Tokens and ICOs are a bless to basic value of the network (Waves, NXT vs. ETH)

Most of the value of cryptocurrencies is based on demand and supply law. Networks that are based only on speculation are vulnerable to “pump and dump” attacks. Also, most of the “altcoins” relate to BTC price, which is a factor, that at the end, gives the result of FIAT value.

To result with the better main value, there is an advantage of networks, that have the mechanics of generation of tokens, which are an economical inflow of value of assets to basic network.

For example, in Waves network, it is easy to generate tokens, which may be used in an ICO/ITO process. ICO/ITO process generates demand on the token, but tokens always refer to the basic value — in this example, Waves value. In Ethereum, ERC20 tokens base on inflow of capital to the main network, so each time a new ICO/ITO is on the way, it influences the main price positively.

The two main positive impacts, despite others are:

1. Inflow of new capital and people by aggregation o resources from other networks (including FIAT money) due to requirement of exchange to the main asset. For example, in tokenloyalty.io ICO, basic token refers to the Waves main currency. Transaction requires purchase of Waves to acquire the tokenloyalty token. When marketing is done among a wide range of people from other networks, in assumption, it generates new users of the basic platform (Waves), makes inflow of resources (like BTC) and makes the platform more popular, but still the value growth touches both, Waves, and the token (in this case tokenloyalty). I think that was one of the crucial factors of success of the Ethereum network — smart contracts generated inflow of capital to the network, which at the end, positively affected the main network. Emerging platforms like Waves, or even older ones, like NXT, should focus on the ICO promotion process, which should create such impact, giving better economical position on main network. But crucial in this scenario is the support of community, which emerging platforms sometimes do not have.
2. Even if the inflow is equal to the outflow, it generates liquidity of the market, which is CRUCIAL for people buying tokens or main cryptocurrency. Sometimes, even lower value does not mean nothing, when gives the ability for fluent trade — like daily trade or using advanced mechanisms.

The conclusion of thought is that networks that offer token creation should focus on high promotion of ICOs, with high support of the community, which creates a great environment for functioning of the business. Without this, platforms are ineffective, which only gives the speculation effect, giving the vulnerability of being independent of such business result, and thus, becoming less attractive to interesting projects. It’s closing the loop.

Author: tokenloyalty.io

Status: Running token sale.