VALUE VS PRICE
I am not a investor but I do believe certain types of utility tokens hold great value. Don’t confuse value with price. I’m a great fan of rendertoken Just because I think RENDR holds great value doesn’t mean I’m going to pay more than the actual cost in electricity for rendering out a 3D-Animation. What do I mean by this?
If it cost $10 in electricity to render out a 3d-Animation without Rendr.
I expect the Rendr utility token to do the same job for less than $10.
This is what I mean with value. RENDR is trying to be the global airbnb for electricity. The purpose of a utility token is to cut down on cost of a service.
Secondly, the the law of diminishing marginal utility guarantees diminishing prices long-term. We are dealing with service tokens aka utility tokens that represent the cost of a service, do not confuse these service tokens with genuine crypto currencies, the two are unrelated.
Youtube did a great thing, banning crypto channels. Situation of the current crypto market is dire. We have saturated market with 4000 + utility tokens spawned for free on ethereum-testnet. The of cost of production = $0,00. Value comes from actual utility.
The narrative that the hurdurrr ”As the network grows, the value of the tokens will increase” Nope, value can only derived from utility. If you want sustainable growth you need businesses that actually consume the tokenized services. Right now, the market runs on greater-fools.
If Bitcoin pumps in the next bull-cycle, dump all your utility tokens while u still can. Suggest you get out this market if you’re not a trader. Majority of the ICO erc-20 tokens are heavily manipulated. Cornering, Ramping, Pump-and-Dump. The crypto-market is unregulated, trading volume manipulation isn’t something exclusive to crypto, it happens in all markets.
SPECULATION OUTPACING UTILITY
Every utility token in the cryptospace tries to be the Airbnb of this and that, they generally end up pumped and dumped to death.
95% out of the 4500 utility tokens on coinmarketcap have been …..
- Jacked up in price, completely defeats the purpose of a utility token. Market valuation has been jacked up by a few very wealthy buyers. They control the supply, hence they control the price by only selling tiny bits, artificial scarcity, composite man in wyckoffian logic, call it what you want. Be careful with chainlink as a ”investment”. Tokenized services are not investments. The demand for link comes from speculators (traders, investors) and not from businesses who have a usage case for the tokens.
- Blatant narrative manipulation, utility tokens should represent the cost of a service. Some scammy businesses promote these tokens as securities or currencies. Which coin am I talking about ? (Popular coin among simpletons – dubbed the bankercoin aka XRP – they even have their own brainlet twitter army called the XRP-army) Owning one of these scam tokens doesn’t grant you ownership of the technology nor partial ownership of the company but the simpletons think they do. The simpletons even think they are holding a real cryptocurrency like Bitcoin, monero.
- Pumped and dumped to oblivion. Price will likely congest due to the sheer amount of left-behind bagholders.
- No development, no github commits, completely dead. The ICO founders probably exitscammed. Yes they can do that, the space is unregulated.
- Saturation and zero innovation 10 projects ”pioneering” the same business model. Cryptocurrencies for the gaming community. Imagine thinking that E.A or Activision-Blizzard haven’t thought of that idea.
- blatant scams runned by scammers hosted on a scam exchange like HitBTC. Spoofed orderbooks driven by wash-trades, your orders will never filled unless you market-sell with slippage. Avoid HITbtc at all cost. They are the scammiest exchange in the game.
- Still testnet, some tokens have been on test-net for ages. Mainnet migration isn’t free, if you’re dealing with a scammy erc-20 ICO token then mainnet is out of the question.
- Start-ups. What are ICO’s? They are fundraisers for start-ups. What do we know about start-ups? More than 90% of the start-ups fail, the statistics don’t lie. To add more injury to insult, you’re not even holding equity(ownership) in the startup nor equity in the technology. You’re holding a IOU (I owe you) a token that represents a cost of a service. You’re speculating on the future price of a service.
The list goes on and on, it’s free to launch erc-20 token on ethereum testnet. You’re literally investing into a idea and few lines of code. Some tokens do provide great value (if they can deliver a working product) but the price must match with the value.
VENTURECAPITALIST AND YOUTUBE SHILLS.
But what about Venture capitalists, Hedgefunds who
invest in these tokens?
None of the VC’s are investing in the utility tokens. They see ”demand” They buy wholesale with 50-80% discount and resell them at a premium.
Many paid youtube have been caught promoting worthless erc-20 tokens. The fastest way to lose your money is buying a token recommended by popular youtubers. CryptoLark and boxmining promoted PledgeCamp -80% loss on return. IvanonTech promoted sparkster -99% loss on return within 1 minute after listing. I am not wrong.
PROOF OF WORK VS ERC-20
Genuine CryptoCurrencies, yes CURRENCIES that function and act like currencies are ironically rare in the crypto space. Find a any online-store that accepts crypto currencies and tell me which coins they accept.
Litecoin, Ethereum, Monero, Bitcoin, Dash, BitcoinCash ,DogeCoin. MonaCoin What do they all have in common? Yes, correct they are all Proof of Work.
In some retail stores in Japan, you can pay with Monacoin, Dogecoin.
Besides P.O.W currencies like bitcoin, monero and litecoin there are some other newer proof of work currencies that could (not can) rapidly increase in value. One of them is called nervos, a store of value coin with proof of work consensus model. The mining-difficulty will have to increase before this S.O.V coin can appreciate in dollars. Why P.O.W? unlikely erc-20 tokens, P.O.W is backed by cost of production, it isn’t free to mine a POW coin. If demand declines, price will revert to cost of production.