Internal vs External Utility, Why External Utility Should Be The Priority?
Cryptocurrency has been viewed differently by everybody with some people viewing it as an investment opportunity. But despite all of this, the true utility of cryptocurrency remains to be a better form of payment method compared to its fiat counterparts. This is the reason why most companies rush to develop utilities within and outside of the crypto space for their coin/token to be accepted as a payment method. With all of this development, let’s take a look at what is internal vs external utility and why is it more important for a cryptocurrency to be recognized as a payment method externally than internally.
Internal vs External Utility
Utility, as mentioned before, is a very important part of the crypto space because to create a new form of money, you have to find people who want to use it. Since the first time bitcoin was created, the goal of Satoshi Nakamoto was for it to one day become accepted worldwide as a more efficient method of payment that is both decentralized and deflationary due to its fixed supply.
Over the years Bitcoin has transitioned to what we called right now a “Commodity” due to its high rise in value and growth from year to year. This then triggered a ripple effect that proved a rise in demand for cryptocurrency amongst people and for companies like Apple, Tesla, and Microsoft who are willing to accept cryptocurrency as a method of payment in order to tap into this new market of young crypto enthusiasts. There are currently more than 15,000 companies that accept cryptocurrencies or provide bitcoin ATMs and this number is only expected to continue increasing in 2022.
These companies that accept Bitcoin are what we called “External Utility” because it was not set up or built directly by the developer of the crypto assets themselves. This means that these companies are not affiliated in any way with Bitcoin but they accept it because they trust the concept and value that bitcoin was built upon. One of the biggest examples of this is El Salvador which accepted Bitcoin as legal tender within the country in June 2021, this move although deemed controversial in front of the global world but proves to show how capable Bitcoin is to be an efficient Method of Payment.
Of course, when we talk about the crypto space, there are other forms of the way in which a cryptocurrency can be used as a method of payment and that involves the creation of “Internal Utility.” Internal Utility is the type of utility that is built inside the network to help provide a use case for the coin/token issued. This could be in the form of a metaverse where the coin/token is used to make purchases inside the world or simply buy your NFT art in the marketplace.
This is where most of the cryptocurrencies development takes place, as developers look to update more utility onto the network to increase the use case of their coins/ tokens. The great benefit of this internal utility is that everything is happening within a decentralized network which means that there will be fewer barriers to entry to make it happen.
Although the internal utility is on the rise right now and more coins with different kinds of features came upon CMC, a lot of people argue that the crypto space should focus more on building external utility with the traditional finance sector. So why is this a priority?
Why is External Utility more important?
Considering that most of the coins in the space are created out of thin air without utility or whitepaper whatsoever, both internal and external utility play a role in maintaining the demand and supply of the coins. The problem with Internal Utility is because it is inside the blockchain network, the only people that have control over the utility is the developer team. You, as a holder, do not have any control over the future plans of the utility and if we know too well about the crypto space is that once a coin is already in the market, the developer is no longer responsible for the price of the coin.
Even worse than this are scenarios in which the developer team made big plans of building the next great metaverse and created a whitepaper filled with Crypto Jargons that you don’t even understand but you buy into the hype because it will be the next big thing. While the HYPE was on fire pushing the price of the coin To The Moon, the metaverse plan was never carried out and you are stuck with a worthless coin that has no value because there is no use case for it. Unfortunately this is the root cause of most of the scams happening in the crypto space, because it is so easy to create a token and utility internal network but the question is, will the developers still remain committed to the project after they already made their fortunes off you? Are they responsible for your investments?
This all redirects back to a point of Trust because it is much easier to create your own utility than to be accepted externally by others. To be accepted by others, you need a coin that can hold a sustainable value that is supported by proper fundamentals, not a coin that is only supported by HYPE and false promises. This is the reason why Bitcoin still remains the number one cryptocurrency out there because it is accepted by more than 5000 merchants externally despite having an anonymous guy as its Founder and a simple whitepaper published on Github. Trust is again much easier to break than to gain and if external third party entities could accept Bitcoin, it is 100% sure that the concept of Bitcoin as a method of payment works.
The true form of any currency is it should be able to be accepted globally in both the traditional and digital finance space and this should be a priority if its aim is to replicate its fiat counterparts. The reason why Cryptocurrency is still having a hard time being accepted by the finance space is because most of the coins depend and focus too much on being used on their own spaces instead of going externally. Only a handful of coins such as Ethereum, Bitcoin and Solana just to name a few have been accepted externally while more than thousand of others are still stuck in the space.
As the value goes up, heads start to swivel and skeptics begin to soften. Starting a new currency is easy, anyone can do it. The trick is getting people to accept it because it is their use that gives the “money” value. — Adam B. Levine
A coin/ token is just a digit or number on a screen but what gives it value are the people that use and exchange it. It is obviously good if you have a use case in the network but it is more trustworthy when your coin/token is deemed trustworthy by the whole world.
We in Nagaya Technologies Pte. Ltd surely believe that a cryptocurrency should be accepted as a more efficient payment method globally. Which is why we are so grateful to announce that Nagaya has been accepted to numerous external utilities around South Korea. Nagaya is the world’s first hybrid crypto asset that is backed by gold while also running subsidiary projects to provide value to all our coin holders. To know more about Nagaya and our utility, you visit us at nagaya.co
Or you can talk to us at t.me/nagayaofficial
