Ontology Price Analysis — a bull among the bears
Ontology provides a well-rounded blockchain-based digital identity storage solution for enterprises. It has maintained strong performance while the market, and other alt-coins, have faltered. With its upcoming mainet launch and support from the NEO blockchain, expectations are high for this unique cryptographic asset.
Ontology exists as an extension of the NEO blockchain, and interoperability between the two networks will be key to their mutual success. NEO is the decentralized public chain, while Ontology provides semi-centralized data privacy blockchain solutions that add a security bridge to entice more users to attach to the NEO network. ONT currently exists as an NEP-5 token on the NEO blockchain with a main network switch due to begin on the 30th of June.
ONT tokens have been resilient in the current bear market — rising 45.61% since April the 12th, as hype and speculation surrounding the mainet switch builds.
ONT price graph- last 3 months
Trading pairs and exchanges
The most popular pairs for trading ONT are all crypto/crypto with Tether, BTC, ETH accounting for more than 95% of the trading volume. The Korean Won and the Indian Rupee are currently the only two fiat on-ramps for ONT.
Only seven exchanges list either the Tether or Bitcoin pairs to trade ONT. The most popular exchanges for trading are OKEX, Binance and Huobi, all of which will also support the mainet switch, automatically switching any ONT tokens sitting on their exchanges. Upbit, which offers a ONT/KRW trading option, will also automatically switch tokens for holders.
The purpose of Ontology
Ontology aims to build a peer-to-peer trust network, which will protect data that is tied to digital identities onto secure private blockchains.
Public blockchains, like NEO, are useful to enterprises and others for a number of reasons. However, the issue of user information existing on a network’s public ledger for all to see is a sticking-point that prevents many from fully committing to existing public networks.
Ontology seeks to alleviate this issue by providing private blockchain storage access for entities tied to the NEO blockchain. Logistically, the process begins when a user of a NEO smart contract starts an ID verification process, once completed, NEO then stores sensitive digital ID information onto a private Ontology blockchain. This adds an extra security layer over other smart contract providers existing in the crypto space.
Connection to the NEO smart economy
The NEO network’s focus is on driving smart-economy solutions and Ontology is directly connected to this overall strategy.
If the ownership rights to an asset (like a car, or a house) were digitized, tokenized and secured onto a public blockchain, there would nonetheless be a requirement to tie the identity of the token holders with sensitive information about them, to prove ownership of the digital assets. when interacting in the real world.
Because of issues like hackers attacking data stored digitally, a more secure, less compromisable way to store identity data on digital networks is needed. This is where Ontology intersects, securing the digital identity data required for NEO, allowing it to manage digital asset smart contracts.
When its mainet launches, Ontology smart contracts will be written using the same virtual machines as NEO’s, allowing for interoperability between the smart contracts coded in either platform.
ONT tokens will function in much the same way as NEO tokens do. ONT will represent ownership rights within the network and holders will receive ONG coins (like GAS with NEO) which will let them participate in smart contracts, which will be used to manage their digital identity rights. All NEO holders received ONT via airdrop in March and more drops are planned for NEO holders post the ONT mainnet launch.
Centralized approach
While many blockchains advertise themselves as ‘trust-less’, Ontology describes itself as ‘trusted’. Unlike Neo, which is controlled by its community, Ontology’s decision-making is controlled by Fosun, a major Chinese conglomerate and investment company. Consequently, it is widely believed Ontology will build its network and private blockchains to meet the needs of its potential enterprise clients.
The pitch to join a private blockchain whose governance structure is dominated by a major enterprise is that users will value participating in networks managed by big name organisations that they recognize, and which may already be holding sensitive data about them anyway.
Ontology offers a diverse suite of digital identity solutions and a roadmap for bodies to build their private blockchains. Either Ontology common or Ontology custom packages can be chosen. Ontology common provides a ubiquitous, premade easily deployable blockchain digital identity storage kit, while Ontology custom provides greater customization options for enterprises to build to their own consensus, governance and encryption specifications.
Going one step deeper, packages are made up of blocks or modules that specify operational rules within the network. ONT ID is the verification system for businesses, individuals and physical IoT objects. Users are responsible for managing their private keys and can grant access to other entities within the blockchain. For example, if Microsoft China were to create a private blockchain, developers, management and devices would all have unique identity and ownership rights within the private Microsoft blockchain.
The most important module appears to be the trust tree protocol. The purpose of trust trees is to create a system where trust can be issued by entities within the private chain, to ensure actors are who they say they are.
Trust tree can either be centralized, where a single anchor initially issues trust to entities, who then issue trust to others, always traceable back to the original anchor.
