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Author Topic: utility coins vs store-of-value: investment gain  (Read 84 times)
Mendouges
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October 23, 2017, 06:39:36 PM
 #1

wonder if any of experts here at bitcointalk have opinions or insights on the following.
do you think certain coins are designed to stay cheap just because they are utility coins, rather than store of value? there are obscure opinions floating around that, for example, ripple or iota might be designed to stay cheap, because having an expensive token would not be attractive/beneficial for transactions they are intended for.
as a result, investment gains (purely financial) might be relative low.

is it a misinformed opinion?
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October 23, 2017, 06:47:31 PM
 #2

I think it can be true in certain cases. Sia springs to mind. Correct me if I'm wrong, but I think that cheap coin price means cheap storage... so if the coin gets expensive, then they will cost more than competitors, in which case no-one will use them, in which case price will drop. So this effectively has low price built in.


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October 23, 2017, 07:07:07 PM
 #3

In this phase, it's all about tokens capital gains. To this date I don't know about any token that would truly be a Utility token because a Utility token value is derived from its commercial value, as stated by SEC and others:

https://coinmarketfeed.com/regulations/wsgr-alert-icos-at-the-end-of-2017-what-we-think-we-know-and-what-we-dont-know-wilson-sonsini-goodrich-rosati/

(i.e. the platforms where those tokens could be spent are not operational yet, therefore they have no commercial value).

Basically, people hope for a high demand for the "utility" tokens in the future. If its corresponding platform would truly be successful, you might expect the token price to spike because a lot of people would need some. Since there is a limited number of tokens, their price will rise and they may provide gains never minding the fact they were called "utility" tokens. Regarding the token price on the open market, you can imagine the platform/service owner [or the market] would change the nominal fees based on the token value. So 1 token might be expensive, but you will only need a few subunits to pay for a service.

As I said, I don't see a big fundamental difference between the so-called utility or security tokens on the current market, concerning their possible gains. The most weight seem to me to be allocated within the actual feasibility of the endeavours that the distinct tokens aim to fund.

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Mendouges
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October 23, 2017, 07:19:53 PM
 #4

Quote
platform/service owner [or the market] would change the nominal fees based on the token value.
exactly. if this is the expected usage, XRP (as an example) price will be kept low by design, otherwise the transactions have undesirable astronomical fees.
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