A great thing happened the other day. I wrote this long thing about everything that built up in my mind and heart about the cryptocurrency industry.

Having studied global economics, cultures, and now this amazing new industry, it amazed me more and more how few people truly thought through the deeper truths of crypto. People seemed to appreciate what I wrote; it resonated with them with the same interest and concerns. I got this awesome comment: "HodorHodl - a day ago - “Projects need to recognize their correlation from project value to market value.” Please, please, PLEASE write an article on this."

You better believe it! Having done a little bit of professional consulting on the theoretical economics of crypto-assets and a ridiculous amount of day trading, going on my 3rd year now, there are some things that simply click for me. There are certainly much smarter people at work on the coin and token projects, so why can't they see the more obvious challenges they face and how to overcome them?

Perhaps this article, again more of a thought piece, can be helpful to someone in the industry.

Let's look at the most obvious points of the topic, and perhaps a few less obvious. This won't be comprehensive, but gives a conversational overview of where the problems sit.

First, the super obvious...

When someone makes a coin that accomplishes something people like, it receives a certain measure of validation from the crypto community. This gathers interest from the ideological and also potentially from peers in the code/design/mathematical end of development.

Next obvious point: a coin that solves a problem and proves it has done so, gains more interest and respect if it is the first to do so in it's class. The majority of the crypto-landscape is less than 4 years old. Coins that have been around more than 7 years are few, many have learned from the school of hard knocks so fewer 'newbie' coins don't have to suffer the same code hacks and attacks to the network. That is no guarantee of safety, but we still respect many of the longest running coins today because of perseverance and not just longevity.

Next obvious point: If you aren't the first, then perhaps you've built a better mouse trap. If so, we see a tribal fan-base between often competing coins. This happens when there isn't necessarily an obvious winner, but two or more projects are after the same field.

And now, what I would consider the crucial disconnect from project to value:

Let's say coin 'x' has in fact built the better mouse trap. They have a team who aggressively goes after clients to get behind their technology. For Ripple, this looks like payment remittance. For Tron, it may look like game app development and coins built on their platform, much like ERC20 tokens all benefit from Ethereum.

Whether or not there are other projects outperforming these specific types of crypto (yeah, I know the argument... XRP isn't really crypto... yes it is, but you are certainly free to feel that way and try stickin' it to the bankers... who by the way, are probably the ones you used to buy your first crypto), the coins that go after clients, P.R., and tangible proof-of-concept in the 'real world' see themselves as outpacing the competition. If you are making money providing a service and the transfer of that service or product is tied to your token/coin, then you are earning; you are succeeding. Or, are you?

That's great. super great. We need more of that, please!

But, how's that coin performing at market? Seriously, how's it doing? If you're part of the 99% token economy, chances are your're market price is down 97% if you were released before 2019, and you are down 79% if released shortly after. If you just hit the exchanges in the last month shush, you have no clue what you are worth yet.

There's an old adage that helps my point a tad bit; "it's only worth what people are willing to pay for it". That is the truth. But, there is such an interesting flip-side to this: if people overpaid at market, and they really want 'x' coin to go up in price, and others see the opportunity to buy in, why are these coins still going down in value? It isn't just FUD and FOMO, although they are hard at play.

We see coins with a good scarcity model and coins with just plain stupid economics equally getting pummeled at market. When the sentiment is high, things may go up a bit, but the up trends may be a cumulative of 5 months the entire decade of crypto, and the bear always lasts 3 times as long. If people are so excited about new projects, a new fool is born every minute, and a new airdrop is right around the corner, why is everything always going down?

We can blame the CVirus, we can blame BAKKT, the CME, we can blame the internet, we can blame Bitcoin's dramatic fall from $20,000 to $3400 (also one can look at this as it's rise from sub-penny to an average of around $8400).

So many are looking at the crypto industry like it is single-handedly turning the world upside down. If that were the case, seriously why doesn't anyone know what crypto is? They DO? NO they don't.

People within the walls of crypto have a reverse-position logic that has them trapped.

Tell me, is it an investment? Is it a product? Who are the good guys? Who are the bad guys?

I want to break a few things down and then build it back up crypto style.

Let's say you have a technology company that makes, let's say, a better smart phone. They get their word out. They are the Linux of smart phones stickin' it to the iPhone and Android. The cool 'x' factor buyer likes it because it isn't the other two brands. That makes them special. Our 'x' factor phone sells a lot of units, pays for parts and factory workers, shipping and marketing, and make a profit. They get paid in electronic payments that represent fiat. Successful business model? Yes.

