4 Reasons Why Cryptocurrency Has Value

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Many question why cryptocurrency hasvalue. Mainstream business people and economists claim that it is worthless and based upon nothing. That is completely untrue. I will provide the 4 Reasons Why Cryptocurrency Has Value.

Bear in mind, I am focusing upon the original type of coin created. We now have Security Tokens that are backed by physical assets along with ones representing applications.

Here are the 4 Reasons Why Cryptocurrency Has Value.

Network

Cryptocurrency is tied to a blockchain which is a decentralized network of computers.

Networks have value. There is a cost to set and maintain them while they provide value to the users. We all encounter many different types of networks in our daily lives.

Home- this is usually a WiFi from our cable provider. This allows us to connect our tablets, PCs, phones, and televisions. From this we are able to watch shows, surf the net, and check our email. It also allows us to communicate with others.

Mobile- once we leave the home, we are on a mobile network. This allows us to cover a much bigger geographic area than our homes. For this, we pay monthly fees to the mobile companies who spent billions erecting these networks and millions maintaining them.

Work-similar to a home network, this allows authorized personnel to "enter". The value of the network also contains all that connected in terms of data. A doctor's office has the patient records tied to the network which is valuable to that practice.

Facebook and Google have enormous valuation, in part, because of their networks that they built out.

Blockchain Attributes

A cryptocurrency represents a blockchain. It is the attributes of that blockchain that have value.

Data Security- blockchain is one of the most secure data structures because it is decentralized. I will not say that blockchains cannot be hacked but they are less likely than centralized networks. Since the software is run on hundreds of computers around the world that are not connected, accessing one does not provide access to the entire network.

Immutability- the data on a blockchain cannot be altered very easily. Again, hacking into a centralized system means that if I make a change on one server, it is mirrored throughout the entire organization. With blockchain, a change will actually alert the rest of the software when it updates. If the hacked computer does not match the others, this is a red flag. The software knows this block was tampered with.

Lack of Censorship- information put on blockchains cannot be censored. Interfaces obviously can but the blockchain itself cannot be. Access is determined by a key that is controlled by the individual. An interface can "hide" the data yet it is still on the blockchain. Anything pushed down through an interface is on the blockchain. This is of value to journalists and those who voices are oppressed.

These attributes have value to people, especially when they are in situations where they do not exist.

Community

Community is what provides value to things although we use different names. We call them customers or fans but, in the end, it is the same thing.

Let us look at the entertainment of sports.

The NFL pulls in $20B a year. The teams in this league are worth into the billions. Why is that? Because of the community that follows this league. We buy the merchandise of our favorite players and teams. Tickets are bought for hundreds of dollars just to watch the game. People tune in on Sunday enabling the league to broadcast the rights which is then sells time to advertisers.

In short, our attention is what gives it value.

And why is the NFL worth a lot more than squash leagues? The NFL community is much bigger.

Cooperative

This is a point many miss.

A cooperative is typically done in real estate. Under this design, one buys a house in a particular community. In doing so, it provides someone with a unit in the cooperative. The co-op might own the land with one only owning the house. This means the road, pool, clubhouse, and tennis courts are all part of the cooperative. As the value of the land appreciates, or the desirability of the area, so will the value of the co-op units.

Owning a cryptocurrency gives one stake in the cooperative that is the blockchain. Anything that is placed upon that network impacts the value. As more applications are developed and transactions (usage) increases, the value of the cooperative network follows suit.

Please note that this is different from market pricing. Markets do things on their own. Prices can be depressed or excited, depending upon what the market is doing at the time. This might, or might not, accurately reflect value.

It is important to understand the difference between cooperative and traditional ownership. An example would be an application. By owning a cryptocurrency, I do not have ownership in a particular application just like I do not have an ownership in my neighbor's house. I do, however, benefit, if that application attracts millions of users and becomes a major success. Anything that is tied to that network will affect the stake that I hold.

These are the 4 Reasons Why Cryptocurrency Has Value.

We see a lot of confusion out there especially when trying to explain this to newer people. Entering this industry at this time is of benefit to people. Hopefully this will provide people a clear way to explain how cryptocurrency derives its value and how the view it is worthless because it was magically created out of nothing is misguided.

It is up to us to spread the word about what is taking place.

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