Cryptocurrency: Utility Is The Most Important Thing

in LeoFinance3 years ago

We see a lot of theories about what is going to happen to both crytpocurrency and fiat. Many of them are based upon nothing more than simple lines that people regurgitate repeatedly. Never mind that it honestly has no basis in the real world.

The United States Dollar, for example, has the "full faith and credit" of the government. This has led people to believe it is something magical. The truth is each fiat currency has the same thing from its government.


So what makes the dollar valuable when as compared to the Japanese yen? There are a couple things.

The first is the utility of the token. This is the currency that is accepted in more places throughout the world as compared to anything else. Some might point to the fact that it is backed by guns, which is not completely untrue. However, when you look at the fact that almost all illegal activity, especially that which is international in scope, is done in USD, we can see the reach.

When it comes to acceptance and liquidity, the USD is the choice.

Which brings up the second reason why the USD stands out. It is not the "full faith and credit" of the government that makes the USD attractive. Instead, it is the investors who give the USD value.

We just saw an epic meltdown in the global economy as well as markets. Where is global investors flee? Was it gold? Real estate? No. It was the USD. When the proverbial you-know-what hit the fan, people opted for cash. In this instance, cash equated to USD.

Will this always be the case?

History shows us, no. If we think back to who was the king before the USD, we learn how this operates. For a long time, the GBP was at the top of the mountain. Britain's reach was strong for a number of centuries. It was the epicenter for trade, finance, and colonization. This lasted right up to the time period of WWI when it lost its place to the United States and the USD.

This, of course, had been an ongoing trend for a number of decades as the United States got stronger during the second half of the 19th century.

One of the most important (and overlooked) features of fiat is the fact that it is a monopoly. On an international scale, traders have plenty of options. Within geographic boundaries, however, there is little choice. Almost all countries are required to use a single currency that is selected, and controlled, by the government. Individuals have no option in their everyday lives.


Cryptocurrency is changing all of this. Here we see currency that is not under the control of any government. This is crucial. By operating outside the reach of government, people are given a choice what they want to use. Of course, this is going to come down to the core requirement: utilization.

As I travel around the crypto-sphere, I see the utility of crypto increasing. This is going to result in greater adoption across the board. My view is that as things get worse with the global economy, more people are going to turn in this direction.

We are seeing ecosystems being build out which is providing said utility to people. Bitcoin, for example, is making strides with the Layer 2 solution, Lightning Network. Ethereum is seeing the applications on the DeFi platform growing. All of this is feeding into the opportunity for more use cases.

Many are approaching the social media aspect of things. We are seeing a number of projects focusing upon this niche, which is enormous. To me, this bodes well for a blockchain like Hive.

In a short period of time, 6 weeks to be exact, we saw a lot of progress. The number of options are growing weekly in terms of what people can do on here. As applications keep updating , this will only extend the reach.

For example, there was a video put up that shows the proof of concept for @threespeak's Android app.

Earlier this week, we saw the announcement of a new game on Hive, EXODE, that is in Alpha with a browser version of the game. The next phase is to get a client version going.

Mobile is very important. Here is a post that details a new mobile app that is coming to Hive called @dapplr. They have a worker proposal they put together in an effort to get funding.

Activities like these extend the reach of the entire ecosystem. At the same time, if successful, this provides more utility for the HIVE token.

Bringing this all back to the idea of currency. Currency is a tool that is used within an economy. Cryptocurrency provides people with the ability to monetize the activities of their users by enabling peer-to-peer transactions. Obviously, the transfer of value is one use case. The ability to send money anywhere in the world without the use of a third party is huge.

However, this is only the tip of the iceberg. When we consider all the activities that people do on a daily basis, all are open to this possibility. For now, the development is lagging. That, naturally, is changing across the crypto world. Each week, we see announcement of applications that are providing more utility to users.

Hive is a microcosm of the whole. We are still in the development phase of things which is going to last a while. At the same time, getting the word out to new users is crucial.

