Is NEXO A Good Investment? In-depth Analysis and Near to Longer-Term Expectations

Is NEXO A Good Investment? In-depth Analysis and Near to Longer-Term Expectations

By CryptoBoomer | Investments | 6 Dec 2019


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Nexo is the leading crypto loan startup that has the potential to get much bigger in the upcoming years. Before the start of cryptocurrency’s rise in popularity a few years ago, nobody was thinking about getting a loan through blockchain-based assets. But now, it is possible to get an instant loan through a crypto lending system.

Nexo project itself is getting more popular thanks to the rise of this crypto lending industry. So, how good Nexo technology is? And is investing in Nexo token worth your money in the long run? Let’s find out together with this article.

Nexo - Summary

The cryptocurrency world has been changing rapidly in the past few years. The rise of Ethereum and other newer gen blockchain platforms has opened up a lot of different possibilities. Nowadays, many real-life assets are tied directly to the blockchain, making it easier for various types of transactions to happen.

Especially about the crypto loan space where it gets more popular recently. Yes, these days, you can easily get instant cash by using cryptocurrencies as your collaterals. No credit check and no hidden fees, everything is done very easily and in a very short way.

What amazing about the crypto loan industry is that every party is “guaranteed” to be satisfied. When you want to get a loan, you only need to verify your identity, deposit your crypto assets as collaterals, and you will get your loan instantly in the form of cash or even stablecoin.

The system is automated, and the Nexo party themselves will automatically take your collaterals if you cannot continue paying because you agree to the terms once you make your deposit. The system automatically minimizes risks for themselves and the lenders.

In order to understand how Nexo truly works, it’s actually better if you go to their loan page directly. They explain it in 3 steps, and it’s quite straightforward.

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Create an account, put your information correctly, deposit your collaterals, and get the instant loan into your card, bank account, or in the form of Tether (USDT). If you do your KYC (know your customer), you will be able to get an even larger amount of loans.

Most of the processes are quite instantaneous, and even their KYC approval is very fast. For this reason, crypto HODLers who need instant cash for various reasons choose to trust Nexo over the likes of bank loans and other real-life loan processes.

And how about the lending process? Well, it’s pretty straightforward, as explained on their Earn Interest page. You can get up to 8% annual interest on stablecoins like TUSD, USDC, USDT, PAX, and DAI. You can also lend your fiat currencies directly like USD, EUR, and GBP.

In the future, it looks like the Nexo team plans to introduce standard-yet-volatile cryptocurrencies like Bitcoin and perhaps top altcoins in the Earn Interest page, but for now, you have to settle with stablecoins or fiat currencies.

What I like the most from the NEXO project is that the team has been carefully thinking about everything, including from legal and security perspectives. For example, NEXO token is not a registered security with the US’ SEC (Securities and Exchange Commission).

Nexo’s documentation with the SEC has shown that the team does not register the token because of the Regulation D, Rule 506(c), which defines NEXO as restricted securities. 

The document legitimizes the idea of Nexo token, but it also means U.S. citizens need to hold their NEXO tokens for a minimum of 6-12 months and must inform the SEC regarding their NEXO tokens once they sell them.

Not only about legalities, but Nexo also has been carefully building its security features. Nexo uses BitGo as its custodian, which is seen as “very secure” by other crypto loan industry players. BitGo actually has a $100 million insurance policy and adopts Crypto Security Standard level 3, and SOC 2 compliant.

To add even more security, cryptocurrencies in Nexo are 95% stored in cold wallets that require multi-sig. It seems that it would take almost-impossible efforts for criminals to try to steal crypto assets from Nexo.

Analyzing Nexo Team

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Nexo project was created by a European-based FinTech Credissimo. The company (Credissimo) has been around for more than 10 years, it was created by 4 different co-founders, and they went public on May 7, 2014, successfully listed 2.5 million shares.

The success of Credissimo allowed them to integrate a BTC loan repayment option into the company business model. Not only that, Credissimo also used ChatBot automatic lending and integrated it into their system.