For larger organizations, however, a decentralized trust tree option may work better. Here reputation and trust is built through using the wider network, as opposed to centralized anchors. Entities within decentralized trees issue verifiable claims, which have validity periods, attributed to others in the network. In this sense, trust is built more organically than in the decentralized tree model.
Consensus in private networks
“Ontology will at first be based on the NEO-like dBFT model, however, Ontology will provide different consensus algorithms such as POW, POS, dBFT, OCE, and so on. In addition, organizations can choose their preferred consensus nodes to run their own ONTX network and use chain interoperability to interact with entire Ontology network” — Jun Li, Ontology CEO
It appears that Ontology will provide options for private blockchains to choose their own consensus protocols. They will also source the core block-producers (called Consensus nodes), who are the computers verifying smart contracts, for the individual networks.
How network consensus is achieved is the key to running a successful blockchain and there are arguments for and against every form of protocol. The fact that Ontology is offering options for blockchains to use algorithms according to their own specifications, is likely to be valued in the market.
Technical analysis
ONT has surprisingly experienced strong growth in 2018 despite the bear market, with ONT’s gains standing at ~215% since initial trading back in March 2018. However, price over the past month has declined 22%.
Exponential Moving Averages (EMA)
Using the daily chart from CryptoCompare, the bullish EMA cross, or Golden Cross, using the 26/50 day EMA, is about to reverse into a bearish cross, which is consistent with the recent downward trend.
Ichimoku Clouds with Slow Wave Trend Oscillator (SWTO)
The Ichimoku Cloud uses four metrics to determine if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, Lagging Span (Chikou), and Senkou Span (A & B).
The status of the current Cloud metrics on the 15 minute time frame with singled settings (10/30/60/30) for quicker signals is bullish; price is above the Cloud, Cloud is bullish, the TK cross is bullish, and the Lagging Span is above the Cloud and price.
A traditional long entry would occur with a price break above the Cloud, known as a Kumo breakout, with price holding above the Cloud. From there, the trader would use either the Tenkan or Kijun as their trailing stop. ONT successfully performed a Kumo breakout and held around $6.45, before price pulled back and is currently sitting around ~$6.10. Short term price targets are $6.80 (flat Senkou B), and $7.00 (resistance), while longer term targets are $7.70 (flat Senkou B) and $8.00 (resistance) if price momentum builds. Additionally, the SWTO and volume flow indicator (VFI) are both bullish at the moment which may provide an additional lift to positive price momentum.
The status of the current Cloud metrics on the 15 minute time frame with doubled settings (20/60/120/30) for more accurate signals is bullish; price is above the Cloud, Cloud is bullish, TK cross is bullish, and the Lagging Span is above Cloud and price.
As mentioned, price successfully executed a Kumo breakout and has since pulled back, but still may push higher given the positive indicator momentum. If the target of $7.70 is attained, the key resistance levels to watch in the future will be $8.50 and $10.00 (all-time high close), which will require strong buying volume to surpass.
The status of the current Cloud metrics on the 30 minute time frame with doubled settings (20/60/120/30) is mixed; price is above the Cloud, Cloud is bearish, TK cross is bullish, and the Lagging Span is in Cloud but above price.
Under this time frame, price has completed a Kumo breakout, but the overall Cloud is still bearish. However, the price break above the Cloud coupled with the positive VFI trend may signify a reversal of the downtrend with some positive momentum.
Conclusion
Ontology is a progressive blockchain-as-a-service solution that is focused on building a product that will be appreciated in the future digital economy. Given Ontology’s complexity and ambitions, it is not surprising that the mainnet launch has been well received by the market . There has also been additional fuel to hype the launch in the last few days, with the announcement of a major enterprise client, Carblock.
An immediate observation of the Ontology project, is the sheer scale and scope of its ambitions. Building and facilitating multiple bespoke blockchains for businesses, large and small, will likely require considerable manpower and logistical support. How Ontology manages the multiple moving parts of its ecosystem will be a challenge. However, If successful, it should provide a compelling solution for enterprises to manage their compromisable digital identity data securely.
Overall technicals for ONT are mixed in the short term. Both the prudent short and longer term trader would enter a long position once price successfully retests a Kumo breakout around the $6.30 level. Short term price targets of $6.80 and $7.00 are probable given price’s short term, positive price momentum, while the longer term price targets of $7.70 and $8.00 are possible but less likely given the faster time frames. Traders should not consider a retest of $8.50 or $10.00 probable in the near term unless the overall market sentiment changes for the positive, coupled with a consistent increase in buying volume for ONT.
Caveat: ONT is a very new project (only launching in March) with limited trading data available for analysis, hence the utilization of the shorter duration time frames (1D was not available for analysis). Readers should be mindful of the limitations of technical analysis in scenarios where limited historical data is available.
Brookins, Das , 15 Jun 2018
Source bravenewcoin.com
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