The network effect is vital. In a simple form, this is basically a friend telling a friend. One of the advantages of Hive is the dedicated user base. This is something that is hard to see but the numbers are bigger than most. While they do not come close to matching those in the centralized world, the DApps are ahead of most other blockchains.

This is important since it is easier to grow when there are 10,000 people talking about something as opposed to 500. Of course, when you consider that Twitter has close to 400 million users, we can see how much work is still ahead of us.

Nevertheless, token values will grow as utility increases. The goal of Hive is to keep increasing the number of offerings so that users have more options. It only makes sense that the more use cases for the token, the greater the desire for it.

As we just witnessed, for now, the USD is the preferred fiat. People know that the dollar offers them the most security and is accepted most everywhere.

In the future, cryptocurrencies are going to represent the individuals within a particular ecosystem. The use of that currency is going to be voluntary. Thus, the more people who are involved, the greater the value that is attributed to it.

The flip side, of course, is those without much use are going to have little value. Hopefully, the industry progresses rapidly to start eating into the number of people using the USD. It is time to start siphoning some of the activity away from there.

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Utility is hugely important @taskmaster4450, which is why we need to work to shed this image of cryptocurrencies as a super high risk exotic investing derivative that ambitious young developers use as a gateway to a lambo.

To be honest, that has ZERO appeal outside a very small and narrow niche of the population.

One of our greatest challenges — as I see it — comes from inside the crypto ecosystem, itself: In order for cryptos to gain traction as actual currencies they have to become utilitarian and stable, which is the exact opposite of what those harboring "Lambo dreams" would want. A token that doesn't swing more than possible +/-50% in a year is BORING to a large core segment of the crypotosphere whose lives revolve around the question "when Moon?"

So we need to move towards a place where the mindset shifts from the idea that you profit from the actual coins, and instead you profit from what you DO with the coins... the coins themselves stop being the income source; innovation in Dapps becomes the income source.

Hive as a "multi-faceted content platform where people get rewarded" is certainly a good start, but it has the fundamental weakness that that a great many of the market participants view it as simply a way to get some tokens they then exchange for fiat. And that doesn't add value, in terms of building the spread of cryptos.

For more than three years, I've been floating the idea that someone needs to create a peer-to-peer ecommerce front end here, in the style of eBay/Etsy/Craigslist in their earliest incarnations, before they "went corporate." We have a high speed blockchain with lots of capacity, virtually feeless secure instant transfers, an existing active community to jump start usage. It would be a great way to start people down the road of thinking in terms of "Here's my box of old Lego; I'm selling it for 50 Hive!" rather than "This is US $25, which translates to about 50 Hive."

And yes, I realize it's going to be a slow gradual process, but it strikes me such a Dapp is a ripe cherry ready for the picking, from someone with a bit of ambition and vision. And let's be patient... it has taken eBay almost 25 years to reach "cultural icon" status...

A sort of "template" has already been started in the form of the LeoShop which — however — is only electronic goods, so far. It wouldn't be a stretch to develop it further to include physical goods as well. Not sure if @khaleelkazi and crew are up for the challenge, but somebody ought to take this one on!

Sorry about the "blog length" post, but this is an important discussion!

For more than three years, I've been floating the idea that someone needs to create a peer-to-peer ecommerce front end here, in the style of eBay/Etsy/Craigslist in their earliest incarnations, before they "went corporate."

I couldn't agree more @denmarkguy. We do need to create marketplaces where people can acquire goods and services they require in exchange for crypto. I, too, have been beating this drum for a while.

Leoshop is a start and needs to be expanded from there.

There are millions of ways this can go and, frankly, there needs to be thousands of shops all catering to the different currencies out there. Of course, we are not concerned with all.

But imagine if every tribe, as an example, had a shop with pertinent products for that tribe AND took their currency as payment.

Now multiple they out a thousand times.

