Note: This is a speculative recommendation on a small ($91 million market cap) coin. It operates out of China, so there is some additional regulatory risk.
This crypto project is called High Performance Blockchain, and I believe it offers more than enough upside to justify the risk.
I recommend going into this trade in at least two steps (due to market volatility). You can invest half your normal amount now, and I’ll let you know when we see another good entry point.
Since HPB is more speculative than our other coins, I recommend doing a smaller investment. I would put enough in to make it interesting if it does well, but not so much that I’d be hurting if the project didn’t work out.
As I write this, HPB trades around $3.08. It recently traded as high as $9 back in late January. It may be bottoming out at these levels. But it will likely follow the direction of bitcoin and the broader altcoin market.
Here’s a chart showing the price action since it reached all-time highs in January. The green line represents the market cap (total value of all HPB coins in circulation).
Ticker: HPB
Price: $3.08
Market cap: $91 million
Recommended exchange: KuCoin.com
Portfolio classification: Speculative
Recommended investment size: Small (enough to make it interesting but not so much that a loss would materially affect you)
HPB is a Chinese project being built to expand the scalability of blockchain applications. All blockchain-based apps, whether they run on the Ethereum network, NEO, Stellar or others, face restrictions on the number of transactions they can process.
We saw this with the recent rise of “CryptoKitties,” a collectible blockchain-based game that runs on the Ethereum network. The app became so popular that the entire Ethereum blockchain was affected. Transactions slowed dramatically.
CryptoKitties is the type of application that works only on a blockchain, so it needs that Ethereum backbone. But the network simply can’t handle massive traffic yet.
All blockchain platforms are wrestling with scaling issues. HPB aims to enhance performance of the apps (like CryptoKitties) that run on them. Similar to how the Ethereum network charges participants “gas” for transacting, HPB will charge for the network’s performance-enhancing services in its own cryptocurrency.
HPB uses a unique combination of both hardware and software to attempt to solve these scaling issues. It is currently at the prototype stage for its custom computer chips, boards and hardware acceleration engine.
The HPB team claims it will be able to process millions of transactions per second using this unique approach to scaling.
The hardware aspect brings incredible potential, along with some risk to this crypto. HPB is a bet on a future in which decentralized, blockchain-based applications require more throughput.
Currently the project is in the testing phase. HPB just completed the first private “testnet,” which lasted for one month.
HPB’s team is one of its strongest qualities. The founding team has deep experience in the blockchain, hardware and software world. Co-founder Li Jinxing was a blockchain analyst at major Chinese securities firm Guotai Junan.
The founder of two major crypto exchanges Bibox and OKCoin, Lei Zhen, is an early investor in HPB. Zhen is a heavyweight in the crypto world, and his involvement is encouraging.
The hardware team includes former Huawei and Intel engineers, according to a report on Steemit. Testing is already utilizing custom hardware.
You can read more about the team on HPB’s official English language site here.
Execution So Far
HPB is a relatively new project. The coin only started trading back in January.
But from what we’ve seen so far, it is executing according to plan. One of its first milestones was to launch a “testnet” early version of its product in Q1.
This target was hit, and the first private testnet is complete. The second phase of the testnet is ongoing, and HPB plans to launch the “mainnet” (live product) this quarter.
Although it’s very early in the journey, HPB has demonstrated constant progress and good communication. If it can continue to expand its presence in both the East and West, this project could really take off.
You can read more about the testnet and other FAQs here.
Tokenomics
For now, HPB is an “ERC20” token. ERC20 is a standard for tokens on the Ethereum network. Eventually, HPB will launch its own blockchain and transfer coins there. This process has been completed many times before, by many different coins, and isn’t a major concern. We’ll let you know if you need to take any action.
There are currently around 29 million coins in circulation. Eventually there will be as many as 100 million. Some 19% of coins are held in reserve to support the project in the future. Early contributors, founders and investors also hold many of these coins.
The good news is that the vast majority of these coins are “locked” for one to five years. Insiders and early investors can’t sell immediately and must “vest” their coins for years.
