Token Use-Case

Price fluctuations of Bitcoin and other altcoins and the volatility of the cryptomarket may lead to a misconception that crypto coins and tokens derive their value from the number of people who want to buy/own them. Objectively, that is far from truth: while Bitcoin and the altcoins have not been able to live up to the hefty expectations based on their mind-boggling surge in value in 2017, they still have their utility.

It’s incredible how easily we forget even the most basic things when our get-rich-quick dreams fall to pieces. Cryptocurrency tokens and coins are pieces of software code, and as such their value is derived from the functionality they offer. Bitcoin (“the dumb one”) allows you to transact, while the Ethereum blockchain enables creation of “smart” contracts — the mini software program that runs inside them is multifunctional (“fat layer of protocols”) and lets you build (“thin layer of dApps”). Once you put a decentralized application on the network (in the form of a token), people using the tokens start working on problems that dApp was built to solve, and the network effect does the rest: all the users reap benefits from working together. It’s no wonder that the third wave of the so-called “intelligent” crypto even improves upon the possibilities offered by the second generation.

All things considered, the questions that should be answered and the implications that have to be understood more or less boil down to the following:

• What is the purpose of your token?
• What function or utility does it perform?
• Does it generate value inside or outside its own market?
• Are people already paying for something similar, and how does your blockchain solution compare?

If your answers to these questions are favorable ones you have every right to believe in your token’s use case, which should give prospective users enough incentives to join your network and benefit from the solution you’re offering.