Then I think we would have a different image outside the cryptosphere.

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This was done in PeerHub and Steemfiles. Both of these closed unfortunately. What I see is in the marketcap of a all the coins, the "stable-coins" are like 2% of of the combined marketcap.

Yet, even though Tether is bound to what we mostly use as a unit-of-account, Bitcoin remains accepted in many more places than any other crypto-currency and Tether just doesn't have that penetration. The combination the usefulness of being a peer-to-peer crypto-currency and the network effects of being the first such currency, has made Bitcoin the king of coins.

"Here's my box of old Lego; I'm selling it for 50 Hive!" rather ...

The problem with the peer-to-peer crypto shop is the ever present tax man.

Lemonade stands get shut down due to the State wanting its cut of the $12.34 profit earned by a bunch of 10 year olds... a crypto shop will be much worse.

However, one can accept crypto as payment through a regulated payment processor such as Bitpay or simply head over to Gyft and buy a gift card with crypto for use nearly anywhere.

Of course, there's nothing to prevent someone from accepting any form of payment for any given good or service. I could open a shop and start accepting old cigarette butts as payment, if I want to... However, the tax guy is going to ask you to convert the value of that good or service into USD and pay the tax on the transaction... also in USD.

The rise of crypto as a preferred payment option can only occur once the State loses control over the market place. This has already happened in places like Venezuela... when basic supplies become wildly expensive, regular citizens will seek to settle transactions in a more peer-to-peer environment.

Network effect + trust = money.

I totally agree to your views. The thing I am thinking about, is that the $ and (also the €) has also value, because the governments are able to enforce its use, or ban the alternatives. I know that cryptocurrency is designed in a way that it is not possible to shut them down easily, as long as some are running a node. However, we all depend on an internet connection (or a device) that can be monitored easily and is hard to anonymize for the average Joe. Given the helicopter money we are seeing to get distributed, we might see the discussion turning against crypto. The campaign might be like „Where was crypto when fiat saved your live in the corona time.“ That, together with the more conservative leaders we are going to face during a crisis like this, might lead to the criminalization of crypto as well as the legal enforcements to restrict their use. I hope I am wrong and I hope the industry is mature enough to fight for its existence.

I would not disagree with the thought that there is a push to turn people away from crypto. That is why it is imperative that we get as many people into using it as possible.

As for the helicopter money, we cant buy into the hype. Very little of it, at least in the United States, is getting into the hands of average people. Even unemployment is impossible to get in a number of states like Florida and New York.

Government bureaucracy is operating full tilt to screw up any help that is being passed out.

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Don't forget that the US dollar is legal tender the United States. That means three things:

  • Taxes and fines must be paid in it.
  • Those with an accounting obligation must hold accounts as the dollar as the unit.
  • You must accept it as repayment of a debt if you want the government to enforce the repayment of that debt.

Using the US dollar in the US is overwhelmingly the path of least resistance for businesses and individuals. And because of that everyone else uses it which only reinforces it being the path of least resistance.

Each nation or currency areas has an official currency as its legal tender. In each country, legal tender is the de facto means of payment and unit of account unless that currency has been debased as a result of mismanagement.

Dislodging the US dollar from its dominant position in the US is pretty hopeless unless the government and the Fed mismanage the monetary system so badly that the nation loses trust in the dollar. In the world, however, it makes sense for central banks to not only keep US dollars in their currency reserves but other major currencies as well. The Japanese yen or the euro are also held by many countries to some extent.

The Japanese yen or the euro are also held by many countries to some extent.

That is true. And over the next decade, the Yuan will also gain being held since China is going to keep becoming a larger part of the global economy.

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Utility must increase, yes, but we also need to pay attention to value capture. For instance, if my goal here on HIVE is to get paid for blogging, and that is a perfectly legitimate use case that we want to support mind you, but every time I transfer my HIVE to an exchange I am extracting value out of the HIVE ecosystem without attracting a commensurate influx of value into the ecosystem. That, in my opinion, is a slippery slope to the erosion of HIVE token value. So I think we should start thinking about how to counteract that export of value to the exchanges by monetizing some of the traffic here and using those monies to buy HIVE tokens off the exchange.

