Friday, June 8, 2018

EOS - The Value Proposition

I suppose this is what most people are interested in. How high will the price of EOS go? The pure technocrats do not care. They are in it for the technology and most probably will not even hold any EOS other than to use in their application and protocol developments. The rest of us will always need to seek assuring warm comfort in on our token holdings and "bet".

For those of you that lament that you were too late and you wished that you had bought Bitcoin when it was only worth pennies, do not despair. Contrary to popular perception, most of the early investors are not millionaires. Many have lost their "fortune" because they lost their keys or crashed their hard drives. Many others lost their "fortune" investing in scams and other nefarious schemes. Even hodlers will not be spared as they could be holding on to a coin that goes to zero. The only safe course is to understand how this ecosystem develops and to change your crypto portfolio as the landscape changes.

There are of course those we know of who have made it "big" so to speak. However making a fortune and keeping it are two very different things. This is true in the real world as well as the crypto world. The person sitting on a pile of crypto wealth today could very well be sitting on nothing but fresh air tomorrow. This is because there is really no intrinsic value in crypto tokens.

Intrinsic value meaning a value derived from a useful property of the commodity. Platinum has more value as an industrial metal than its' use in jewellery. Gold has more intrinsic value as a store of value because nations hoard it, than in the industrial and ornamental use of the metal.

Bitcoin as a token has no intrinsic value at all and its' value is only derived from its' usefulness as currency and a store of value. This means that if that usefulness diminishes or become obsolete, its' value will also decline proportionally. We can take the example of feathers and shells, which in one period of time had value, but those properties that gave it value were replaced by other commodities that better exhibited those properties.

For Bitcoin to possess and hold intrinsic value it had to be a protocol on which all other financial applications are build upon. This is where it has failed and I am afraid will lead to its' decline in both as a store of value and as a currency. First mover advantage in holding on to just a property ( scarcity, immutability, transportability ) is not enough as other tokens also share the same properties. It has to be the bedrock on which every financial application is built upon so that its' position cannot be usurp, because for that to happen you will have to take down the whole social and financial infrastructure first.

Failing this Bitcoin has to acquire mass adoption so that everyone in the world uses it and nation states hoards it. This it has failed to achieve. As a token it is only worth what the collective human mind space is willing to exchange for it.

Crypto currencies are not going away. When we look at this space we must not overlook the forest for the trees. Tokens are like individual species of trees making up the forest. Under changing conditions certain species thrive and others die away, but this crypto forest will continues to grow and capture a bigger share of the global net worth.

Here is my value proposition for EOS.

EOS is the first industry grade protocol that is ready for the mass on boarding of every financial application to dis-intermediate the financial middlemen. Assuming that this turns out as I expect in the next few weeks, we can navel gaze on what the valuation of 1 EOS token will look like.

For a reference perspective global net worth is estimated to be around 280 trillion dollars. Gold accounts for about 8 trillion and total global real estate is estimated to be around 214 trillion. These are all asset classes of which crypto is but one asset class with a valuation of only 350 billion.

Current EOS valuation is 14 Billion - $14

1) If EOS rise to number 2 in market cap. it will have a valuation of 70 billion - $70

2) If EOS gets to number 1 in market cap, it will have a valuation in excess of 100 billion - > $100

3) If EOS is a compared to a global company with tokens representing shares in this company then it would be a global company with shareholders in every country of the world. Apple Inc, a largely American held company, is at the moment the largest company in the world with a valuation close to 1 trillion dollars. If EOS were to become the largest company in the world it need to have a valuation in excess of 1 trillion dollars - >$1000

At this moment EOS is a GO 100% unanimous. Magic. Let's see if we get to Stage 3. GO EOS.