Now, take the exact same company, and let's say everything from the factory workers to manufacturers get paid in 'x' coin instead of e-fiat. Successful business model? No. Why? All things being the same, they not only need to believe in the product, but also the payment method. But, in the crypto world, the coin essentially IS the product, and the 'product' is the means to generate interest in the coin. Both can benefit one another, but one needs feet firmly planted in real world economics for the other to benefit.

Let's say the actual coin technology is resolving something in the actual financial sector and the business model is built around this. For starters, the crypto world really is tiny. Your first business connections, even in big funding rounds, are going to be a tiny percentage of what is available to other start-ups. But, that is not a killer limitation; crypto companies are raising tens of millions of dollars. From the internet of things to energy efficiency, from voting and governance to just literally playing with open source code, every token launch has it's reasons for coming to market.

A lot of people who are really into crypto, but are a bit jaded by getting burned, have their scam visors on, skeptical of a fancy new website and the same crypto-blahblahblah, and yet, we all want to see the next big thing, become 'the next big thing'. Victory for crypto!

Why, then, WHY does that not just plain correlate to market? Wellllll.....

Let's pretend we're using another easy real world example.

the FAANG stocks, like Google or Apple, are companies with products that prove to have massive value in the marketplace. People like their iPhones and... apparently we all like giving our personal data away so we can search how to cook the perfect squash. These companies rely on products that sell and generate interest for the next overpriced version of the same thing, be it physical items or the value of data and curated data with ads. People can show their dedication to these companies by owning a share(s) in its stock. That's as close a correlation as we have to crypto market price. Apple releases a great new product, their stock goes up. Google gets caught doing something really nasty with our searches, stock might go down. There is a direct correlation to the shareholders and the quality of business or products. Again, WHY NOT with Crypto?

The real issue is addressing the audience and doing so honestly. 

You ask most people who are die hard cryptohollics, and they will tell you they hodl because crypto is going to change the world. They invest because banks are evil and they are cutting out the middle man. They will tell you that they got in at the ground floor when XRP was only $2/coin (lol) and every bank is going to have to use them and it will be bigger than all of the fiat in all the land. They will tell you that Enjin will revolutionize the gaming asset industry. STEEM is going to free the 3rd world from hunger. 'X' coin can be mined from Jupiter, and 'Y' coin is going to automate accounting and 'Z' coin is going to fix everything wrong with Uber.

Really, that's why you're into crypto? Sure, sounds great. But, not an honest answer. You bought crypto because someone told you it was going to go up 100,000X. That's why you bought it. The fact you like something about the actual idea behind the design just supports the fact that you will look cool getting rich. Yeah, I bought this lambo with baby-saving coins. Yeah, I made my first $ billion reducing the cost of electricity. "I'm really passionate about back office efficiency". Gimme a break of that kit kat bar, wouldja'? 

Crypto is money. It is supposed to be better money. Magical internet money. Crypto is numbers with a conscience... or trust without trust, or fair mining never mind the centralized mining. We can buy and sell without the evil governments or banks, except KYC will track it all, and the banks are financing those crypto credit cards and on-board purchases through your favorite exchange. By the way, the exchanges are making money letting you get crypto, and letting you unload it.

Get honest, and we start to get to the heart of the problem. Crypto is about money. It is about making more money. Buy low, sell high only works if someone... sells high! If everyone holds, it will eventually help good crypto with good design. But, until it gets there, is it running like a business or like a crap shoot? There's one of everything in crypto, and none of them guarantee any value at market; none at all.

SO, there's some understanding needed from the coin developers; they may run like an organization, a foundation, or a business. They may run like a dude who thought a dog picture was a good reason to fork Bitcoin. It's all there. I love it, and you do too!

For the developers, many of you never asked yourself if the business model actually relies on the value of the coin. If you issue any coins to yourselves and others in the group, then the price matters, but it may not matter that much, if it is merely a mechanism of a business that pays in other ways. For some organizations that focus completely around the price value of the coin, they are crippled in fear of the Howey test, whether they are allowed to actually speak to the value of the coin, address it, actually work at making the price go up. Can they? Well, you can't just hire hitmen to make the market... although in some ways you can. Yeah, some coin projects do actually hire market makers within a very thin line of what is allowed. Exchanges do it too. There is illegal washing of trades, and there is perfectly legit market making, and the latter can be a necessary function of the market. In fact, it is legit in regular stocks, and often if it were not, the OTC market wouldn't have a means to even the books at the end of the day. Whole different story!