In this way, we can balance the selling pressure brought by full-time bloggers with some buying pressure supported by their activity. LEO does this quite elegantly in my opinion, but it doesn't have to be the exact same mechanism.

What do you think?

I agree with you @shanghaipreneur. When HIVE is taken out and sold for another crypto, that diminishes the value.

It is up to us to create a self contained ecosystem. This is where utility enters. For example, what about HIVE being used to purchase products and services that people need. We then do not see the diminishing of the value of the token but, rather, an increase. If the Hive economy grows, the token will, instead of being sold off, will be utilized.

Against other currencies, the overall price could then rise as use cases expand in number. This would likely cause less selling on exchanges and keep the token within the ecosystem.

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Deep capture here. Utility is indeed the "BIG" advantage of crypotocurrency over fiat. I was discussing with a friend few days ago on how worthless our currencies are - ordinary printed paper. Whereas, while we were trading on coins, the gold weight on each had some value.

For example, there was a video put up that shows the proof of concept for @threespeak's Android app.

Is @Threespeak going for an Android dapp soon? That would be a great advantage.

I can't speak for the threespeak team but it looks like it. The video was cut short since there were a password left in it.

I hope another one is put up to explain what is happening but a proof of concept is the first step.

That would be a major jump forward since I know much of the world of video comes from mobile. It should increase the usage since people can film a video on their phone and quickly post it.

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I agree that ultimately what will drive value is utility. Far to much energy has been invested on price speculation and far too little on just making things that people find useful. Distributed ledger technology should never be anything more than a tool that you use to do something and should only be used when it actually adds value.

I recently came across a project where they are using the trust less nature of an immutable smart contract to handle the distribution of value through a Matrix Program. Say what you will about the ponzi like nature of Matrix Programs but this is at least a practical application of decentralised trust and far more valuable than simple price speculation on the future price of cryptocurrencies on centralised exchanges.

Far to much energy has been invested on price speculation and far too little on just making things that people find useful.

The financial aspect of cryptocurrency naturally drew people into the speculation side of things. Of course, seeing the Bitcoin millionaires crop up, seemingly, overnight only fed into this more.

People overlook the fact that cryptocurrency is a technology, peer to peer ability to transfer value without a third party. Because of this, development is crucial which should lead to use cases.

It is then where we will see the utility of tokens increase to the point where people will be using the applications and the token will just be an interwoven part of that economy.

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USD is the enforced currency for international trade of oil, backed up by a huge army situated around the world. Now when it costs more to suck oil than to sell it, actually getting paid 0 for crude.

That does not seem to matter, since the whole scam has crashed, perhaps that guides thoughts from numbers to resources. Both virtual and real, like for example a Hive community sharing information on growing food etc.

The value is not equal as the price tag, like how can one count the cost of a human life, a beetle etc?

 3 years ago  Reveal Comment
  1. Yes it would although the complexity of Hive (cryptocurrency in general) is still a hindrance.

  2. Yes that is because you account does not have the proper Hive Power (actually recourse credits) to keep posting. As you power up your HIVE, you will be able to do more posting.

It is a way to prevent spammers for attacking the network while also providing incentive to newer users to power up, thus making the entire platform more stable.

Just keep powering up your HIVE or, even better, buy about 50-100 HIVE which will give you enough Hive Power to comment as much as you desire.

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To help your process @hiveshout, I recommend using the Leofinance interface. This will post directly to the blockchain and you can get more upvote that will also pay you in the LEO token which is on Hive-engine. This will give you additional payouts.

Leofinance ( is a tribe that deals with all aspects of business and investing (including cryptocurrency). It is a good place to get started while also improving your position.

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