What would you say if I were to ask you, “What is the purpose of purchasing crypto-coins?”
That’s simple, you’ll likely say. Your longer answer will of course depend on what angle you’re approaching the issue from – investor, miner, or IP holder – but most generally any answer will include some mention of “to see a return.”
But, to further the question – a return on what and from what?
The money one invests in the project is, at least in theory, going toward something the investor believes will have some value somewhere down the line. This value is presumably what will be the source of the return. Any added perks of the cryptocurrency, such as an integrated use on an IT platform or discounts for holders of the currency, may not be considered a part of this return by those unassociated with the project.
And then, there exist a large number of ICO projects in which little to no value is to be expected. This can be for a variety of reasons, but most likely the project falters or had no demonstrable product to start with. Or worse, it was what has been unfortunately termed a “Pump and Dump” scam from the start.
In July of this year, an ICO was started to make light of these situations. The Useless Ethereum Token (UET), advertised complete transparency in that it had zero value or use, was created out of boredom, and that proceeds would be used to buy a television. And what happened? People flocked to the UET.
Perhaps only for the novelty or what analyst Steven Gleiser describes as “FOMO” (fear of missing out), the Useless Ethereum Token ended up raising USD 214,479, or as the UET CEO phrases it “Enough to buy 182 televisions!” All this for a self-admitted valueless token.
So then, what does this mean in regards to value that generates the desired return?
Value is entirely where we place it, whether justified or not. This can easily be seen with the recent skyrocketing of Bitcoin to over USD 16000. In this instance, and a number of other non-fiat or virtual currencies that have surfaced in recent years, value is placed in something ephemeral and intangible, but supported by a shared sense of all those participating.
This sense of value attributed to the intangible is exactly what the Useless Ethereum Token set out to make a mockery of, but instead joined the ranks of these valueless tokens who managed to find their own value. Except, that value did end up to be fleeting as well. At the time of this writing, the UET has a value of USD 0.0133. This is, admittedly still more valuable than the “nothing” promised by the ICO, but not by much.
As we have seen time and again, the value of a token can fall or rise, or go to nothing at all. How will this affect your return? It’s impossible to say. However, we are left with one key, yet often overlooked, feature of many tokens – those added perks we brushed aside in the rush to higher returns. And it’s these bonuses inherent in the token themselves that may lend the investor the true return they are seeking, should they care enough about the ICO project in which they are taking part.
TraDove is a Business Social Network built to ease transactions between business partners by ensuring all parties operate with transparency and reliability. Recently, TraDove began the world’s first dedicated B2B token ICO, the BBCoin, created to add another level of confidence for buyers and sellers worldwide. Learn more at https://bbcoin.tradove.com