By Crystal Stranger, Co-Founder of PeaCounts
Bitcoin Prices Year To Data / CoinMarketCap
The cryptocurrency market is exciting. Fortunes are made and lost. Mainly on the loss side lately, as the price of Bitcoin dropped by roughly 70% since the highs at the beginning of the year and recovered only slightly. But this is also exciting because a gain back to a new all-time high will mean more than 100% gains from the prices today. Still, there are other cryptocurrencies that will do even better. There will be 10x, or even 100x gains out there for some tokens. But the million dollar question is, how do you find these tokens?
Financial pundits say that 95% of the tokens on the market have no inherent value, but that remaining 5% are poised for meteoric growth. Beyond that, there are tokens you can buy during an initial coin offering (ICO), where you get a bonus of tokens, as well as getting a boost when the token is listed on an exchange. Whether you are buying on an exchange or at an offering though, the principles of determining value remain the same.
The first question is how do you gauge the value of the underlying company? The team is critical. You must make sure the people involved have the power to succeed. This doesn’t necessarily mean experience or fancy degrees, as has repeatedly been proven in the tech world. An understanding of the crypto market and a well-rounded team covering both technical and marketing aspects is more important than any one member. I’ve noticed a number of crypto token websites list advisors first, then the actual team members later, and this can be a little deceptive. While it is helpful to have a great advisory board, the passion and dedication of the team working day in day out will be the key to success.
Next, you want to think about the concept of competition. For example, there are a number of crypto companies competing for the “Internet of Things” marketplace. And while several of them are technologically strong, it can be hard to determine which of these companies, if any, will succeed in this market. Especially when you consider competition from blockchain development at companies such as IBM with virtually unlimited resources, it could be tough for these companies to succeed in the marketplace.
Verge coin logo / Crypto News India
Understanding the company and how it creates value is only half of the equation. How the token fits into the ecosystem of the company is, in the long run, the main factor that will drive value. I have seen several ICOs with companies that have a brilliant idea and a fabulous team, but offer a token that doesn’t actually do anything. If people can buy the company’s services or products with fiat money, and the token exists only to create the underlying blockchain for network security issues, where will the demand for that token come from?
Of course, some tokens are not intended to run any system and they are issued to be used as a digital currency. Bitcoin is the most famous, although there are a number of others that focus on privacy such as Moneroor Verge, and others that started out as a joke such as Dogecoinand Jesuscoin. Others still, such as Ethereum, have value both as a currency and as a token for development on the Ethereum network. For popular tokens such as these, it is more important how the leadership team adapts to changes and challenges than calculating the inherent value. But for these coins to give 1000% returns going forward, there will need to be a huge influx of money into the crypto market at large by new investors.