What is the inner value of tokens?

in #hive-1752545 days ago

What is the inner value of a tokenplay.jpg

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When I was a banker quite some years ago, I dealt often with stocks and bonds. I've studied the field and it was quite easy for me to define the inner value of a stock according to certain indicators. Like that I could build a nice portfolio of shares that I knew were bought at a good price.

How to define the value of a token ?

Like many of you, I lived through the ICO wave and then the STO wave and later I met all the DEFI stuff. I've seen many things and many projects were still born or abandoned. So how can we define the inner value of a token or a crypto currency ?

The distribution

One of the most important factors to evaluate the inner value of a token is to look at it's distribution. How many people are owning and using the token? The more people use it the better. There are a lot of very high market caps where very few people own the token. The market cap and the token price can be manipulated quite easily, especially when few people own this token.

The more people actively use the token the better

The use cases

There are so many different tokens and not all of them have meaningful use cases. If you have a token that can be staked for the sake to produce more of the same token it is nice and well but in the end this won't be enough. When you have new tokens produced, what can you do with the existing ones?

When you look at Etherieum, the principal use case is to use all the fancy tokens on the etherieum blockchain to pay the gaz fees. It's an use case.

Let's look at Bitcoin. The use case of bitcoin is to protect your fortune. Thanks to the deflationary aspect of the coin, people see it as a perfect fit to protect their capital and to profit from the price development. But with bitcoin it's not possible to pay stuff.

For every use case there is a competition between tokens and blockchains. Some will not survive and some with strive.

If you combine distribution and use cases together this is for me a good indicator for the internal value of a token.

The network effect

I've seen a lot of projects lately that integrate several blockchains into their services. This is a very important success factor because linking blockchains and token economies together is an amazing multiplication effect for the distribution of the token and of the use cases.

These are the indicators that I try to use to evaluate the potential of a token. For me the short term price doesn't matter that much. What does a nice price development mean when the token won't be around anymore in the near future?

But tell me how do you define the inner value of a token?




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Hello @achim03
Interesting and complete publication, as usual.
It strikes me that you say you can't pay with BTC, or I don't know if I misunderstood. Here in Colombia there are places where they accept BTC as a form of payment, even a dental office, clothes, I have seen several places, that's why it caught my attention that you said that.
In the end I think that the value of a token is determined in good measure by the project that supports or represents it.
Because we know that some projects, in the future, have more possibilities of being maintained in time than others.
And there is a parameter that gives it value.

It's good you point that out. This is great news if you can start to pay with btc. The problem I see with btc as a paiment mesure is the cost and duration of a transaction. If you don't add enough miner fees, it can take hours till your transaction passes and I don't see how a shop can wait with you at the cash desk to wait so long :-). Of course there is the lightening protocol that can make things speed up.

Thanks a lot for your comment my friend!

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HA HA HA
It makes me laugh to imagine having to wait until hours in a store to be able to go out alone when the transaction is verified...

Yes, but in general they are stores where you can wait, or are known in some way, or pay in advance, and then you can enjoy the service or product. Because that is a problem, the duration.
The other thing is that imagining paying for a product that is worth 10 dollars and you have to pay 5 in commission, is a very high cost.

It's a detail, let's hope these things are solved, otherwise, maybe the problem of speed is already solved in other blockchains.

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I feel with time, user get mature in crypto space and all useless token will get no market.
Some nice indicators mentioned here.

Thanks a lot for your feed-back. I believe there are still a lot of newbies that get caught in scams and useless tokens but the more experienced users find a way to define what has a future and what not. Thanks a lot for stopping by.

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Thanks for sharing your "bankers wisdom" with us... :) These two things are indeed one of the most important, especially in the crypto world...

Bitcoin is specific as it is the "oldest" coin, and besides all his specifications, I think that the value is also that he has no "owner"... It sounds weird, but I do think that it is his advantage...

Regarding ETH, it's totally different from BTC, as its main strength are smart contracts (not just fancy tokens... :P ), and it wasn't planned to has "value" and be used as money... more like a super-computer...

