Altcoins: Salsa between 0 and infinity

Original title: "Alts: The Salsa Between 0 and Infinity"

With cynicism rife in the altcoin space, conditions are ripe for revisiting old issues.

(PANews note: cynicism here means that crypto people know exactly what they are doing, but still do it calmly)

Why are altcoins valuable?

If you ask the crypto veterans around you, you will mostly get boring or superficial answers - usually "oh, altcoins have no value, but I will try to profit from them before they go to zero."

This answer is unsatisfactory because it simply cannot explain why the altcoin market, with a market capitalization of approximately $860 billion, exists.

"Cynicism is a good servant, but a bad master"

This article aims to explain why altcoins exist and how the total market capitalization of hundreds of billions of dollars is and will continue to be justified. This article is dedicated to the aforementioned cynical crypto “old gun”.

Stock Exchange VS Crypto Frontier

The stock speculation game has long been common knowledge - everyone knows that stocks should have a certain value.

People have witnessed many companies rise over the generations and their stock prices soar. This road has been well traveled, leaving little room for imagination. There are two paths to profitability:

• Cash distribution via buybacks/dividends
• Liquidation of assets minus liabilities

These paths are well defined, easy to understand and can be widely replicated.

The concept of a stock exchange dates back to at least 1602, if not earlier. The development of joint stock companies can be traced back to ancient Rome

In sharp contrast is the Crypto market. Although many people are immersed in it every day, "comprehensive imitations" that imitate the stock market (referring to Crypto) are still relatively unknown.

Imagine if you were a farmer in the 17th century, far removed from the legal system, corporations, and global commerce that was beginning to flourish in cities at the time.

As a farmer in the 17th century, everything you produce is done by hand and has a clear use value. Your trading activities sum up by exchanging physical or metal currency. On top of that, maybe visit a big city twice a year at most.

So the business model is completely foreign to you, let alone the financial model.

You need a common sense social framework, that is, a "synthetic imitation" (referring to Crypto), which will tell you: "Yes, it is possible to give pieces of paper to those who claim to own some abstract, invisible enterprise Value is assigned and ownership is guaranteed by an abstract bureaucracy and an alien judicial system.”

17th century farmers correspond to contemporary non-internet users.

These people make up the majority of the population (just like farmers in the past), they have never participated in P2P online commerce, never bought and sold purely digital goods, never felt the power of anonymity, never established over the Internet Intimacy, never feeling the power of complete control over one's own money, and unable to understand the value of a borderless, deterministic financial system stemming from an unstoppable world state apparatus.

The missing “synthetic mimetic body” would tell them: “Yes, it is possible to assign significant value to cryptographically verified tokens that claim legal rights in a purely digital reality”… or something like that.

It’s now understandable why people (even some crypto natives) are skeptical about whether tokens have real value.

Because crypto tokens rely on expectations of an unknown future.

We are currently in a new field. The path to monetization for token holders is unclear on several different levels; tokens face many unknown paths, leading to multiple possible outcomes. Not only is the choice of path unknown, but also the nature of the path itself. "We don't know what we don't know."

However, despite the uncertainty surrounding value accumulation, tokens still have value and should have value.

Thinking about value step by step

can build in probabilities for favorable and unfavorable outcomes of the token framework. One is that at a certain point in time, a strong framework can never be found to allocate value to token holders; the second is that at a certain point in time, it is found. Setting probabilities without knowing what those paths will look like, when they will occur, or what they will ultimately look like. For simplicity, assume a “bimodal outcome”—either completely clear or not clear at all—and assign a 50% probability to each outcome.

The second assumption is that Crypto will continue to slowly penetrate the financial system and global commerce (especially cross-border and/or natively digital commerce). If the global financial system is valued at $X and Crypto penetration is 20%, then the total valuation is $0.2X.

Since the probability of “figuring it out” is 50%, the crypto token can be valued with a total valuation of $0.1X.

Therefore, the expected total market capitalization is determined based on the built-in probabilities.

The next step is to do the same for a single token and make a second hypothesis: not only the probability of "finding the framework", but also the expected dominance of the token protocol in Crypto, and at 0.1X Share in USD.

There is a problem here: it does not allow you to really estimate the value of a certain token. This is stupid and naive.

But to give you some perspective: While it’s unclear whether token holders will be able to profit from the success of the protocol, subconsciously, this is how the market can (and does) move in 9, 10 and 11 digit numbers The valuation of the token.

Next time you find yourself or someone else rejecting a token because it has zero value capture, or laughing at the holders, imagine the hypothetical above, think about the likelihood that the project will succeed one day, and think about those futures What the possibility means for its current valuation.

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