Wednesday, April 7, 2021

Cryptocurrency Price vs. Usefulness

Bitcoin ($56,000 on 4/7/2021) is an asset more than it is a currency, though it is a currency too, it's just that its high fees and slow transaction times limit its use as a currency (for instance, you wouldn't want to buy coffee with it, but you'd not hesitate to buy a Tesla with it). Because it is an asset and viewed by more and more people as a safe haven asset, it makes sense that its price would be high and track higher (due to limited supply). But if you look at most other cryptocurrencies you'll see that they were not created to be investments, they were created to be useable currencies for one function or another. BAT is a currency used by the Brave browser, LBRY coins are used on the video streaming site LBRY and Odysee, Filecoin is used in the Filecoin distributed storage ecosystem, and there are many more examples. 

Bitcoin Cash, Dash, Monero, Nano, and Digibyte are cryptocurrencies which are meant to enable cheap and fast transactions person to person, they are not intended as investment vehicles and do not need to be priced at hundreds of dollars per coin to work well. As an example, look at Digibyte which is $0.08 per coin today and functions well as a person to person payment option. 


Monero will function just as well as Digibyte as a payment option but the price of one Monero is $267 per coin today. The higher price is a function of the relative scarcity of the coin and the increased amount of usage which Monero has. But, the bottom line is that it will cost you about the same to send $20 with either coin, almost nothing, and transact just as quickly. So as far as usability is concerned, it doesn't matter what the price of a cryptocurrency is, you can still get 20 bucks worth of whatever coin you want to use and send it to your friends.

My point is, don't disregard the usability of a cryptocurrency based on low price and don't give too much regard to a cryptocurrency's usefulness based on a high price. 

 

Check out: The Essential Guide to Bitcoin Mining: A Cryptocurrency Tutorial

Paperback, Kindle, Nook, Kobo, Google Play

 

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