I have some IOTA and have been holding it for a while because the project is very interesting indeed. But one thing that has bothered me, and keeps bothering me, is that I can't find a decent answer to the question: What is the IOTA token used for and why is it valuable?
Where will the demand for this token come from?
With Ethereum for example, ETH is the fuel and presumably this is used on smart contracts through transaction fees. But since IOTA doesn't have transaction fees, what benefit or value is there to holding IOTA?
Once I have this answered I will feel much better investing more into it.
Is Eth only used for transaction fees? Of course not. It is used as a currency. Like USD or EUR. All of those currencies do have value, although they are made out of thin air and "backed" by an insolvent country. Not because the transfer costs, but just because it is used. The more people use it, the more precious it becomes. Thats why the USD has the highest market cap of all currencies (about 12 trillion), because its the most used one. If iota gets mass adaption, the usage increases and with it its market cap. The transaction fees don't count here.
I get what you are saying, trust me. I am not new in this scene.
I believe IOTA is a great thing. However, I currently don't see the point of holding IOTA. If there is no reason to hold it, what will be the thing that makes IOTA retain it's value in the long run? Why not hold a different coin which does offer economic incentives to holding it? It's value is backed by the people who hold it but without a clear and overwhelming reason to hold..... then what?
I think labelling it as a currency isn't really correct either, as it is more of a platform than a currency, similar to how ETH is. Except Ethereum has built-in 'demand' for the tokens from transaction costs to drive up price, whereas IOTA doesn't seem to have any built in demand. Bitcoin doesn't either, but Bitcoin is Bitcoin just like how Coca Cola is Coca Cola. Banking on mainstream opinion switching from Bitcoin to IOTA is a stretch.
My personal hope is that IOTA will offer ICO's to be built on top of it, just like Ethereum's ERC20 tokens. Those 'sidechains' could then be fueled with IOTA. That would be one thing that gives value to the token; it is similar to the STRAT token. I haven't been able to discover if this is the case with IOTA however.
You've got a bright future ahead.