Is Ontology (ONT) a Good Investment? In-depth Analysis and Near to Longer-Term Expectations
Is Ontology (ONT) a Good Investment? In-depth Analysis and Near to Longer-Term Expectations

By CryptoBoomer | Investments | 6 Jan 2020


The cryptocurrency space is constantly evolving with new cryptocurrencies, new crypto businesses, new breakthroughs, new laws and regulations, and more. 

This is because the industry as a whole is still in its very early days. All you need to do is to take a step back, look at the big picture, and you’ll see that. 

As we enter a new decade, 2020, we can expect to see even more developments and progress than we ever experienced in crypto’s first decade. 

We will see new innovations, new trends, increased adoption, more utility, and of course, even more new cryptocurrencies. 

Did you know that there are already nearly 5000 different cryptocurrencies according to CoinMarketCap

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This number keeps on going up and will continue to rise throughout 2020 and beyond. This is because the cryptocurrency landscape along with its protocols, algorithms, scaling solutions, and blockchain technology is literally just a giant experiment of what works and what doesn’t. 

As existing cryptocurrencies evolve, grow, and develop, the core developers and teams behind them discover what works and what doesn’t. 

Sometimes they find ways to implement new improvements and innovations into their existing blockchains, but sometimes they just move onto new projects where they build a new cryptocurrency on a new blockchain. 

One such example of a project like this is Ontology (ONT) – a cryptocurrency project founded and developed by the same people behind the Neo (NEO) cryptocurrency. 

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Ontology defines itself as a high-performance public blockchain and distributed collaboration platform that enables mainstream blockchain adoption for businesses of all sizes. The project’s blockchain framework provides tailored blockchain solutions to private enterprise for a variety of blockchain applications.

Now, for the remainder of this article, we’ll take a deep dive into Ontology (ONT). We’ll look at its price action, it’s level of adoption, development, unique features, and the risks and challenges it faces. 

By the time you’re done the reading, you’ll have a fundamental understanding of whether or not Ontology (ONT) is a good investment. 

Ontology (ONT) - A Brief Summary & History

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Ontology (ONT) was created in 2017 by Onchain, a leading blockchain technology company in China. OnChain is led by NEO founders Erik Zhang and Da HongFei and it’s also the founding company behind NEO. 

While Zhang and HongFai are the founders of NEO and want it to succeed, they are also driven by the VC funding at OnChain. This venture capital funding led OnChain to fund and develop  Distributed Networks Architecture (DNA), which was written in a different programming language than NEO. 

Therefore, instead of further developing and implementing this technology on NEO, OnChain announced the launch of Ontology in November 2017 and put a lot of their resources towards Ontology’s development.  

The launch and development of Ontology sparked a great deal of controversy because the project took a great deal of funding, investment, and development away from NEO. 

Ontology quickly stole the spotlight and rose to greatness while NEO’s development dwindled and its market cap shrank. Ontology even surpassed NEO’s market cap in February 2019.

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Therefore, Ontology was seen by some people as just another way to fill the pockets of Zhang and HongFei. The two founders were accused of abandoning NEO in their chase for VC funding and more riches by launching a new cryptocurrency. 

However, this isn’t necessarily the case. 

According to Da Hongfei, NEO and Ontology are completely separate entities. He says NEO is open-source and community funded, whereas Ontology is for-profit and funded by a major Chinese financial group.

Also, in July 2018, Neo and Ontology announced a strategic partnership to develop an interoperable cross-chain protocol. Therefore, Eric Zhang and Da Hongfei’s decision to create and develop Ontology may not be as nefarious as some people think. 

Ontology (ONT) Launch & Distribution

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One of the most important things to look into when deciding whether or not a cryptocurrency is a good investment is to understand how it was launched and distributed. You want to make sure the coin’s supply is not too centralized but rather fairly distributed.

In Ontology’s case, the project did not hold an initial coin offering (ICO), which is unusual for most cryptocurrencies. Instead, the project was heavily funded by VC investors and a Chinese financial group through Ontology’s founding company, OnChain. 

Since Ontology did not initially sell its ONT coins to retail investors, the project airdropped (which means to transfer for free) their coins to a variety of people starting in February 2018.

Such people included NEO token holders, NEO DevCon attendees, and those who signed up for the Ontology email newsletter. 

  • NEO token holders received 0.01 ONT per NEO in February 2018 and also received a second airdrop of 0.2 ONT per NEO in July 2018.
  • NEO DevCon attendees received 500 ONT.
  • Ontology newsletter subscribers received 1000 ONT.

The total supply of Ontology is capped at 1,000,000,000 ONT. Out of this supply, the distribution is as follows:

  • A measly 12% was distributed to retail investors and the Ontology community
  • 28% is owned by private investors and institutional partners
  • 10% is held by the NEO Council
  • 15% was distributed to the Ontology core team
  • A whopping 35% is held by Ontology (with 25 percent set aside for development and 10 percent for technical community reward)

All in all, Ontology’s (ONT) distribution is quite disgusting. 

