Copy traders give permission for investment decisions made by a more knowledgeable trader to affect a portion of the funds in their own trading accounts.
The startup CoinPennant plans to elevate this concept by channeling advice from established traders for those who want to enter the fast-paced cryptocurrency investment space by using a combined social network and blockchain-based copy trading platform.
Blockchain, Copy Trading, and Smart Contracts
Some companies, such as eToro and ZuluTrade, already provide copy trading services for foreign currency trading, and they have also ventured into cryptocurrency. CoinPennant will forge a different path by choosing to specialize in the cryptocurrency space by reinventing copy trading on a blockchain-based platform.
David Hoverman, CoinPennant’s lead business developer, said that the fast-moving and volatile cryptocurrency market is intimidating to newcomers as the market is beset by risk and fear, uncertainty, and doubt. Hoverman explained:
It’s not necessarily due to lack of access but just lack of knowledge. Good, reliable information, especially in relation to trading, is hard to come by, and generally, when you come by it, it’s expensive to obtain.
The CoinPennant team originally envisioned a subscription-based model that would use algorithms to analyze market data and push market indicators to a user’s dashboard. During its research, it noticed online “signal groups” offering trading information and opinion for a regular financial payment. Some were unreliable, but some were legitimate, Hoverman said. This gave the team the idea to expand its services.
Alongside its original data analysis services, the company will fold a marketplace for crowdsourced trading advisory services into its platform. Investors will access the market via a social network that lets them collaborate with each other and follow those with “master trader” status in the community.
Newbie traders can shadow these established traders in two ways. The first is by purchasing trading tips that master traders publish on the system, which include entry and exit points, stop-loss thresholds, and written explanations of the trading strategy.
Infusing Copy Trading with Confidence
Users pay for the tips using CoinPennant (CPNT) tokens, which are ERC20-based utility tokens. The payment goes into a smart contract, which watches the market to see whether the tip correctly predicted an asset’s movement. If the tip succeeds, the smart contract pays the tip to the trader, with a 25 percent cut going to CoinPennant. If it doesn’t, then the money returns to the user who paid for the tip.
The blockchain-based mechanism introduces more confidence in copy trading arrangements, Hoverman said. He further elaborated:
People giving out tips are accountable. People giving the tips are more comfortable that the parameters are set and the smart contracts are in place to make both sides accountable to each other and prevent a lot of scams.
Master traders are those with a proven track record on the system, and they are a key part of the company’s copy trading module. On a subscription basis, traders can create a contract with a master trader that will copy that master trader’s transactions in their own accounts, proportional to the funds that they make available.
Of the experience of master traders, Hoverman says:
These master traders are people who have been trading Bitcoin and ether since Bitcoin was priced at $500. They could be either individuals or groups who are really good at technical and fundamental analysis and merging the two together to predict the market movements.
Users will be able to intervene in their accounts, manually overriding instructions sent by a master trader. They will also be able to mix copy trading contracts to create a portfolio that combines multiple strategies and risk levels, Hoverman explained.
CoinPennant Token Sale
CoinPennant will produce up to 54.0 million CPNT in total, selling up to 24.3 million CPNT in a private presale and crowdsale, with the exact number depending on the funds raised. It will only distribute CPNT at the end of the crowdsale.
The company will also reserve 26 percent of the total tokens produced for the founders and team, 10 percent for advisors and partners, 7 percent for early adopter master traders, and 12 percent for an airdrop. The exact number generated will depend on the funds contributed.
The presale and crowdsale will be conducted in Slovenia, where the bulk of the founding team resides. CoinPennant will soon announce further details of the crowdsale, which Hoverman said will not be offered to U.S. citizens.
The CoinPennant team brings together top crypto developers and traditional business experts to provide technical solutions that meet the needs of investors of all backgrounds.
Note: Trading and investing in digital assets is speculative and can be high-risk. Based on the shifting business and regulatory environment of such a new industry, this content should not be considered investment or legal advice.
CoinPennant is an intelligence-trading platform and social network that enables copy trading, advanced technical analysis, and data mining. For more information, visit our website or follow us on Twitter and Facebook.
Have you ever participated in social/copy trading? How will CoinPennant ease onboarding for new crypto traders? Let us know in the comments below.
Images courtesy of Shutterstock, CoinPennant