Crypto And How To Deal With Its Fluctuating Value.

If you don’t want to manage large fluctuations then consider tokenized assets.

Pretty much anything you can find in the real world can be tokenized. Real Estate, IOT devices (these are things like Lime Scooters), traditional stocks and shares.

Because these tokens have a return on investment, they should have far greater stability, with the exception of tokenised assets that own other crypto assets such as shared investment funds and tokens in crypto exchanges. When the interest goes out of the market their ROI will decline along with the value.

Tokenized assets can be very similar to equities where you may also get voting rights. Users can be sent special voting tokens that have no value other than for voting. Another method would be to use a snapshot and get users to sign a message to prove their ownership of an account address, this method is less anonymous than the first method.

Other tokenized assets will not come with any rights other than some claim to revenue.

When the crypto boom happened in 2017 many tokenized asset ventures were doing their ITO’s (initial token offerings). These ventures then withdraw their capital to buy assets in the real world and after the market busted many of these ventures have ended up in the unusual situation of having a lot more capital than their market cap. The market cap is the value of all the tokens. 

Something that adds to this situation of undervalued assets is financial reporting. Unlike stocks, annual reports are not a requirement, leaving investors unsure where to find information that is current. Here is a hint, go on their communication platform, such as discord, telegram, or slack and ask other users where you might get financial information from.

While speaking of tokenized assets, there are also tokenized metals such as gold and silver backed tokens. Now to me these sound much like e-gold. E-gold was a digital currency backed by gold that started back in 1996 and ironically shut down the same year that Bitcoin started (2009). E-gold was shut down because they were not able to meet US regulation requirements. Tokenized metals are not decentralized because a 3rd party holds the metal in storage which could put them much in the same situation E-gold found themselves in.

Another method of dealing with fluctuations is by converting your cryptocurrency to something like tether. Tether fixes the amount you have to the US Dollar. The problem with this is there is currently no way to earn interest with your tether and because it’s fixed to the USD its value depreciates over time because of inflation.

Tether is good if you are going to offer an exchange service to your customers. By using tether you can quote a current market rate plus a small margin for yourself and then make the exchange in real time.

Being a crypto seller by using an instrument like tether will guarantee that you profit on each sale and you will have a profitable business. There is also an endless supply of customers for you on localbitcoins.com where you can register as a seller.

The final instrument I would like to talk about is called a smart coin like BitUSD this is a smart coin that is backed by 200% collateral in Bitshares (BTS). BitUSD can be settled, meaning that they are converted back to BTS reducing their supply and stabilizing their price. There are some arguments why these tokens should always be cheaper than the actual USD, while other arguments state they should always be more expensive than the USD. I won’t go into it here because there are entire videos already on this subject. What I will tell you is BitUSD has been around for 5 years and during that time the price has ranged from approximately $0.72 to $1.60. Which compared to other cryptocurrencies is pretty stable. Today BitUSD sits at $1.18

Which brings us to the ultimate question, do you really want a stable coin?

Bitcoin’s price 5 years ago fluctuated between $300 and $900. This year it has been fluctuating between $3400-$4200 with today’s price at $4103.

Ethereum was just having its ICO 5 years ago at a price of $0.31 per ether. This year it has been fluctuating between $108-$164 with today’s price at $142.

For now it seems long term users will benefit from fluctuating coin values, while short term users such as crypto sellers benefit from stable coins.  

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