More details on the coin distribution and lock periods can be found here. The team has demonstrated notable transparency with regard to their tokenomics.
If the project isn’t turning out well, we’ll look to exit the position before the bulk of these coins are unlocked because there’s a risk that insiders could sell and depress the price.
But we’ve got a window of eight months or so before a significant number of coins begin to be unlocked. If the project takes off, the insider sales won’t be a major concern. Many coins have large insider positions, and this gives their teams a strongly vested interest in the project succeeding.
More Information
HPB’s primary focus is the Asian market, so English language materials are somewhat sparse. Still, the HPB team has done a good job of providing access to key resources in English, and I expect them to continue paying more attention to Western markets (its chief marketing officer is based in New York City).
How to Buy
First, you’ll need to register for a KuCoin account if you haven’t yet.
Note: Your verification email from KuCoin may go to your spam folder (mine did). So definitely check your spam folder for that.
Make sure you go directly to KuCoin.com. Do not search for it in Google and click on ads – they could be imposters. Now, once you’re logged in…
In the upper-right corner of the screen, you’ll see a little circular dollar sign. Click on that, and it will bring you to another screen.
Once you’re there, click on “Deposit” on the left side of the screen.
Pick the coin you want to deposit. (I strongly recommend bitcoin for this trade.) If you don’t have any bitcoin yet, you’ll need to buy some at a crypto exchange such as Coinbase, Gemini or Kraken.
To select the coin you want to deposit, click the dropdown menu where it says “KuCoin Shares.” That will bring up a menu of all the options.
The exchange will now show you a new wallet address where you can deposit that coin. Copy this new wallet address to your clipboard (Ctrl+C on Windows).
In a separate browser window, log in to your other wallet/exchange where the bitcoin/Ethereum is. (We’ll use Coinbase for this example.)
Now you need to send the bitcoin from your Coinbase wallet to the new KuCoin address.
Go to “Send” in Coinbase, and paste the KuCoin wallet address you copied earlier into the Coinbase “Send To:” field.
Double-check to make sure you are ONLY sending bitcoin to a bitcoin wallet address or ONLY sending Ethereum to an Ethereum wallet address, etc.
Once you have either bitcoin or Ethereum in your KuCoin account, go to the “Markets” tab.
Search for HPB. It will say “HPB/BTC.” Click on that.
Next you’ll be brought to the trading page.
Entering orders will seem a little strange at first. The interface still needs a little work, and it’s all translated from Chinese (impressively, in my opinion).
If you want to make it easy, transfer to KuCoin only the amount of bitcoin/Ethereum you want to spend on HPB. Then simply click on the numbers next to “Best price” and “Max.”
If you want to buy less, you can slide the “Ratio” bar in the middle that will move up and down, representing the amount of bitcoin/Ethereum you will be spending.
Once you’ve entered the amount you wish to buy – I recommend using the best (market) price, unless you’re an experienced trader – simply press “Buy.”
You may be asked to enter your Google Authenticator code again here. And by the way, I do strongly recommend turning on two-factor authentication for KuCoin and all other exchanges.
To activate Google Authenticator on KuCoin, go to settings, and on the left-hand side select “Google 2-Step.”
Write down your backup code BEFORE scanning it into the Google Authenticator app. Keep it somewhere very safe. Triple-check everything.
Storage
For now, I recommend storing this coin on the KuCoin exchange, where we’re buying.
There is no official wallet available for download yet, and the coin will eventually move off of the Ethereum network and onto its own platform. If you store on an exchange, the exchange will typically take care of this conversion process for you. We will let you know if there’s any action you need to take.
It is possible to store the coin on MyEtherWallet, but I do not recommend it for now. We haven’t seen an official announcement yet with the token details necessary to add a custom token type to your account.
So I recommend storing on the exchange for now. As always, make sure you use two-factor authentication and a strong, unique password.
Risks
HPB is a new, ambitious project. It aims to increase blockchain scalability dramatically. It is a high-risk, high-reward investment.
As always with cryptocurrencies, do not risk money you can’t afford to lose. There are regulatory, adoption and other risks involved in this project and others.
Good investing,
Adam