The majority of ONT tokens are heavily centralized among the creators of Ontology and private investors. Therefore, the price of ONT and big market moves can be easily controlled and manipulated by private investors and the Ontology core team and creators. 

Therefore, based on the data of Ontology’s launch and distribution, I would not consider Ontology (ONT) to be a good investment.

Ontology (ONT) Utility & Adoption

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We’ve established that Ontology was created because of OnChain VC funding and its development of new Distributed Networks Architecture (DNA), but how successful has the Ontology venture become in terms of actual utility and adoption?

Let’s find out.

First off, Ontology sets out to enable mainstream blockchain adoption across all types of business, be it enterprise, corporate, or even small businesses. 

According to the Ontology website:

“Ontology supports a complete distributed ledger system, including core distributed ledger, smart contract system, cross-chain solution, sharding, and security system. 

Also, Ontology introduces a series of protocols and frameworks that build the "last mile" for blockchain applications.”

With that said, Ontology offers real-world businesses an array of blockchain services and solutions that integrate within a company’s existing infrastructure so that they don’t have to completely change all of their current systems.

See Ontology’s blockchain offering below:

Infrastructure
Ontology’s blockchain infrastructure provides a high-performance blockchain framework under which different blockchains can be built to serve various business scenarios with different governance models.

Extension
Ontology offers businesses a series of pluggable components and protocols, which provide multi-VM, hybrid data storage, data privacy protection, Oracle, sharding services, and more.

Developer Frameworks
Ontology provides a series of application development frameworks and toolkits that allow users to develop their own applications without any barrier. 

In total, Ontology provides individuals and businesses with 8 different development frameworks and toolkits, 7 different extensions which are pluggable components and protocols, and already has 60+ dapps built on Ontology.

All in all, Ontology isn’t just a pie in the sky crypto project. 

Ontology is building and growing at a very healthy rate and is really trying to push for mainstream blockchain adoption with its blockchain infrastructure, extensions, frameworks, and products. 

Ontology (ONT) Price Action & Market Structure

Now that we have a basic understanding of what Ontology (ONT) is, how it came to be, how it was launched and distributed, and its level of adoption and utility, let’s dive into its price action. 

After all, some people would argue that technical analysis is more important than fundamental analysis. I for one, believe investors should look at both the technicals and the fundamentals when deciding whether or not a cryptocurrency is a good investment.

So, here we go.

The first thing we must look for when analyzing the price of a cryptocurrency, or any asset for that matter, is whether or not the underlying asset is building or holding above a solid market structure. 

For the uninformed, a market structure refers to an asset's macro price action. For an asset to be considered a good investment, it must be building a solid market structure or maintain above its market structure. 

If an asset has not yet built a solid market structure or has broken its market structure, then it shows signs of weakness and would not be considered a good investment.

Let’s see if Ontology (ONT) has a solid market structure and is holding above it.

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The price chart above shows Ontology’s price history starting from March 8, 2018, to January 4, 2020, on a log scale. 

As you can see, ONT began trading at $3.00 before it quickly sold off and settled around $1.30. Within the same month of March, ONT began to pump and eventually reached its all-time high (ATH) of $10.43 on May 3, 2018. 

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From that point on, Ontology sold off immensely for the rest of the year and eventually found a low of $0.45 on December 15, 2018. 

Following its low, the price of ONT bounced slightly to $0.80 and later settled in the $0.50 range before going on a run and reaching a local high of $1.72 on June 25, 2019. 

Since then, ONT came back down to retest the $0.50 range which held as support and pushed the price back up. Now, as the price stands today, we have fallen back down to the $0.50 range once again where ONT is currently consolidating.

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As seen from the price chart above, Ontology has built and is maintaining above an extremely important market structure level of around $0.50. 

This shows signs of strength and resilience and as long as Ontology holds above this level, I would say it’s a good investment from a price analysis standpoint. 

Conclusion

New cryptocurrencies keep popping up left right and center and this trend of launching new cryptos is likely to continue for years to come. There is just too much money to be made for crypto founders and early VC investors to stop launching new cryptos.

Ontology is one of these cryptos that launched due to VC funding and benefited from the tailwinds of NEO’s success. Thus far, Ontology appears to be making good progress in terms of developments and adoption but its price has failed to show sustained growth just yet. 

The Ontology (ONT) supply is not very fairly distributed, which raises some red flags for me. But if the project can manage its holdings responsibly and continue to grow the network, ONT might be a good investment.

However, if I had to decide right now, I would stay away from investing in Ontology (ONT) because there is still too much uncertainty for the project's future and I am not satisfied with ONT’s distribution.

What do you think about Ontology (ONT)? Do you think it’s a good investment or do you agree with my analysis? Let me know what you think in the comment section below.


CryptoBoomer
CryptoBoomer

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