Evaluating the value of a cryptocurrency

By Mchapeyama | CryptoSocial News | 9 Feb 2019


In the investment sector there are a number of risks. Therefore, investors require to make informed decisions after assessing the business environment. The same principle applies in the crypto ecosystem. Before taking part in a crypto project one needs to assess the utility and value of the cryptocurrency used. A cryptocurrency is a digital currency. Some crypto projects opt to use already existing currencies such as bitcoin, ripple or ethereum. Others choose to introduce their own cryptocurrency. However, not all cryptocurrencies have good value. There are some cryptocurrencies that do not have any worthy values, normally referred to as shitcoins or scamcoins. You would not like to deal with businesses that dishes you with scamcoins, because at the end they do not create value for you. The following are some few guidelines which one can use to assess the value and utility of any crypto coin. However, remember that there are many models that are used to assess the utility of cryptocurrencies.

Size of the community

The community refers to the number of the people or parties that do business with an organisation. The larger the participating community the more valuable a crypto coin is. Organisations that serve the same function can have different sizes. For example, I have liked Trybe based on the number of participants it has and how active they are. If I post an article, I can get a number of reviews in a short space of time. With other content creating sites, the participants are few and are not active in assessing the articles or posts of fellow writers.


Utility of coin

The utility of a coin refers to the purpose that it serves in its internal and external communities. A coin or token that has a strong function becomes valuable. The use of a coin is related to its value. A good example is that of ethereum, which is used mainly in the decentralised communication platforms. Other uses of coins that can make it worth include voting rights, payment of dividends and as a medium of exchange. Some tokens give ownership of the business to its holders. Some tokens perform all these functions and many more.  If there is a marketplace for products and services, the value of the coin is most likely to increase. That is why the coins of peer-to-peer marketplaces such as OmniBazaar are likely to remain strong.


One outstanding feature of any cryptocurrency is scarcity.  Scarcity means that there is limited supply of the coin. If the supply is limited and there is a rise in demand, the value of the crypto coin increases. One mistake which some companies face when having their initial coin offering is to introduce a very large supply of a coin and giving people easy way to acquire the coins. This weakens the coin value. We have seen some firms resorting to buying back their coins. The problem of wishing to buy back coins introduced on large supply, is that people lose confidence in the cryptocurrency. This results in poor perception of the coin.

 Type of product or service the token is tied to

When assessing the value of the coin, evaluate the product or service it is linked to. A cryptocurrency that is related to a strong brand of a product or service is likely to create value for itself. To increase the perceived value of a coin, the offering firm can do better by getting into partnership with well-known companies or organisations.

The role of various participants

The greater the roles the participants have in the organisation the greater the value of the coin or token. If the various participants offer their contribution to the crypto business, it is most likely that the value of the coin increases. When I think of this point I think of Decenturion, which is the first decentralised state. Its citizens play various roles such as employees, business mentors, success coaches, journalists (media), ministers and many more. Almost everyone has at least one role to play. Some of its participants are individuals while others are investors.

This discussion has just touched on a few criteria that one can use whether he/she wants to be part of a community that uses their internal cryptocurrencies. Trybe is a good example of a platform that uses cryptocurrency as its internal token.

You can also get a list of crypto-driven organisations at Cryptosocial activities


How do you rate this article?



I am a blogger and writer

CryptoSocial News
CryptoSocial News

In this space we will discuss issues relating to cryptosocial activities and blockchain. How to earn online as well.

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.