Back to distribution and use case... I would agree that they are important, but our HiveEngine tokens are a bit specific... I have to admit that I don't like how they are centralized, and how the creator of coins can easily "change the rules of the game"... Also, creators can mint additional coins when they want, which is also a big red flag... Unfortunately, a lot of owners do that and harm their own tokens, maybe not knowing that... Or, knowing... :)



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our HiveEngine tokens are a bit specific... I have to admit that I don't like how they are centralized, and how the creator of coins can easily "change the rules of the game"... Also, creators can mint additional coins when they want, which is also a big red flag...

This is a very important point. It's totally true that most tokens have like an unlimited supply and owners can issue new tokens whenever they want. The token prices can also easily be manipulated. Most tokens don't have a sound concept behind them and over time the actions of the owners tank the token...

With Hive-Engine tokens the notion of trust in the owner is very important. Thanks a lot for your great comment!

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I was able to see some of your video, but unfortunately Odysee seems to be having issues & cut me off in the middle of it.... 😑

However, I did appreciate where you were talking about the value of tokens & how can you determine what's worth & what's not. Since I am a newbie compared to some (only 2 and a half yrs of crypto experience here), it still can be confusing as to whether it's worth the time to invest or research a certain token. There are so many out there, but a lot of them are crap unfortunately (outside HIVE)...

So I invest in some major ones as well as HIVE, but do my own research with others....that's the best way for me to do it. The De-Fi and wrapped technologies are blowing my mind & still haven't grasped all of it yet, but I know I will learn as I go...:)

As far as on Hive Engine, it would be nice to see it decentralize as they have been mentioning. That would create more stability & I think, personally speaking, it would help me to see which are really worth spending time on. We know there's the few that are, but the others are difficult to say since the token creators can change the rules at anytime. So, it will be interesting to see if H-E does go the decentralization route - it would only make sense!

Holy long book. Sorry about that ha ha. 🤣 Thanks for a great post, my fried. I enjoy them a lot! :) Have an awesome weekend.🧡

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So, it will be interesting to see if H-E does go the decentralization route - it would only make sense!

Thanks a lot for your amazing comment :-). I think it will be a first step to make the platform more decentralised. Another problem I see with H-E tokens is that a lot of people who create tokens don't know much about the economical aspect of the token. They just believe that you can create a token and people will buy it. A lot of tribe tokens are governed by an inflation that nobody can exactly quanitfy. These are some real weaknesses. I think that there should be more documentation and tutorials for future token owners so that they can make something that works aslo in the long term. I wish you a beautiful week-end :-)

I agree with you 100% on that. I would love to eventually create a token someday (way down the road lol) but I want to be educated & make it truly valuable before I get into something like that. It's too easy to create one on H-E & try to fly by the seat of your pants. For me, it needs to provide value, like my content lol. Blessings! 💛

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Personally, I determine the value of a token by the number of people I know who endorse it. While this could leave me open to being misguided, I feel there are certain folks that I can trust to make valid points regarding a token and I do not follow the advice of just one person.

When it comes to introducing a valuable token, I think it doesn't make sense to create one until you have a valid use case. I have plans to create a token and already have a use case in mind. However, I am still working on the "product" and will not offer the token until there is a need for it.

This is a sound strategy. Especially when you listen to people who have experience with more and less serious tokens.

I've created several tokens and one of the most important factors is that a token needs to have a certain use case and also that I needs a certain economy. Especially at the beginning the owner of a token has to make sure that the demand and the offer are in balance and how it could kept in this balance for the long term. This is the very reason why many tokens turn out to be without value after some time.

Thanks a lot for your comment!

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Interesting analysis about the variables that define the internal value of tokens, greetings and thanks for sharing important information.

Thanks for stopping by!

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Wow, buddy. definitely this world of crypto and tokens are ways that I am learning every day but despite that I would not be able to give it a value, unless I do it from the point of view as they are done with the shares of a company that somehow it is giving good economic performance in its financial statements.

@tipu curate

I totally agree with you. It's very difficult to define the value of a token in let's say objective terms. Thanks a lot for stopping by!

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