What gives a coin its value? Gold is rare (as is Bitcoin), but most coins are plentiful. So we need to ask another question – is a coin useful?
The utility of a coin can be determined by observing how it’s been designed to be used – and comparing that against how people actually use it.
Bitcoin was originally meant to facilitate peer-to-peer cash transactions on the Internet, but because of its long settlement times (in the tens of minutes) and high fees, it’s rarely appropriate. Instead, Bitcoin’s utility comes from its store of value.
But there are other coins:
In 2015, Ethereum came along – more about that in episode 5 – and the number of ‘initial coin offerings’ exploded, generating well over twenty billion dollars (USD) in sales:
PowerLedger provides a blockchain-based accounting mechanism allowing individuals generating energy at home – via renewables such as solar and wind – to sell that energy to their neighbors, with real-time payments.
Dr. Jemma Green joined us to discuss the utility of the POWR token – created to act as a ‘bond’ against settlement of electricity bills – but with much broader applications.
Dr. Green described a system of POWR tokens and another token – SPARKS – used together to facilitate payments:
The POWR token sale raised $34,000,000 in investment for PowerLedger.
According to Mark Jeffrey, the real value of any coin can be surmised by its usefulness – and he suggests we head over to Block’tivity to see the real-time chart of the most useful coins.
Here’s a snapshot from 25 August 2018:
Mark Jeffrey also took us through the tokenomics of Guardian Circle, his ‘decentralised 9-1-1’ application that aims to bring emergency services to billions in the developing world. It uses a ‘Guardium‘ token to incentivise first responders. (Disclaimer: I am both an adviser to Guardian Circle and am a Guardium token holder in recognition of my services as an adviser. This is not investment advice.)