Altcoins: Salsa between 0 and infinity

Compiled by: Felix, PANews

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

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

Why are altcoins valuable?

If you ask any crypto veterans around you, you’ll mostly get boring or superficial answers – usually along the lines of “oh, altcoins have no value, but I’ll 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 value of approximately US$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 post is dedicated to the aforementioned cynical crypto “old gunner.”

Stock Exchange VS Crypto Frontier

The game of stock speculation 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 distributions via buybacks/dividends
• Liquidation of assets minus liabilities

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

证券交易所的概念至少可以追溯到1602年，甚至更早。股份公司的发展可以追溯到古罗马

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

Imagine if you were a farmer in the 17th century, far removed from the legal system, businesses, 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 can be summed up as the exchange of physical or metal currency. On top of that, visit a big city maybe twice a year at most.

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

You need to have a common sense social framework, that is, a "synthetic imitation body" (referring to Crypto), which will tell you: "Yes, it is okay 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 justice system.”

The farmers of the 17th century 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, significant value can be assigned 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 it is found at a certain point in time. 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 figured out or not figured out at all, and assign a 50% probability to each outcome.
• The second hypothesis is that Crypto will continue to slowly penetrate the financial system and global commerce (especially cross-border and/or natively digital commerce). If the value of the global financial system is set at $X and Crypto’s penetration rate 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 coin, making a second hypothesis: not only the probability of "finding the framework", but also the expected dominance of that coin's 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.

Mais juste pour que vous compreniez : bien qu'il ne soit pas clair si les détenteurs de jetons pourront profiter du succès du protocole, inconsciemment, c'est ainsi que le marché peut (et échange) des nombres à 9, 10 et 11 chiffres. valoriser le jeton.

La prochaine fois que vous ou quelqu'un d'autre rejeterez un jeton parce qu'il n'a aucune valeur de capture, ou que vous vous moquerez des détenteurs, imaginez l'hypothèse ci-dessus, réfléchissez à la probabilité que le projet réussisse un jour et réfléchissez à cet avenir. possibilité signifie pour sa valorisation actuelle.

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