XYO (CCC:XYO-USD) is a cryptocurrency that has gained a great deal of popularity this year. The XYO Foundation administers the token as part of its XYO Network.
The project aims to help integrate cryptocurrency into the physical world through geospatial technologies. It’s not just a fleeting grab at popularity from the booming crypto market, either. XYO has traded for four years now and put together a community to support the project.
This year, however, saw XYO finally break through to prominence. That came due to increasing social media buzz. This, in turn, caused Coinbase (NASDAQ:COIN) to list XYO last month. Coinbase is quite the influential mover in crypto. When it lists a token, people take notice. The price of XYO surged following the Coinbase news.
Since trading went live, however, the price has gone in reverse. Indeed, it has been a steady slump over the past few weeks with XYO sliding 40% off the highs. Regardless, it’s still up a ton year-to-date. So why are traders interested in this smaller ($400 million market capitalization) project?
XYO came to life back in 2012. According to Co-founder Arie Trouw, he saw an opportunity to utilize the blockchain to further pursuits within location-based technology. XYO performed its initial coin offering (ICO) way back in 2017, seeing the benefits of decentralization and crowd-based participation to mix map-driven information with technology.
XYO is based on location. X and Y refer to coordinate locations and the O stands for oracle. “The idea is to tie real-world data to the blockchain and other systems so we can get a consensus on what the reality of that is. For example, we can get all these different nodes to witness things in the physical world and have software […] rely on that data,” Trouw said in a recent interview.
XYO works by embedding its COIN app on people’s phones. The COIN app collects data from GPS, camera and other sensing equipment. XYO can use this as “eyes and ears” for the network out in the real world. It asks people to go to certain locations and verify or photograph items. In return, users are given points that can be converted into prizes such as gaming consoles and/or cryptocurrency.
How This Plays Out
So what does this look like in practice? Trouw mentions retail commerce as one big application. For example, users of the COIN app are given the assignment of going to stores such as Target (NYSE:TGT) to verify what time that they’re open. Once at the store, COIN might ask its users to take photos of certain products or shelves to see what items are in stock and receiving good shelf placement and which have been eliminated from a store’s line-up.
Presumably, XYO can sell this in-person data to analysts and research firms looking for this sort of boots-on-the-ground insight. Meanwhile, for users, there is a gamified aspect of going to find specific things and getting small monetary rewards for it. In a way, it could be seen as something like Pokémon Go, giving users a reason to go out and explore things they never would have visited before. Trouw says users are incorporating XYO into daily walks to get rewards while they exercise and get some fresh air.
XYO’s technology seems fascinating. And getting listed on Coinbase helps validate the commercial prospects of the project as well.
An obvious question, however, is with privacy. Will there be wide demand for an application that so explicitly tracks a person’s location? Proponents can argue that advertising networks already track users closely, so giving XYO permission to use peoples’ data and camera may not be a big ask.
I’m not sure though, there’s a weird and somewhat creepy element to the whole concept. The rewards have to be pretty slick to justify this sort of tracking. However, based on Mark Hake’s analysis, crypto geominers have only been earning around a few dollars a month from using the XYO platform. Those rewards could increase over time. For now, though, I’d need to see more evidence that it has the right product to attract a broad user base.
That said, XYO has a differentiated vision and is doing something unique in crypto. This could be enough to keep traders buying XYO in coming weeks and months.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.