Why Tokens are Eating the World
Vinny Lingham

‘Private Economies’ and “Token-Based Assets” raise so many opportunities and issues in one go. It is a difficult challenge for those, like me, that have not been in the sector for years, but hope to be part of the future.

“Token-Based Assets” seem a logical next user case for Blockchain infrastructure. In the case of gold , or a company issuing shares, it is easy to understand that the token price will not correlate to the price of Bitcoin/Ethereum (liquidity aside).

“Token Sales by pre-trading companies” present a more difficult challenge to understand value creation and value allocation.

With no equity participation, it looks like there are two value creation opportunities for Token Holders:

a. “Business Value”: If the underlying business has valuable product and services to offer in exchange. If this is the only value upside, it looks like a good deal for the funded company in that no equity is given up. It looks like a “Coupon Based Funding” model, though this raises valuation and accounting issues (treat outstanding coupons as liability) for the company.

b. ‘Network Value”: A more nebulous concept, but where the “cream” is located. The more the network is used the more valuable the token. I still do not get the link to how the Token value rises by the greater number of real world businesses on the network and the the nodes within its network…..But I will keep trying!

I look forward to more from Vinny on this.

Appreciate any help!


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