With cryptocurrency having soared massively in market capitalization, we should take this lull in the market to reflect on whether the price has outpaced the practical use cases of most cryptocurrencies.
You see, most people criticize me heavily when I bring up their favorite cryptocurrency like IOTA, and ask whether it has users. When I do this, these clowns will often cite some pawn shop in Europe that accepts it for payment. When someone does this, I lose all doubt of their clown membership status, because the question I am posing has nothing to do with, "Does anyone in the world at all use X crypto?" Rather, I am asking a more general investing question of whether a given cryptocurrency has a broad base of users who transact in that crypto to do regular, everyday business, not people speculating in cryptocurrency for investing purposes.
There is a difference between investing transactions, and regular, everyday use of a currency. Certainly a coin can have many speculators flocking to it. Certainly a coin can have many youtube videos made about it. It can get marketed and hyped... but is anyone actually using it for something besides these reasons?
Measuring Usership
When we want to measure whether a currency is used, I am not concerned with number of transactions. After all, we could have a million transactions all totaling up to less than $1 USD. This metric can be useless. Likewise, if we are tallying up test transactions of projects people are working on, or tallying up speculator transactions, I do not care about these either.
The reason we need actual users in the long-run for a cryptocurrency is that when all the speculators dump your favorite cryptocurrency who will be left to buy it?
This is why I want real users. Real users need to buy a cryptocurrency to accomplish something meaningful in the world of cryptocurrency. They will buy a cryptocurrency even if it has fallen out of favor with speculators.
Real Uses that I see in cryptocurrency:
- Reserve currency for trading other cryptos, used to send funds internationally (bitcoin, USDT)
- Cryptocurrency used for ICO sales (Ethereum)
- Possible Future as a International Banking Currency (Ripple)
- Possible Future as a currency for blockchain apps, and better functionality for the ICO market (EOS)
- Blogging Social Media Currency / Most User Friendly Currency / Influence Purchasing on Steemit.com / Soon to be the Easiest way to launch an ICO (Steem)
- Illicit economies using privacy coins (Monero)
The rest of cryptocurrency is based on pipe dreams. Even two of the ones I listed are based on a future hope and expectation which may not happen.
How many ICO's have exclusively launched on NEO? ICO's anyone cares about? Compare that number to the number of ICO's exclusively launched on Ethereum and you will notice the difference. Relatively (relatively means in comparison to Ethereum), NEO has no users. I am not saying NEO has no users, I mean in comparison to Ethereum it has not users.
When the market figures out it is stupid
My Hypothesis:
There is a moment in the future where all the facts that should matter but do not matter, will actually matter. In other words, in the end, the market should eventually reach a state that it cares about how a project is actually doing. At some point, lies posted on a fancy website have to eventually be seen for what they are, marketing deception not based in real-world reality.Path to market maturity
First, cryptocurrency needs to get out of the diaper stages. From what I listed, there are only five projects presently which have users, and two more that I think could have users within two years.
In some ways, what we are looking at today is like IBM stock in the 60's. It was not until 40 years later did people fully figure out computer tech and build the infrastructure to use it for the internet tech bubble. This maturity cycle should be faster because blockchain tech quickly innovates and it does not require new infrastructure.
What we have not seen is the beginning of the tech bubble in cryptocurrency. We have seen a lot of absolute junk put up into copy-cat projects that mostly all do the same thing bitcoin or ethereum does.
Steemit.com was the only decent, everyday implementation for a cryptocurrency. Everything else is largely too difficult to use for an average person. Bitcoin, Ethereum, Ripple, ect. remain geared for technical uses for cryptocurrency.
I personally believe the marketplace should do better at developing real projects and innovating better.
CONCLUSION:
The chaff of the cryptocurrency market will fall by the wayside. 95% of the cryptocurrencies listed are useless for practical purposes and will not play a major role in the marketplace in the distant future. The market does not need 100 bitcoins, we need less than 10. The broadening of the marketplace in crypto needs to be a practical use case differentiation from standard bitcoin copy crypto.