If the coin's value is central to commitment from workers, needed for the value of the organization and it's founders, then we truly have not seen the worst of the crypto fallout, and that is a shame, because it is completely unnecessary. When I say I am annoyed that this is a business about money, and the people running the operations don't understand money, I really mean it! I care about this stuff. I'm nowhere as close to how smart the developers are, but I seem to understand things they just cannot see.

Ideals have to be matched to application and practicality. the tokeniziation of things is real, and the tangible value can be explosive. But, you really are actually allowed to care about whether the token is worth something at market. The people who are fans of coins tend to be stand-offish to learn how to trade the market, and the people who are entering into real day trading crypto often have zero clue what any of the coins are, or what they do. They look at the patterns, or run the bots to do so for them, and they get rekt when the volume bottoms out because it was fake volume to start with.

Bringing these things together, we have serious disconnect that matters. A good token project will have it's code reviewed and also the economic model. Usually, neither of these happen. But, if they both do happen, it is not the needed step for success. Again, if one thinks of the token itself as the product, then even if an entire business model is structured in a whole stack of other details, that is secondary to the fact that this is crypto, and the people that care are also in crypto. You want to make the best dishwasher in the world? Don't do it in crypto. Why? Because the world might want your dishwasher, but it isn't going to sign up for your token to buy it, and it isn't going to care that they can buy dishwasher freakin' coin on Coinmama-lol. Get it? If they aren't already in crypto, then they aren't going to care! You can make the greatest egg sandwich in the world, but you can't sell it on Binance. You can make the greatest next-Ether in the world, but unless it's tokenomics are designed to pump, it doesn't matter.

So, getting rid of denial is the first step towards success. If it is a token, it is about money. You can't sell it by saying it will go up in value. But, that doesn't mean you pretend your business model isn't allowed to go up in value. You are supposed to bring value! The government agrees as well. Inexperience is a technology killer and that is the center of crypto. The true professionals in tech and business are patenting their crypto and blockchain design and sitting back and letting all the newbie small fries shake out all the early money in the business. But, this could all peak right now if people understand what we are dealing with.

So, products? Great. Ideas? Great. But, ALL secondary to a well-designed coin on a solid blockchain designed to scale, to not be hacked, and to spike in value more as time goes on. No one should launch a coin and try to convince people it is great, if they are not serious about it gaining value at market. I do not care if it is end world hunger coin, if it doesn't raise money, it either shouldn't be a coin, or it shouldn't be a foundation. It can only be both if the coin is actually designed for profit. If that profit does something great people believe in, then fantastic! I'd rather it succeed because the creators respect the ideals enough to design the economic model in such a way that it doesn't die 3 minutes after it is pumped at market.

The actual industry on-whole, including the best exchange developers, need to understand a few principles at play. 

First, there is a misconception that when Bitcoin goes up, all coins go up. It is actually scaled, and it is not just because money flows from one cap size to the next. The math is actually at play here. There are multiple scenarios I see play out hundreds of times in waves. This is not that article. But, the long and short, is that there is Bitcoin, and there is the rest of the market. If it were cheap and easy to change that, it would have already happened. For all the conferences, smart folks and playas like J.sun, none of them could tell you the first thing about winning over Bitcoin dominance. But, it is going to happen with a group of coins eventually. Since most coins trade against Bitcoin, and most coins trade against fiat or Tether, all coins are thus moved up and down at market by  a constant averaging of the buys and sells of Bitcoin and how it weighs against the dollar or stable interpretation as such. A coin that just sits at a value of 200 sats and has even distribution of buys and sells above and below this, will clear buy and sell orders for literally no other reason than the orders are there, and Bitcoin went up and down. This is an anomaly that is one of the most spectacular things that make it different trading crypto from any other asset. This basic concept is not somehow illegal for a coin developer to understand, and to desire to benefit from. Now, they shouldn't do some kind of dishonest shilling, though everyone seems to allow a measure of it to their detriment. They shouldn't do insider pumps, because if that is necessary, then something else is at play.

But, the market is not off limits. The market price, for an item based in finance, should be the primary place people look for the value in the item; the token!

