What gives a coin value?
-
I think the value comes from a combination of.
The team behind it making changes, fixing bugs and innovating etc.
The software / company level ecosystem that makes it easy to be used.
The perception by the users / general public about its reliability, safety, long term prospects / future, and also that it is “Fair”.
And the demand for the coin based on all of the things above determines the value.
*This may be bypassed or ignored by pure speculation which is solely based on market / public opinion.
-
A couple of responses I have had on the twitter
-
Community Support
-
Usability
-
-
I would agree with all of the above. It’s the people behind the project, their ability to care and more importantly to keep caring over time even in the face of change or if their mood changes.
The price is a reduction of sentiment. Most of these coins have a speculative price based on historical information. Now that so many more people are making coins I think the more relevant each coin is to a particular community the more valuable it will get.
Communities form around a common need. That can be a local need or it could be shared practices and values, like environmental conservation or something.
-
Whether it be perceived or realised, Usability and Survivability.
-
Yeah I would say survivability is the most important aspect, especially if your aim is to become money.
People don’t accumulate money expecting it to go down in value. If you believe that your money will lose its value before you expect to spend it on your future plans you won’t want to keep hold of it. This is what causes people to misallocate their capital in things like art works and property. I talked about this in Ep101 of Let’s Talk Bitcoin.
There is a lot of cognitive dissonance within the crypto space with people lying about their true underlying intentions. Often lying to one another about their expectations of return and on many occasions lying to themselves.
People aren’t buying these coins because they think they have any value, they are buying them because they believe other people will buy them. This is called a Keynesian beauty contest.
So everyone tells themselves a story about how they will buy at the bottom and sell at the top. Nobody likes to think they are stupid and so everyone walks around with the same private expectation. What they don’t realise is that everyone else is doing the same and it can’t be true for everyone, the fact is most people will not be able to sell at the top and in fact most people will lose money.
So we are spending huge amounts of time, money and energy on propping up a market in which the incentives are there to make everyone pull in opposite directions.
We are very good at detecting authenticity in other people and this undermines our attempts to cover up true intentions. For example there is a huge difference between:
1. starting a coin expecting it to go up in value and…
2. starting a coin and working hard to protect its value from decline
A team working towards goal number two understand the contradictions in a complex system like a market. They don’t see the profit as the goal they see it as the result of getting things right. They work hard and push themselves in to areas of work that challenge them because they know that this is the work nobody else will do thus creating value.
It’s not that they are trying to make the price go up with PR and marketing drives which just look good on the outside. They are working hard for a gradual and stable rise over time as the result of building confidence among their users.
-
We discussed this very briefly at the last meet up…the fact that a coin is stable in its genesis block concepts and ethos.
By this I mean… A coin launches with a set of ideals and mechanics and should do it’s utmost to stick to them. For example it was made clear to me that some coins have decided to reduce the mining reward by a percentage each month to inflate the price despite not launching with this mechanic. That strikes me as short sighted and essentially greedy by whoever governs to ability to make such changes.
Some things may need to change to protect a coin and it’s community but a stable and consistent ethos is important in the long term price of any commodity.
-
Massive and frequent P&D. More volatility the better :)
That is good value for trader.
Nothing is worse that long flat boring line.
For me most valuable coins are coins with highest volume and big spread, lot of those coins can be found at Mintpal.
-
It seems to me fundamentally all value is derived from the abbility to use a currency to get the goods and services and the abbility to aquire and hold it as an intermediary for such time that you need said goods and services.
Anything that enables this gives the coin its value. So, a strong network for underailable block chains, security in the form of unhackable wallets, the abbility for anyone to contribute to the mining enterprise in a meaningful way and get paid for their efforts in said currency, universal acceptance of the currency and of course the easy abbility to transactionally transfer currency for goods and services.
Things like non-asic-able algorithms, good developer support to pre-emptively and retroactively fix bugs that arrise and vendor acceptance everywhere are all things that I think are implied by the former.
-
Massive and frequent P&D. More volatility the better :)
That is good value for trader.
Nothing is worse that long flat boring line.
For me most valuable coins are coins with highest volume and big spread, lot of those coins can be found at Mintpal.
This runs contrary to the incentive that most day to day consumers and businesses have. It’s not so bad with national currencies but a global one with tiny volume it’s problematic. And that very volatility ends up killing the coin as it doesn’t get the adoption it needs to give you the volatility in the future.
You’re just killing the goose and then no more eggs.
-
We discussed this very briefly at the last meet up…the fact that a coin is stable in its genesis block concepts and ethos.
By this I mean… A coin launches with a set of ideals and mechanics and should do it’s utmost to stick to them. For example it was made clear to me that some coins have decided to reduce the mining reward by a percentage each month to inflate the price despite not launching with this mechanic. That strikes me as short sighted and essentially greedy by whoever governs to ability to make such changes.
Some things may need to change to protect a coin and it’s community but a stable and consistent ethos is important in the long term price of any commodity.
Or maybe they launched with a 4 year old obsolete model and are willing to adapt. As long as the supply curve matches the old mechanics (only smoother) then it’s fine. Every few months is ridiculous. Somewhere between 18 months and 36 is fine.
-
This runs contrary to the incentive that most day to day consumers and businesses have. It’s not so bad with national currencies but a global one with tiny volume it’s problematic. And that very volatility ends up killing the coin as it doesn’t get the adoption it needs to give you the volatility in the future.
You’re just killing the goose and then no more eggs.
This runs contrary to the incentive that most day to day consumers and businesses have. It’s not so bad with national currencies but a global one with tiny volume it’s problematic. And that very volatility ends up killing the coin as it doesn’t get the adoption it needs to give you the volatility in the future.
You’re just killing the goose and then no more eggs.
Sure, this is just trader point of view :)
Plenty of gooses to kill :D
