing Bismuth or on the future direction of the project. I’d like to see more content like the Hypernode explanation video, as this is critical in growing a project’s user-base. Speaking of Hypernodes, the dedicated channel for these is rather active, with lots of users getting swift support in setting up their nodes. Exchanges highlights a recent listing on TradeSatoshi, whilst the most interesting channel – Suggestions – is not active enough, though it’s good to see the community getting involved in the development process and the team being receptive. More of this would be great. Overall, it’s a solid Discord group.

Moving onto Telegram, Bismuth doesn’t fare so well here. There are 333 members, with 7 new members in the past week, which is around 2.1% growth. This isn’t so bad. The problem is that there have been less than 50 messages across those 7 days, and the majority of those are about the Discord group. I’m guessing the Telegram group isn’t of much importance.

BitcoinTalk:

The Bismuth Bitcointalk thread was created on May 1st, 2017, and has since generated 2742 posts across 138 pages, with an average of 4.71 posts per day. Further, there have been 155 posts in the past 90 days via 39 individual posters.

Regarding the content of the thread, there does seem to be quite a lot of excitement about the launch of Hypernodes and general interest in the future of Bismuth. The community are also quite happy to answer any questions from newbies swiftly and informatively. There are regular, succinct updates on the thread from the team, and the roadmap is visible in recent posts; all of this serves to improve userbase growth, as those new to the project can see exactly what is going on and the consistency of development. Further, there was an issue flagged with false positives on antivirus software and this was quickly resolved by the team. Overall, the thread is highly informative and fairly active.

That concludes the section on Community. Onto Development:

Development:

For the following Development analysis, I will be evaluating project leadership, the website, the roadmap, the whitepaper, the wallets and finally providing a general overview:

Project Leadership:

Concerning project leadership, there are 10 core members listed on the website. This is a larger core team than that of most of the coins I’ve previously written about. This team is comprised of 2 advisors with experience in programming and cryptography; 1 member who is focused on design; 1 who has experience in service operations; 1 in engineering; 1 in tool development; 1 in research and development; 1 in testing; and 2 core developers. There is a lot of strength and breadth here in development, but little in marketing, which explains why Bismuth isn’t as popular as it perhaps should be. This is another similarity shared with Dero, though they are two very different coins; a concerted effort in developing a great product but no specialists in the team to capitalise on it and push it to the largest userbase possible.

Website:

www.bismuth.cz

The website isn’t particularly great, with relatively poor UI/UX. That being said, it is very informative and comprehensive in its detail on the project itself. What I would like to see is stronger branding, cleaner web design and resources that are clearly linked or segmented; for example, the wallets are linked under the Projects tab, which isn’t intuitive. Overall, I think the website just needs updating and redesigning.

The explorer, however, is very useful and highly functional, which speaks to the focus on utility and development rather than marketing and growing the userbase.

The website is the first point-of-reference for many, so this does need more attention. Ideally, I’d like to see a dedicated, regularly-updated blog.

Roadmap:

https://bismuth.cz/roadmap/

The Bismuth roadmap is great on many counts and not so great on a few counts. I really like that there is a complete history of the project provided, as well as a visually appealing roadmap for present and future endeavours.

Beginning with the historical roadmap, I’m not so keen on the lack of a visual representation for the information but it is still very informative and clearly segmented. May 2017 saw the successful launch of Bismuth; support for messaging (encrypted and unencrypted); and the launch of a mining pool. September 2017 saw a decentralised token layer integrated. From November 2017, Bismuth saw an expansion of the development team; a period of refining the codebase; and proof-of-concept development for Hypernodes. Beginning in February 2018, the project implemented codebase modularity; exchange compatibility; a tiered mempool; more focus on graphic design; a html wallet and cold storage; and continued to develop Hypernodes. At this point of reading the roadmap, I felt that the project is very much targeted at highly technical users that have some familiarity with programming terminology rather than layman. It would be useful for those new to cryptocurrency to have some sort of brief explanation of these developments provided in jargon-free prose.

In September 2018, Bismuth published a roadmap update in the form of a more accesible visual graphic. This is far more useful. H2 2018 (the second half of the year) saw a new logo designed; more exchange listings; the Proof-of-Stake chain initialised for Hypernodes; the code released for Hypernodes; a reduction of inflation; the launch of Hypernodes and shared hosting for them. H1 2019 will see Hypernodes moved to a sidechain and decentralised file storage based on Hypernodes. H2 2019 will see how-to guides and tutorials written and published; a new mining pool and GPU miner; seed wallets and more paper wallets released; and development of DApps.

Whitepaper:

There is no consolidated whitepaper written for the layman. There are several highly technical academic papers that can be found here. These are beyond me, so I won’t even attempt to assess their strengths or weaknesses here.

Wallets:

With regards to wallets, there are Windows, Linux and Mac local wallets, a paper wallet generator and a third-party web wallet.

General:

In general, Bismuth is undoubtedly a development-focused project. It is innovative at its core in that it is the first blockchain written in Python, and thus the team must know their coin inside out and be committed enough to the project to write any additional features for it from scratch. I like that they have custom built their Hypernodes and that these will serve as a base for decentralised file storage in the future. I also like that the project makes it easy for developers to test out new concepts. What I worry about is that it is not yet a fully accessible coin for a layman user: those with limited prior experience with cryptocurrencies will find Bismuth less accessible than, for example, a Bitcoin clone, where those more well-versed with programming may find it more accessible.

With regards to funding, the Bismuth team receives 10% of block rewards for development purposes, which is not included in their circulation supply calculations. This seems ample for the purposes of growing and developing the coin, and I like that it was not premined, so that the rewards are always in line with the supply being emitted, rather than the team controlling a significant amount of the supply, as is often the case.

Technical

The Bismuth chart is a beauty. Price has experienced a full market cycle, with a peak forming in early 2018 at ~65k satoshis and subsequent price-action taking Bismuth down towards the all-time low of 4600 satoshis. Price formed a bottom above this all-time low at ~5700 satoshis in mid-September, bouncing from there to a level of prior support turned resistance at ~15k satoshis. Price has since retraced on low volume towards the accumulation range that was established below 7k in Autumn. As such, current prices are only ~17% below the local lows that formed in September and ~33% above the all-time low. Upside potential is over 1000% against Bitcoin, and far more against the Dollar; as such, this would seem like a low-risk, high-reward play at current prices.

Conclusion

This report is now approaching 5,000 words, and it is time to draw it to a close.

My final grading for Bismuth is 7 out of 10. It is quite clear that Bismuth has a strong case to be made for it regarding its approach to development, and current prices seem relatively cheap, but there’s no hiding from the fact that the project is falling short of where it should be because of a lacklustre approach to growing its userbase and incentivising market participants to buy and (preferably) hold Bismuth. There is much to like and much room for improvement.

Further, here is a link to a Google Sheets file with any significant data from previous reports compiled for cross-comparative purposes. I will keep this updated as I continue to write these reports.

I hope this report has proved insightful and that you’ve enjoyed the read! Please do feel free to leave any questions in the Comments, and I’ll answer them as best I can.

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