Bitcoin will go to $1M / Why other cryptos won't (part 2)

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Yesterday I wrote about why Bitcoin will go to $1M. Today I'm talking about why others won't. Diving right in....

How do you "value" cryptocurrencies?

The biggest problem with crypto is I don't think anyone really has a firm grasp on how to "value" a cryptocurrency. How do you place a value on something that can't be bought or sold? As an entity that is. No one can come in and "buy" the entire Ethereum blockchain. So how do you know what it's worth?

That's where Bitcoin has such a huge advantage. With it's "store-of-value" utility, it can actually be measured against numbers in "real world" assets. It can be measured against gold, measured against stocks, measured against bonds, measured against fiat, and given a value against the values of those other things.

How do you measure Chainlink's value for instance? The token doesn't even really have a use-case right now. It's only been in the last couple weeks you could even stake it and earn interest. Say the crypto marketcap goes to $10T. Does that make LINK any more valuable? Why? It may be used 10 times as much but what is it providing token holders? How does it benefit them?

Same for Ethereum. It is the fuel that makes the engine run but it can do that whether it's priced at $100 or $10,000. What makes it more valuable than anything else? Why is it worth more than Hive, for instance? Especially if Hive can do the same things cheaper and faster. People need ETH to do transactions but it's not like they have to buy 1000 tokens. One is enough for quite a while. If ETH were paying holders a percentage of the fees generated then you'd have a reason to own and hold. Without that, it's still pure speculation at this point.

What makes one worth more than another?

These crypto "companies" are going to need to find a way to give value to "investors". Right now, they are just innovating and providing tools to make the cryptomarkets work. It's all basically infrastructure. Or speculative yield farming. These tokens are all "valuable", but how do you decide if it's more valuable than its current price or less valuable than its current price? Again, if LINK partners with Cardano to provide oracle services (just a hypothetical, I'm not saying Cardano needs LINK) what "value" does that provide to LINK or ADA holders? How do you quantify it?

These are the questions Wall Street is struggling to answer. And these are the questions these tokens have to provide an answer for. If I invest in Apple and they come out with an iPhone Infinity that blows away the competition, the company makes more money and my stock becomes more valuable. If I invest in Ethereum, regardless of how valuable it is to the cryptocurrency ecosphere as a whole, how does anything they do benefit the token holders?

Again, I'm not saying that these cryptos aren't worth anything. I'm just asking how I can measure how MUCH they're worth? Ethereum is worth more than LeoFinance. But should it be? Why? It seems I can make the exact same percentage on my money staking Leo as I can staking ETH. Actually, I can make substantially MORE on Leo. So why should ETH be $1800 and Leo $1.20? I can stake CUB for the next year and make orders of magnitude more on that than I can on ETH. Why is that only $3.50?

You might say that Ethereum is used "everywhere". Half the crypto market is built on Ethereum and uses Ethereum to run.

Ahh, so token holders get paid by the other cryptos using Ethereum?

No.

Token holders get paid when other cryptos build on Ethereums network?

No.

Well then how the hell do token holders make any money?

Exactly.

How can a token holder extract value from his tokens?

At some point, the financial energy captured by these tokens has to have a way to reach the "shareholders". Again, theoretically someone could buy Apple. They could buy up all the shares and then they would make all the money that Apple makes. Their investment would yield them a tangible benefit. With Ethereum, there's no company to buy. You're getting a token you can use to make transactions and that's all you get. You can stake it somewhere and make 6% of more ETH and sell that into fiat. From what I can see, that's the only way you can extract any value for your investment. Sounds a little dangerous to me.

In conclusion, I believe at some point people will figure out ways to place a "value" on these tokens and the markets will dictate whether they're too high or too low. More use cases will be developed and there will be other ways to direct some of that value back to the token holders. Leo and Cub are doing just that as we speak; creating uses for the tokens and allowing token holders to extract some value from those uses. But, in the meantime, I don't see ANY scenario in the current environment where any of these cryptos can get anywhere near Bitcoin in value.

And Bitcoin is going to a Million.

Stack those sats.

Thanks for reading. Comments are welcomed and appreciated. If you like the content, please consider an upvote and rehiving. As always, I'm not a financial advisor. Cryptocurrencies can and do go up and down and you could lose all your money. Do your own research.

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