MY DAM TOKEN BUSINESS, PART 1

Let’s simplify the business of Cryptocurrency by creating a simple, high-tech Dam example. I started this business simplification process in my blog, Is Peer Mountain a Dog, a Frog or a BAL; where I created two business layers, which I called the Business Aggregation Layer (BAL) and the Business Silo Layer (BSL)!

Example: I want you to buy tokens in an ICO, based on my invention of the Air Water Virtual Dam. My company is called, My Dam Business (MDB) (quit laughing). MDB will extract large quantities of water from air. My investment pitch: I plan on building a community of water providers which will source water to everyone, so invest now!

In this example, I will create a new water centric currency. My currency value starts with the measurement of water; however, the currency is also like a raw material. Basically, I am floating this water centric currency in my new water centric community. So, the value of the token will be independent from the usage/value of the water. The currency services the needs of my newly created community. For example, we can cheaply transact with each other and even finance new ideas around our joint water interest. If my plan works, businesses will aggregate on top of the new Cryptocurrency, to make it financially easier and cheaper for the community to create new investments in products like drinking water, irrigation water, bottled water, etc.; wow, doesn’t this sound great!

The Cryptocurrency is represented by a new token, DLT (Dam Liter Token); yeah, yeah, my Dam tokens! At the beginning of the offering, DLT’s value will be set at the value of one liter of water, but remember, this float value will quickly change. Let’s look at what makes this happen!

Exponential appreciation for a Cryptocurrency predicates a business requirement for a growing customer base. Customer growth using DLTs is the major driver for DLT’s expected, future exponential value. In my example, exponential value is the major reason for creating DLTs in the first place, because it encourages both BSLs and investors to join; therefore, I need customers. For a short explanation on how exponential growth happens to Cryptocurrency, I like this short explanation from Peer Mountain, “On Crypto Valuation — The ICO 2.0 Framework”.

By the way, Cryptocurrencies will be used for a mirage of reasons. A Cryptocurrency’s value does not increase exponentially by default; it is by business design. So, pay close attention to what and why you are investing. For example, are you investing in the Cryptocurrency, hoping for appreciation or a manufacturing company, hoping for something like dividends.

A good example of a dividend like Cryptocurrency is EVN from Envion. By buying EVNs, you are buying rights to dividends on the profits produced by Envion, which dividends are paid in EVNs. Envion is a Cryptocurrency mining company whose strategy is to use cheap, over produced electricity at the point of production for their Crypto mining platform. Its Cryptocurrency’s value will not increase exponentially, unless its share value does. By business design, EVN holders are basically the shareholders.

What is important to understand about Cryptocurrencies, there are drastically different business models, which the tokens can represent. And, although EVN is a Cryptocurrency, it does not belong to my self-defined BAL business layer because it does not, by business design, aggregate BSLs!

On the other hand, DLT is obviously in the protocol aggregation layer, which is a requirement for my BAL. This is reflected by its design for exponential currency value growth at the protocol layer, meaning the token value is not tied to the water value or the shareholder value of MDB. What is also critical for the BAL, new BSL businesses are being serviced like virtual irrigation water gates on a dam, which represents aggregating BSLs. BSL businesses are all aggregating around DLTs, because without it, they are not in the water centric community. The BAL structure also encourages investors to own DLTs and to invest in BSLs, just because of the likelihood of exponential appreciation of DLTs.

Great BAL strategy, right! Well, maybe?

The problem; without BSLs, I just have stalled, stagnating ICO investment water behind a Dam, which represents the initial ICO investment capital. What I need is multiple business gates servicing BSL streams of water like depicted above. The gates are servicing different BSL applications, defined by the BSLs. Without these BSLs, DLTs ultimately doesn’t survive!

Another way to look at it, if a symbiotic relationship between the BAL offering and the servicing BSLs does not exist, the BAL offering is most likely dead on arrival. The BSLs are the major supplier of water customers as well as being the most important customer utilizing the DLTs! So, a BAL offering must know the complete value chain in the defined business, because the hype that got the ICO funding will not be sufficient without technical knowledge and the business understanding to implement it. BALs are dependent on BSLs, which in my example, will service farmers with irrigation water. It will be BSLs that get the bottled water into the retail stores. In this respect, business basics didn’t change despite the arrival of Blockchains.

Therefore, I won’t invest in someone who only knows how to technically build a Dam or a token, which even this, I cannot absolutely prove. I want someone who knows the water industry, because of the need for a growing community of DSLs using DLTs! If not, it still might work, but I define this as investment gambling, meaning I HAVE BEEN THERE, LOST THAT! I am not interested.

I hope this blog helps with your investment ideas. Feel free to ask questions in the comment area, especially if you do not understand my imperfect example, which may even need fine tuning. I am just hoping that we will all get to the point where we understand what we are investing in! I will convert this analogy to Peer Mountain, my investment pick, in next week’s blog.

What is obvious, building a Dam Cryptocurrency is technically not easy, but getting the Dam currency to the customer in the form the customer will use it, is also a huge business problem! OK, you can laugh now!

The rest of this blog is not important to read, unless you want to waste some time reading some of my incidental thoughts!

Life taught me something about technology investments over the last few decades; I learned the difference between gambling and investing, but the hard way. I really should have considered taking an MBA! After all, it would have been cheaper and quicker. Despite my ignorance over the years, I finally did learn to quit gambling on investments, while maintaining my love for calculated risks.

In this light, a friend asked me, “Isn’t this Cryptocurrency thing, just another bubble?” My simple answer, “Yes.”

My question to her, “When did you last make real money on an investment, where there wasn’t some sort of a bubble”? We both laughed, then started making investment plans.

My bubble perspective; I believe an investment bubble does not deserve such a bad reputation. A bubble gives financial oxygen to a growing industry/economy, new or old. If you understand what is in the bubble, you can make good money with a little investment. If you are a gambler, you can win or lose. If you know nothing about the industry or gambling, get an investment advisor who has skin in the game!

ICOs allows us to invest in a Cryptocurrency, most often without shares or legal regulations, which protects no one when the bubble pops! Yes, someone may go to jell in an IPO, but your money is gone. ICOs allow us to join the startup phase of a company, most often without the regulators stopping us, or without the need for a humongous investment.

OK, as you can imagine, this is not Wonderland! So, my advice, put it in perspective by making a calculated investment. For example, I like the Bitcoin perspective of Paul Brito, “Bitcoin is best thought of as a 5- to 10-year project, and we’re at the very early stages.” Forgetting, it might have been his reference to Marc Andreessen or Netscape, which added to a nostalgic moment about my past building of a European Online solution with Netscape and Sun; I believe, Paul’s article makes sense.

Although, the above is far from investment advice, it does allow you to look at my Cryptocurrency investment thought process, then apply what you like to your own investment targets. Remember, if my logic is faulty, there are those who will rip it apart in the comments, therefore I suggest you read them. I know, I will.