Should crypto-tokens pay dividends? I think so...
Why aren't there more crypto-tokens like PPY?
Peerplays appears to be the only crypto-token right now which pays dividends to hold it. Originally Steem paid dividends in the form of "interest" on the Steem Dollar. The real question is should the new model for tokens be the tokens which pay interest to holders? Many of these ICOs are offering very high risk low yield tokens which only have value if the price goes up. Interest for holding the token can offset the risks of a bubble because if we look at the stock market then we find that typically dividend investors do fairly well even when the markets are in a recession.
Dividends reduce the risk of holding during a recession
Dividend investors can get their dividends regardless of the condition of the market. They can keep their stock, hold it, and receive the dividend when the market is in a panic. When the market is in a bubble they can sell their stocks. Dividend stocks actually pass the profit directly to the investors. Dividend tokens from truly profitable blockchain projects can in theory reward holders with interest. The best way to prepare for a crypto recession is the same way we would prepare for a recession in the ordinary economy and that is to buy recession proof assets. If it is a bubble, then Steem and Peerplays can do quite well in a bubble but if it becomes a recession they'll likely still do quite well as long as they continue to grow.
References
- https://seekingalpha.com/article/294269-dividend-skeptics-heres-how-dividend-champions-fared-during-the-last-recession
- https://www.simplysafedividends.com/5-dividend-stocks-that-powered-through-the-financial-crisis/
- http://www.suredividend.com/bear-market-stocks/
I do not offer investment advice. This post is not investment advice.
For a token with a real income return, you might want to check out the WTT token, which gives you the right to 50 years of rent-free capacity at a one of the world's low-cost power-cost regions (Washington state). It's for cryptocurrency mining, but you can just rent the tokens, if you don't want to mine. Projected return is 35-60% annually, at $1 token price. Obviously, when tokens are tradeable on an exchange in a few months, I expect them to appreciate in value to lower the yield. Best time is to get in now. Crowdsale is still open. http://bit.ly/wtt_token (Disclaimer: I am invested in the WTT tokens.)
Hi^^ Thank you for sharing, I'm following you!
Very insight article and I observed that Steem price is less volatiled than other cryptos during fear sell off and bitcoin price dropping recently. Keep up the good work...
It depends on the purpose of the token. Is it designed for long term investors or for speculators. What value does the token have to warrant interest payout...financial viability still applies to the crypto-world!
Couldn't agree more
I think crypto-tokens should pay dividends. A huge emphasis on investing on cryptocurrencies right now seems to be based on rapid trading speculation. If crypto-tokens paid interest to hold them I believe that there would be a much greater incentive to hold them.
I think my only concern is that typically the dividends paid by stocks is actually a share or distribution of the profit on an actual business. If cryptocurrencies paid dividends, it would definitely would have to be based on profits generated by that particular cryptocurrency as a business and not by virtually printing more cryptocurrency to pay out dividends. If more currency was just printed out to do this, it can seem counter-intuitive to stabilizing the price since the supply of currency is being diluted by creating more of it to pay out dividends.
Would the dividend model really work for ICO's? I ask because it would seem to be that ICO's are not built upon fiat capital to begin with so if they promised dividends, they would either have to pay in fiat or instead offer more of their coins, which don't have any value yet, this essentially meaning that you just get more coins per unit of fiat money rather than a return.
They should if they are able to generate any income. But no to inflation.
I wonder why nobody buys PeerPlays and why they are listed only on one doggy exchange...
Exactly and they can generate income. It's just not enough of these kinds of tokens exist and that is why it's a "bubble". It's not because developers cannot create them but because they just haven't. Ethereum or Graphene offer all the tools necessary to create profitable platforms. Steemit honestly isn't yet profitable, but it can easily become profitable. Peerplays also can easily become profitable, maybe even easier than Steemit.
More focus should go into making projects profitable and sustainable for the long term. This requires a different mindset which frankly is not compatible with some of the political idealism we see. To be profitable long term requires targeting the mainstream rather than the crypto-anarchist. It's a matter of demographics, marketing, and then monetization, not so much a matter of politics or fancy cryptography. Without these bread and butter mainstream projects you cannot have a sustainable and profitable ecosystem for the research projects or activist driven projects.
It depends on the crypto token. Note that due to the volatility, holding crypto´s can be risky as you are not 100% sure of the future. However the established once due bring in good ROI over time and its ok like that
Will be great for any of us!