Appreciation of crypto assets has been insane. Insane. Ultimately this meteoric rise in value will be the same force that leads to a collapse. I do believe that crypto assets will be incredibly valuable and provide tremendous value in the long-term. I still remain very bullish as a long-term value investor and continue to buy, but I am eyes wide open that I will have to stomach some serious volatility on the path to get there.
The biggest risk I see with all of this is actually the rate at which the value scales. If the inherent value of the underlying asset appreciates too quickly I will be disincentivized to actually use it. For example, if the gas station started accepting ETH, today, I would never pay for my gas with ETH. Why? Because what it would have cost me in ETH to fill up my tank in January could buy the car today. The more volatile these assets are, the less likely I am to use them. Everyone turns into a speculator and holds their assets – the transaction velocity is almost entirely currency swaps and now we have a bunch of crypto assets that look a whole lot like securities. This is a problem because most founders want to create a token with utility, but the utility part is hard because no one will utilize it.
At some point this ICO craze will slow and people will start looking at the fundamentals behind the project, which today make no sense. This will likely lead to a correction. What is important is if we, the community continue to build more and more ways to utilize the token and introduce the token when they can actually be used. But it’s just as important that we as token holders look for ways to do more than just speculate on our holdings. I do believe we are on the precipice of starting to see some true value add in the space where our tokens can unlock functionality in our lives we wouldn’t otherwise have. Shameless plug for Kin – which I am a part of – you can read more about it here. I think IPFS is a game-changer and Civic gets me really excited as well, to name a few. There are some excellent projects being launched that are going to add a great deal of value, and utility to our lives. It’s on us to start utilizing them. The best thing for all of us is not 400% appreciation in our crypto assets, it’s appreciation of value that is directly correlated to the value derived by its increased utility.
Let’s stop hoping for 4x growth in our Poloniex accounts and start hoping for 4x the functional use-cases of our tokens.
Written by: Tanner Philp