Token developers think that the value of the coin will go up if they post great new news about their new game, their new app, their latest customer. Well, we all like positive crypto news. But, Ripple had an amazing week with all of these and their social platforms are blowing up. And XRP went down from $.30 to $.22. Should they fire their social media expert? No! They should hire a real consultant to bring correlation to market value! Now, admittedly, Ripple is going to know a heck of a lot more about their own correlation; they are close to doing things the right way. In fact, I'm probably not even really addressing the top 10 coins with this thought piece. But, there is a lot to be learned even there.

A healthy market breeds healthy innovation and a growth in the entire sector. Healthy projects that do cool things should breed interest in investing in those projects, and this should be reflected at market.

What do the developers and crypto business owners need to learn and understand? Build based on economic principles; supply and demand, proudly shill your truth and don't hide behind some idea that you're supposed to change the world without making a dime. Show people why you're better, if you are in fact better at something. If you'e just here for fun but really want to get loaded, then don't release like an ICO or IEO making any promises. Just do your coin thing and design it to blast off to the moon. You can't say "this will make you rich because I worked hard to make it make you rich". That is trouble. You can, however say that you made something you really like and designed it for long term value and growth, and your intentions are to get on every good exchange possible. You are allowed to hope that every early buyer becomes a gazillionaire. 

You can do amazing things with blockchain. There is still so much more thinking outside the box to be done, it isn't even funny. But, until the truly mind-blowing innovation that truly will change the world comes along (or, doesn't, because you know, people) we have the current model. All of the infrastructure is there that is needed to pump these coins and turn everyone into whales. We know that won't happen, but it is a lack of understanding on the side of the developers AND the exchanges AND the enthusiasts and HODL'ers. The coin developers need to focus equally on things that drive the model of profit for the coin at market as well as the business model or products itself. Whatever the revolutionary tech on chain or off, whatever innovations, whatever great idea they claim to solve (or lack thereof) it needs to not be fluff, but they need to message the crowd who buys the coin about the fundamentals of working the crypto market. Really, it is true. This is not the crypto store. This is not the crypto book club, and it is not the crypto vacation agency. Sure, all of those things are in crypto, but the star of the show is the token, and if that baby doesn't have any market value, or is easily kicked to the curb, then what does it say about the other benefits of the businesses?

Here is my #1 concern (and there are about 300 others to follow):

Most of the best coins that we know of, have already gone 2-3 rounds of funding, to the tens of millions. The investors understand well they may have picked a loser. It's the risk they are willing to take to be at the ground floor of the hottest innovation field to come. But, most of these same groups are operating off of early funding rounds. They don't know whether the coin economics designed for their business models are capable of funding a business at all. When that early round money starts to wear off, we could see the crypto-apocalypse and I don't want to see that. It isn't necessary.

We need better exchanges that are centralized and locked tight in security. We need that model backed by cold/hot storage and customer insurance built into the premium for services. We need zero fees for spot trading, low interest for futures and perpetuals, margins, leverage, shared volume for better liquidity everywhere, and we need the actual coin projects to support the exchange-aspect of the industry. If people think they are supposed to choose one loyalty over another, this is all going to die a sad death to governments and whales. If we open our eyes that the innovation comes at the benefit of, not despite, a new financial sector, then we can see that supporting the best projects means knowing the leadership, enjoying the cool factor that it is a new wave of superstars who are accessible (if they are smart enough to be so), coins that really can change the world, and fans who can retire when they are 40 if they learn what we all need to learn.

If we want better money, we have to all admit to ourselves that it actually represents money. Fiat isn't bad on it's own. It takes bad players to turn money into the root of all evil. It is the lust after something that tarnishes it's usefulness. What are we chasing? What are developers trying to innovate? They can only be true to their model, if they realize they have to earn a living out of that great coin project long after the investment funds are gone. That, my friends, is how we get to 2021. So, if you happen to be a real coin project and read this, get in touch. I will have to charge for my time, but I'll take crypto if it is listed and can pump! Only sort of kidding. If you are a fan of crypto, get your head in the game, and don't sit around wishing for altseason. We can literally all make it happen in a week, but it is going to take the attention of the actual developers and a lot of work.

I hope this provides some food for thought. The truth is, there is an amazing spread of truly brilliant coins, and some of them chose good economic models for their coins, and some of them did not. They can all perform better at market, and that should fuel more interest, and provide more funding to the projects. It isn't evil to earn money by making imaginary money. The first step is getting over the denial that we all would like a little more, thank you.

Gordon Freeman Out.