Fast forward to 2017, Credissimo successfully created the Nexo project, because they have foreseen the idea of crypto loan platform. Just like the IPO success of Credissimo, Nexo also successfully obtained $52 million from its initial coin offering (ICO)

The faces behind both Credissimo and Nexo are Kosta Kanchev, Georgi Shulev, Antoni Trenchev, and Vasil Petrov. I say all of them are pretty solid, as they have proven themselves with their adventure at Credissimo.

If there’s any team that can help the crypto loan industry to get bigger, it’s certainly them.

Not only about the team’s background history, but the fact that Nexo is licensed and regulated is also quite important to prove the team’s credibility. If you want to check more details about Nexo’s license and regulation, you can check it out on this page.

Long story short, the Nexo team is quite proven and has a rich background history. Perhaps one of the best in the crypto finance industry.

Nexo Future And Potential Roadblocks

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Nexo’s future will be dependent on the potential of the crypto loan industry itself. Nexo is arguably the leading startup in this space, and its biggest potential roadblock is the future of the industry itself.

Most likely, the crypto loan industry will get bigger when crypto space (in overall) gets more popular as well. On the other hand, if cryptocurrencies get less popular, the crypto loan industry will get smaller as well.

There are competitors to Nexo like Celcius Network and Dharma and several decentralized loan platforms. However, none of them seems to come close to Nexo when it comes to loan activities. And just like everywhere else, most customers feel more comfortable with Nexo’s regulation, licenses, and the team’s rich background.

So, to sum it all, Nexo already has huge advantages over its competitors. As long as it keeps adding features and as long as people don’t really complain about the loan/lend process, it will maintain its edge over the competition. 

Hopefully, the crypto lending/loan industry will get bigger in the next few years. There are, of course, many speculations that the crypto loan industry will get much bigger. Recently, it seems there are more and more real-life assets that are “issued” and “linked” on the blockchain. 

For example, gold-backed crypto tokens are getting slightly more popular recently. And who knows, gold-backed tokens and other similar cryptocurrencies will be available with Nexo platform in the future.

The Role Of Nexo Token In The Platform

So, we have studied the most important things about Nexo as a platform and the core team behind it. But, how about the role of the token itself? After all, we want to invest in Nexo token, isn’t it?

Well, to get a loan in the Nexo platform, actually, you can completely skip the usage of the token. They do not force you to use Nexo token just to use the platform. That being said, there are 50% interest rate discounts when you use NEXO tokens as your collaterals. 

And not only that, if you choose to HODL NEXO tokens within your account, you can get passive income in the form of dividend. Usually, most people are attracted to HODL NEXO tokens due to the dividend feature.

External Factor And Nexo Price

Unfortunately, talking about altcoin prices is not as simple as their fundamentals and the use cases of the tokens. There’s one big external factor that affects the ups and downs of altcoin prices. That factor is called Bitcoin.

Yes, it’s undeniable that Bitcoin price has hugely affected altcoins since, practically, the beginning of cryptocurrencies. Nexo's future price will be affected by the Bitcoin trend, as well. So, even if Nexo the platform gets more popular in the future, if Bitcoin price goes down, there’s a big chance that Nexo token price will actually go down as well.

And talking about Bitcoin price, there are some opposite talks about 2020 price prediction. As we all know, in 2020, there will be another Bitcoin mining rewards halving event. The last one occurred in 2016, and Bitcoin price went up significantly and kept going up until December 2017.

But, the question is, can Bitcoin repeat the same price action following 2020’s halving? Well, optimists believe Bitcoin won’t disappoint and will repeat the same patterns as 2016. The pessimists, however, believe Bitcoin price pump was already “priced in” this year, and 2020 won’t repeat what happened three years ago.

Either way, it’s important to pay close attention to Bitcoin's price. Whether we like it or not, the Bitcoin price will have some type of long-term effect on the Nexo token price.

Conclusion

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Nexo is a very promising project and is the leading startup in the crypto loan industry. The future looks bright for Nexo as long as the crypto loan industry can keep going better. Whether it will get better or not, only time knows the answer.

Not only about the future of the crypto loan industry, but the future of Bitcoin can also affect Nexo token price heavily. Overall, investing in Nexo token worth your money in the long-term. However, there are still some risks involved, as I have written above. Trade crypto carefully and only invest what you can afford to lose.


CryptoBoomer
CryptoBoomer

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