Price vs. Value
There are two types of blockchain users: one that’s concerned with price, and one that’s concerned with value. In this article I want to highlight the key difference between the concepts of price and value, and how blockchain accommodates for both of them. For this purpose, I may employ the gambling and investing analogies. Gambling and investing have a lot in common as both involve risk, profit and loss. Cryptocurrency and blockchain have a similar relationship.
Blockchain and cryptocurrencies are new to the public and for most, this is the first time people are afforded an opportunity to trade at all, let alone trade for themselves. This has given people a sense of power, inclusion, and money, but this can quickly turn into a game. The huge swings (volatility) in cryptocurrency prices is closely associated with the swings experienced in gambling. It’s this exact rollercoaster of thrills that keeps people hooked and looking for that next big win. It started with Bitcoin and it quickly stopped being about making the most educated bets. But chasing that rush of seeing their crypto holdings double, triple or even quadruple against the dollar in a matter of days.
In this sense the blockchain has traded casino chips for digital tokens. The moment you exchange your fiat for cryptocurrency (tokens) then that money is gone and volatility kicks in. You become obsessed with price, is it going up or going down? After a while you convince yourself that you didn’t trade fiat for crypto only for it to lose value or remain stable like fiat. From there it doesn’t take long for your impulses to take over as you begin to search for ways to increase your token holdings. But this involves having to take risks in order to realize profit.
The difference between Price and Value is what defines the quality of a market asset. In fact, wise investors are in a constant lookout for companies that exhibit a great deviation between the price of its shares/stock vs. the value of that company. The same principle applies when looking at blockchains and the prices of their respective tokens. It is therefore wiser to ask “what is x token priced at?” rather than asking “what’s x token valued at?”. It is a minor adjustment to make but could change your whole perspective on what is an over-priced or under-priced asset. This is one simple ideology that separates great investors from good investors. The market often values assets incorrectly in relation to the companies behind them, especially in the earlier stages of operating.
The cryptocurrency market is filled with useless tokens that are priced high but offer little value. Over 5 000 cryptocurrencies exist today with at least 90 percent of them overvalued by being priced over $0. It is these kinds of projects that attract newcomers mostly, and people looking to make a quick buck by imagining the seemingly huge upside. It is also the same overvalued yet useless projects that deter potential investors from entering this space. There is still a decent number of undervalued projects but receive little attention because of their low prices. People often associate price with value and that’s the gap that most of the market misses. There are also valuable projects that are still overpriced. When the scales balance out overtime, that market capitalization will trickle down to the valuable yet under-priced projects.
Even after reading about Price vs. Value it can still be confusing as it seems to be a game of rock-paper-scissors. ‘Valuable yet overpriced’ triumphs over ‘Worthless yet priced’ but still loses to ‘undervalued and underpriced’. I’ll let the man regarded as one of the best investors of all-time simplify it.
Price is what you pay. Value is what you get.Warren Buffet
The Value Token
EOS is the only token in which you’re incentivized not to sell even when it’s price is going up. Let me explain. In my opinion, that phenomenon is the only proof one needs to verify that EOS is heavily utilized and thus valuable. Any sale of the EOS token is short term sighted, because the money you would’ve gained doing so quickly evaporates. By selling, users have to consider forfeiting all the benefits the token provides them within the blockchain ecosystem. Fast, scalable, fee-less etc. on top of all the benefits of decentralization, complete ownership of assets, borderless and trustless transactions, and so on.
For one, EOS gives users a voice in the very network which they love and conduct their daily operations, whether it’s for business, gaming, shopping or daily recreation purposes. Where else are a user’s tokens and their right to express their opinions on its network’s governance this closely aligned? The question is rhetorical cos the answer is simply “nowhere else”. The only other place where this is fostered and nurtured to possibly be even better, is on the Voice social media platform, which will greatly complement EOSIO tech.
Secondly, by selling their tokens users give up their claim to valuable network resources. These resources are a scarce commodity, which with time, will become even more valuable as people realize that this network (EOS blockchain) is also the best performing network for all kinds of applications, even under the pressures of mass scale. EOS is currently handling operations that are, at the very least, 20 times more than its closest blockchain competitor. When it comes to scale – EOS is technically in a league of its own.
As the most scalable and best performing public blockchain, everyone will be scrambling to be on its network. Developers and business owners will want their applications and/or platforms to be deployed on the EOS blockchain. Things will get to a point where token holders are no longer selling their tokens to the average EOS user but selling them to big corporations, and possibly to government entities around the world.
Average users on the network will be able to enjoy free transactions or usage of the EOS network. But those who provide services on this network must have tokens staked in order for their applications and platforms to efficiently operate. And since in order to do so they need to have a sufficient allocation of resources, they’ll either rent or buy tokens at higher premiums than current levels. Even as the amount of tokens needed to facilitate their applications decreases as we scale, the price will increase on the inverse, again due to the value of mass scale (adoption).
Although in reality there’s a lot more benefits to holding EOS tokens – short term gains (if any) from selling are misguided because the long term gains are exponential. Not necessarily financial gains, but because the value of EOS tokens is exacerbated by these two main points – at scale. (1) The ability for a token holder to voice out their opinions on the governance of a global network. (2) Having claim to resources of such a global network.
Blockchain transcends any other technology before it, even the internet. If the internet connected an already existing world, then blockchain is building an entirely new one up in space – without the limitations of a single planet. Blockchain space is unobstructed and promotes wide transparency. Many spaceships can take us to this new world. But EOS is the only one capable of facilitating this mass exodus of people with its secure, fast, scalable, and most importantly – free transportation (infrastructure).
Thank you for reading!
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