Old-school market rules don't apply to new cryptocurrencies

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Using old-school ideas to evaluate something new is never a good idea. Blockchain is a truly disruptive technology that does not fit the models that have been used to evaluate other business ideas.

This new type of business model is what brings solutions to specific problems in an entire industry, which is really relevant to anyone. Because it is new, and nothing similar has been done before, the world reacts defensively.

Cryptocurrencies have redefined investment classes. There is a strong financial argument that these digital coins are unlike cash, stocks, bonds, hard assets or real estate and have established themselves as a distinct asset class. They have added the option for another portfolio element to be part of a diversified investment strategy. As a distinct asset class, cryptocurrencies have a unique blend of value drivers and value multiplication opportunities.
Using old valuation models and techniques will give a wrong idea about the true value of a coin. There are several ways in which the old-school valuation approach does not work for the new marketplace.

One argument naysayers give is the plan is "too big." A single purpose cryptocoin might sound as a laughable goal to some people who dismiss it as impossible. Others think it is a good goal but just too big to be practical. This way of thinking ignores how the Internet improved both global communication and global commerce, to name just two examples. It also completely disregards how cryptocurrencies already operate across national boundaries.

Another argument is there are "too many coins." Doubters think oversupply will overwhelm demand and ruin the coin. This ignores the fact that all the coins are not in circulation and won’t be for years. The release of coins is intended to match the growing use and demand. Coins can also be locked in annual smart contracts to prevent all of a specific coin type from appearing on the market in a short time.

Others will ask, "Why not just use bitcoin instead of an industry-specific coin?" An industry-specific coin can be used as fuel for an entire industry and provide additional benefits for all market participants.

By using a new “mining” concept called value-generating distribution, users are rewarded for their contribution to the coin with services from the target industry. And participants in that industry will be provided with an integral platform with all the necessary features to make their workflow efficient and create loyal communities around their practices (the most important asset for every service industry). Various opportunities for suppliers and manufacturers are present as well (e.g. through a smart contract they can implement an automatized pay-per-use approach for expensive equipment).

Paying with bitcoin doesn’t provide you with the opportunity to make such a global impact within an entire industry. Moreover, you cannot easily buy or mine bitcoin, due to its high price and the high costs associated with mining. That means high distribution costs and high market-entry barriers.

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