Hi there! This is my second post and I want to thank all of you for your interest, your attention and your tips. I wish to all of you any success to your dreams and to your efforts! I hope that my posts will help you with this and will manage to trigger some thoughts about finance and cryptos. Also, at the end of every post I will be presenting certain links for earning coins, easy mining or enjoying mobile apps, that combine both funny time with some profitable mining.
So, the basic question: Is there any value at the crypto coins / tokens etc.? If yes how we should be able to understand this value, to explain it and – why not – to try to estimate it (although this will come to the next post. Someone should be able to understand any possible added value of blockchain technology to the market, to the assets and to our lives. This is a first step to assess the potentials of the blockchain ecosystem. As I mentioned to my first post, someone should be able to describe this to a six-years old kid (or something like this…) :)
Although, the main advantage of blockchain technology is that it abandons the traditional principle of the necessary third party confirming any kind of transaction between any two others, there is a number of characteristics / factors that define any possible use or need that blockchain technology covers within the boundaries of market. These characteristics could be summarized at the below mentioned bullet points.
- Transfer of monies is instant.
- Transfer of information is secured with ID keys and necessary coding.
- Transfer is at a small fraction of the cost for the two parties (sender and receiver), not only for the traditional banking system, but also for any other administrative process.
- Bureaucracy doesn’t exist in all transactions.
- There is scarcity to the total supply at least of certain cryptos that have limited supply (like BTC), while others although they have a constant flow of new assets added to the ecosystem, (which makes them possibly inflationary). In any case cryptos always follow a demand and supply principle that determines their growth.
- Decentralization of cryptos ensures that no single entity, team or person, is able to control, or manipulate transactions.
- Counterfeit resistance of blockchain technology via applied protocol, public ledgers, and nodes.
- Portability of the cryptos as they have no physical form and all blockchain records and coins can be traced and transferred to the globe in seconds (…or so, but - definitely - within same day).
- The divisibility of coins is great, as the denomination of the coins is split in many units / figures (from 4 to 9 digits), i.e., BTC consists of 100,000,000 Satoshi, allowing small transactions.
- The energy that is related with the coins mining underlines their intrinsic value and this may control their supply in the long term – even for coins with unlimited supply (protecting hyper inflation possibility).
- This intrinsic value of cryptos related to the mining energy consumed / needed, acts as the underlying value that characterizes all financial products – including fiat currencies (like USD, Euro, Japan Yen, etc.)
Speaking about the intrinsic value a few things for the reader (for people who are already familiar with the term they can skip directly to the end of this post).
Intrinsic value is a measure of what an asset is worth. This measure is possible via objective calculation or complex financial model, rather than using the currently trading market price of that asset.
In financial analysis this term is used in conjunction with the work of identifying, as nearly as possible, the underlying value of an asset and its cash flow. In the case of financial products (like bonds, stocks, ETFs, we focus to the underlying asset).
- In financial analysis, intrinsic value is the calculation of an asset's worth based on a financial model.
- Analysts often use fundamental and technical analysis to account for qualitative, quantitative and perceptual factors in their models.
- In options trading, intrinsic value is the difference between the current price of an asset and the strike price of the option (we will talk in a future post for options, strike and current prices).
The final decision for the value estimate should always be based on thorough due diligence that involves many factors, far beyond supply structure or temporary marketability of certain coins.
Blockchain seems complicated, and it definitely can be, but its core concept is really quite simple. A blockchain is a type of database. To be able to understand blockchain, it helps to first understand what a database actually is.
A database is a collection of information that is stored electronically on a computer system. Information, or data, in databases is typically structured in table format to allow for easier searching and filtering for specific information. What is the difference between someone using a spreadsheet to store information rather than a database?
Spreadsheets are designed for one person, or a small group of people, to store and access limited amounts of information. In contrast, a database is designed to house significantly larger amounts of information that can be accessed, filtered, and manipulated quickly and easily by any number of users at once.
Large databases achieve this by housing data on servers that are made of powerful computers. These servers can sometimes be built using hundreds or thousands of computers in order to have the computational power and storage capacity necessary for many users to access the database simultaneously. While a spreadsheet or database may be accessible to any number of people, it is often owned by a business and managed by an appointed individual that has complete control over how it works and the data within it.
Disclaimer: The content is solely for informational purposes and in any case, it is not intended and cannot substitute professional advice of a licensed or certified attorney, accountant, financial advisor, or other certified financial professionals. The content of all my posts should not be taken into account for any kind of investment and I can't guarantee for their accuracy.
Thank you for your time,
Take good care and stay healthy!
Kapan
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