During the worst time of the bear market, at the beginning of 2019, a new form of tokens appeared, offering the term “store of value” as their key concept, and were based on deflationary features.
Each of these tokens presented a total supply that was shrinking. Each transaction using these tokens sends a percentage of the tokens to a “burn address” effectively removing them from circulation.
Deflationary tokens also had their index (similar to coinmarketcap) tracking them and so, the deflationary market on Ethereum was created.
Hundreds of tokens, each one only offering a different rate of burn mechanics but containing no other feature. Since the main purpose of these tokens was just to buy, “hodl”, and wait for more investors to buy, so perhaps one day their price would appreciate.
There was a problem with all these tokens, though. They had nothing else but deflation as a purpose. While some of them pumped for a while, eventually they all dipped to zero.
A failed experiment that brings into light the only fundamental that logic will prevail.
The Failed Experiment of Deflationary Tokens
Tokens like Bomb, Nuclear Bomb, Burn, Incinerate, Volcano, all with different burn rates and all having a similar model a nd running a few airdrops. Bomb token attracted a few investors, yet this deflationary market on the Ethereum blockchain quickly deflated before even attracting any attention and is now completely forgotten.
Hundreds of tokens appeared in 2019, offering deflationary features but no use case.
A supposed “store of value” with nothing else to back it, but speculation.
Reminds us of anything? BTC is marketed constantly as a “store of value (SoV)” but also it wiped out the Means of Exchange (MoE) features.
While not exactly deflationary, this is also how BTC is promoted. As a store of value, a hedge against inflation, sound money, hard money, and any other financial catch-phrase, the Bitcoin influencers find in academia and transfer it in a distorted version for BTC.
BTC is not money though, since it lacks the fundamentals of being easily accessible by the masses due to high fees. Maybe money for the elite then? Not convincing enough in this approach. So it is just marketed as a store of value, a “buy and hold” asset, instead.
Logic (utility) dictates the potential of a network. Yet, BTC developers defy logic, to favor developments of Blockstream related sidechains LN and Liquid. Today, it is just the Bitcoin brand name that sells.
The overwhelming majority of new investors don’t even withdraw to a non-custodial wallet but let the BTC and other crypto sit on centralized exchanges. The institutions bought from Grayscale & ETFs, retail bought from Paypal, Robinhood, CashApp, and other custodial apps, with most of them not even offering an option to withdraw.
Bitcoin-BTC is not a currency but is also not a store of value either. The development stagnations and the lack of any proper utility discard the “store of value” narrative.
In Conclusion: Having a Purpose, Serving a Need with Practical Solution
The main purpose of Bitcoin Cash is to become a means of exchange, and from this practical use case of BCH as money, together with the fixed supply of 21 million BCH, the “store of value” feature is derived.
Bitcoin Cash doesn’t aim to become a hedge to inflation, it still evolves into one automatically, since the network keeps expanding, merchant and digital adoption increases, use cases multiply, and more people understand the digital cash aspect, the ease of use, and advantages of using a use-friendly, cost-efficient, decentralized network.
Deflation is not a purpose, yet it can be a feature that boosts a token or even a coin running its blockchain. Ethereum this year introduced a burning process that stabilized the price and reversed the negative trend. SmartBCH also burns half of the gas used for transactions on the network.
These are mechanisms that support the price of the assets by cutting supply. On Ethereum, it was performed on a massive scale, yet on smartBCH, there is a modest burn mechanism.
Still, this is the last feature to be considered in these networks, the vast utility smart contract networks offer is what attracts adoption and pushes demand.
As the experiment of deflationary coins, with just the “number go up” mentality and no purpose, we observe the same since 2015 in Bitcoin-BTC. It will not last, though. BTC has served its purpose. It didn’t scale, and Bitcoin moved on to different things.
There is no logic in developing an asset or a network to just serve as a store of value. It makes no sense and only resembles a pyramid scheme. Those that get in at the lowest level striving to convince about the financial prospects and just have price as an argument, but nothing else is there. No product, no developments, nothing practical, no use case, no value.
Bitcoin Cash instead is following logic, developing, producing additional use cases, introducing digital cash to the world as an alternative to fiat payments method, and the price appreciation argument is at the bottom of a long list of merits.
Images:
Lead Image Source: Pixabay
DISCLAIMER: All material published in this content, is used for entertainment and educational purposes and falls within the guidelines of fair use. No copyright infringement intended. If you are, or represent, the copyright owner of material used in this article, and have an issue with the use of said material, please send an email. No financial advice intended.
Follow me: ● ReadCash ● NoiseCash ● Medium ● Hive ● Steemit ●Vocal ● Minds ● Twitter ● LinkedIn ● Reddit ● email ● tipb.ch
You are right my friend, thanks for sharing your useful thoughts