RE: Why I believe (most) utility tokens are a bad investment 🤔
I love my utility tokens and I am very happy with them. I think that you demand argument is erroneous in that I believe that the value of any crypto is determined by demand. Having said that, I do agree with most of your post, which is why I select my tokens rather carefully. I think though that a company will use whatever it can to save money. If that means buying some "funny money" then they will do so - driving up demand and price for the coin/token. Your arguments about throughput and re-entry into the system are very valid. This is why the token economics portion of a whitepaper is so important. Handled correctly, I think that a utility token can continue to scale in value indefinitely while still costing the same to use to the likes of partner companies. Take a token like BNB for example. Token burns increase the value by decreasing supply. But you save trading fees if you pay in BNB - based on the current BNB price. Therefore you can always pay half price on trading fees if you buy BNB and use it immediately, no matter how expensive it becomes, and the BNB price can continue to rise. (Yes I know this example is flawed because of multiple technicalities I have ignored, but that does not change the point.) Or look at LOCI I spoke about a few days back. You can pay a fixed amount of LOCi or $249. It's almost like creating a stable token, only better. The price can be altered if desired. It also creates instant demand for you token as a way for users to radically cut costs.
If you grow tired of that BAT or TKY, feel free to send that useless rubbish my way! 😜 (I sold my BAT long ago and I still regret it)
Yes, in the demand argument it really should be 'demand & usage' .. I meant to say that the price depends on how much the network is being used at any given moment.
But yes, demand is underlying to all value of course.. supply vs demand.
I had to think a little on the BNB example, which is a good one and also a very interesting token model IMO, but doesn't the guaranteed token burn kind of make it into a security by failing the howey test (expectation of profit) ? I think it probably does..
Securities are IMO great investments btw :)
I'm not sending BAT or TKY anywhere! I'm poor in RL, I need my crypto!!!
I've been casually selling BAT at the tops. I've learned that it never goes above 6K satoshi's, so it's safe to buy low and just sell whenever it goes above 5K satoshi's. It happens every damn time... I'm sure at some point it will surpass it, but up until then it's actually a pretty good/safe market to trade in if you're so inclined.
TKY I like but I sometimes feel guilty about supporting China's 1984 state.... TKY is one of the ways how they're gonna do it and I'm profiting off of that?! 😱
Don't worry about China, worry about us. Remember that judging a very different culture by the standards over your own will always make it seem "wrong" or "weird".
Whatever China are doing, it is working. Their already massive economy is Mooning! Since China is rather good at stamping out corruption, I am confident that with their communist principles, most of the country will ultimately benefit from their success. For TKY (and NEO for that matter) to play a part in this is okay with me! I far prefer it to capitalist greed that is designed and regulated to enrich the rich. I also hold TKY and will keep holding it tightly!