Crypto Volatility

Can genuine use save altcoins?

Market volatility is once again the hot topic of conversation in the international crypto community, after another day in which the price of Bitcoin fell by $1000 in 24 hours.

Over six billion dollars worth of Bitcoin was traded in one of the most dramatic days the market has seen in its brief history, while speculation on the cause of the drop has rocketed its way around social media and cryptocurrency forums, including the decision of Goldman Sachs not to include a cryptocurrency trading desk, and the looming SEC verdict on approving a Bitcoin ETF.

Bitcoin’s sudden drop yesterday

Altcoins, a blanket term used to describe all cryptocurrencies other than Bitcoin, have been obliterated. Only three coins of the top 100 on coinmarketcap.com showed a positive “green” swing on a day that has left many traders, HODLers and miners licking their wounds.

The trend that sees altcoins tumble down the mountain after Bitcoin every time it falls is hardly novel. Given its utter domination of the cryptocurrency market cap (at time of writing Bitcoin holds approximately 55% market dominance), the altcoins following in Bitcoin’s wake after a rise or fall in value have become as predictable as the rising of the sun.

So how will tokens be able to avoid this trend?

Stable coins have been one such endeavour to help combat the extreme price swings cryptocurrency falls victim to. Stable coins are similar to commodity backed currencies, meaning their value is tied to a particular asset. This can include being backed by precious minerals such as gold, or fiat currencies like the dollar. A fantastic breakdown on stable coins can be found in this Hackernoon article.

Tether have been the most successful stable coin in the market to date, currently ranked 8th by market cap. Tether (USDT) is tied to the US dollar, and have been under scrutiny for much of 2018 by the cryptocurrency community, who remain concerned the company does not have sufficient fiat reserves to back the whopping $2.7 billion market cap it holds.

Tether has become extremely popular for traders and hodlers seeking to safeguard their profits in bear markets. However many see their business model of only profiting from the interest in their fiat reserves, and dependence on a centralised economy as being too far removed from the ideals of decentralisation that blockchain has been built upon.

Conversely, utility tokens are not backed by a currency or commodity, rather their value is determined by the demand for them. As the market for utility tokens is still small, this has seen many remain tied to the market volatility brought about by Bitcoin price movements.

In the budding crypto world there are few examples of utility tokens who have managed to avoid these swings in price. Genuine use cases are rare, and in the event where they are, the market is small. Cryptocurrencies such as Bitcoin, Ripple and Litecoin remain dominant as purchasing currencies, and distributed open ledger technologies such as Ethereum and NEO have succeeded in providing platforms for many DApps and utility tokens. While successful in terms of market cap, all these listed have recorded significant price fluctuations in 2018.

The question most utility tokens face is how much demand is required for them to thrive in such a volatile environment. The total number of cryptocurrency investors on the planet is estimated to be anywhere between 10–50 million. It would be pretty safe to assume that at least 50% of these only have holdings in the top ten cryptocurrencies by market cap.

That puts holders of small cap altcoins and utility tokens at between 5–25 million. Given the thousands of utility tokens coming into the markets, the outlook for surviving the massive sell-offs that can be triggered by crypto whales looks grim for the majority.

This is where the significance of having an existing user base comes in. The PlayChip will be entering the market in December with over one million customers ready to use the token in 70 different nations around the globe.

The PlayChip is a one of a number of reverse-ICOs breaking out this year. 2018 has been for the most part a bear (sellers) market, and projects without serious business credentials have been found out. This year has proved more than anything that for adoption to rise, crypto must be brought to the people rather than the other way around.

PlayChip have timed their generation event to coincide with a number of key sporting events around the world to ensure maximum user participation. Users across the globe will be treated to challenges based on the cricket test match series between Australia and India, as well as key matches in the NHL, NFL, NBA and EPL. Large prize pools are anticipated to draw heavy excitement from the existing user base, which in turn will attract the eyes of the crypto world as bettors buy and sell the token.

As well as sports betting and fantasy sports, the PlayChip will be available for eSports challenges and casino games also to cater to its broad audience. The platforms hosting the token are not financially dependent on the value of the token, rather than expanding the ecosystem itself to heighten the token’s utility, as well as growing the user base.

This is a refreshing priority in a market that has become obsessed with price and performance over the actual utility value of a coin or token. PlayChip are aware that accessibility and usability are key drivers in growing adoption rates globally, and are helping facilitating that with direct conversions to fiat and other cryptos via their PlayWallet and PlayXchange. With several platforms on which to use the token, and significant demand from a large user base, PlayChip has a better foundation than most to weather the storms that can heavily damage the fragile market of utility tokens.

The PlayChip is currently in its pre-sale, which is scheduled to end on October 31st. For more information, visit www.playchip.global