Crypto Utility: The factor that is most overlooked in the Crypto Space
The Crypto space has grown so rapidly over the past decade, reaching new highs on its market cap and essentially building a whole new world that was never thought of before. All of this was due to the success of Bitcoin which provided an idea of being the system that will revolutionize the financial world. While this might be true for Bitcoin, it is certainly not the case for most other altcoins which claim to be having the next best technology but don’t have any use cases whatsoever for it. Let’s look at what Utility really is in the Crypto Space and why this is an important factor that is often overlooked in deciding the next best coins you want to HODL on?
What is Utility in Crypto Space?
Utility in the Crypto Space is as the word suggests which is the use case or the problem the cryptocurrency it is trying to solve. Now with Cryptocurrency being a digital asset and having no physical form, these utilities are the main thing to consider whether you are an investor or user. If you are an investor, you would be looking towards utility to judge which is the right coin to invest on and if you are a user, you would be looking towards what Crypto is safe and easier to use.
“The most visible cryptocurrencies are those addressing or solving specific problems on a macro level,” — Roman Matkovskyy
Now there are two utilities that are usually present in the Crypto Space which are off chain and on chain utility. On Chain Utility are Cryptocurrencies that build many different features into the network in order to drive more functionality and utility into the network. The best examples of this will be the Ethereum Network that has a Smart Contract system which enables the creation of DeFi, Dapps and NFT, all of which requires Ethereum coin to transact within the network and this creates enormous value for the coin because the network is valuable.
Off Chain utilities are when the utilities are presented outside of the network possibly because of partnership or government tie up. One good example of this is Bitcoin who despite being the one who created the Crypto space but has seen its network quite limited in terms of scalability and sustainability. This is why the tie up with El Salvador was a good way to drive utility to the network by making it a legal tender of a country.
“Any cryptocurrency is only as good as its use case,” — Katharine Wooller
This is also why Bitcoin and Ethereum are the highest in terms of both value and visibility in the Crypto Space. While bitcoin’s use case within the network is deemed to be limited, it has a wide adoption amongst institutions, investment banking and governments Ethereum in other hand has developed a massive utility upon the Ethereum network hence why it is the most traded cryptocurrency in the market.
Utility will always form a close bond with the cryptocurrency because it is the fundamental that helps shape the problem it is trying to solve. But why even though important, it is often overlooked in terms of astronomical value and hype?
Why is it important but often overlooked?
Utility is important because it differentiates a project that was really built to solve problems from the ones that are just there to create hype for a while and rip you off in the end. As cryptocurrencies by their nature, have no underlying value and their prices are driven by supply and demand. Now in a crypto space the supply is created by the developers. Sometimes they have a limited supply and other times it is unlimited while the demand is where the utility comes in place. A good Cryptocurrency with a proper utility and technology to solve major problems should easily drive demand to its coins right. And future potential growth will depend on how well they address the problems and the acceptance of cryptocurrencies in general.
“Utility is the lifeblood of the crypto ecosystem. Without it there’s only speculation” — Roman Matkovskyy
Worryingly, however, there has been a recent trend for so-called meme coins, such as dogecoin and shiba inu, the former rallying more than 12,000% between the start of January and early May. Retail investors have been pouring money into these cheap alternatives to Bitcoin and Ethereum in hope they’ll deliver explosive gains. Now these meme coins might convince you like they are the next big thing even though the coin in itself doesn’t have utility or use case whatsoever and their main demand for the coin is generated by the community. The question is how long can the community sustain the demand? How is it that an investor would want to invest in something that doesn’t have any utility?
The problem? This is the time when hype and the greater fool theory trumps the utility and fundamentals of a coin. This is why Utility is so often overlooked because the hype of making 1000% overnight trumps a good technology that is currently solving the problems. One thing that investors need to understand is about the time people will start to realize what they are buying and divert their investments to a good and valuable coin. This is probably the reason why you see Bitcoin and Ethereum had a slow rise in their value but they remain there on top because they are solving problems on a grand scale. People might trade meme coins but they will hold on to Ethereum and Bitcoin because they have value and utility.
In the long run, investors in the market will be smart to understand the meme coins from the valuable ones and in the end the market itself will go on the reset where coins that have value will remain while the rest will be wiped out. We need coins that are able to solve the problems and build a defi world that is easier for its users.
We in Nagaya Technologies Pte. Ltd believe that a Cryptocurrency was created with a utility to solve and revolutionize major issues that are there with our traditional system. Which is why our coin Nagaya, the world’s first hybrid cryptocurrency has been selected to be a payment method by an upcoming shopping mall P4 Lala Square located in the new capital city of South Korea, Sejong City even before we hit the exchanges. This in turn should not only provide tremendous value for the users in the shopping mall but also to you all our holders. For more information regarding the latest updates on Nagaya and our whitepaper, you can visit us at nagaya.io
Or you can talk to us at t.me/nagayaofficial