What is the true value of a cryptocurrency token? Is it its current value (in USD) that’s displayed on coinmarketcap? Is it its current market cap (based on circulating supply or otherwise)? Is it its predicted value in the future? Is it, perhaps, a combination of all these?

In our current cryptocurrency scene, this highly important question is often lost amid the rabid scramble to catch the next ‘mooning’ coin or token. Many ‘investors’ put their money into coins and tokens without truly understanding what they’re buying into.

I would not dare for a second to claim that such methods should be necessarily frowned upon — but those who employ such methods should, at the very least, be honest with themselves. Buying into something that you don’t really understand, while at the same time hoping that it will make you rich, is not investing.

It’s gambling.

If you want to gamble, then by all means, gamble away. No one will judge you, so long as you keep within your limits. You may also stop reading this article now — the rest of it won’t be of much use to you.

If you, however, want to be a true investor, then you’ll inevitably have to ask yourself the question that is this article’s title.

What exactly is the true value of a cryptocurrency token?

To even begin answering this question, one must understand what a cryptocurrency token really is.

Simply put, tokens are a unique digital asset intended for exclusive use within a specific platform to utilise specific functionalities as set out by that platform. By contrast, cryptocurrency coins are intended for direct monetary use anywhere that it’s accepted; these do not unlock any specific platform functionalities. To complicate things, many cryptocurrencies actually have both token and coin features, in that they have specific uses on a platform, but also have value as a monetary currency outwith the platform.

To better explain this, I present the analogy of an old-school gaming arcade that accepts only its own native tokens for play on its machines. The machines themselves cannot be activated by fiat currency directly, making the step of converting fiat to token a necessary one if one’s ultimate intention is to play on a machine. However, once outside the arcade, unless one were to go to an arcade of a similar franchise, those same tokens would be of highly limited utility.

The key here is the need to trade fiat for tokens in order to reap the benefits within this ‘arcade’ (the platform).

Essentially, this is where the true value of a cryptocurrency token lies. I therefore assert that any monetary value that any token has before its platform is released isn’t its true value. All prices of tokens before platforms are released are based purely on speculation. In other words, returning to our analogy, the market is effectively guessing the demand for play on these machines before the arcade is opened.

However, until our arcade is fully opened for business, no one can truly know how much demand there will be — and it is primarily this demand that would dictate the token’s true, yet unseen, value.

This is why it greatly saddens me to see that many who engage in discussions in the cryptocurrency sphere do not seem to understand this basic concept. They would readily call their tokens a failure when the tokens they are gambling on experience a price fall — despite the fact that the platform that their chosen token is intended for isn’t even live yet. That’s like calling the arcade in our analogy a failure before it’s even opened its doors for the first time based on the meaningless fact that the presold arcade tokens (tokens that do not actually have any current use case yet) have gone down in price.

So now that we’ve established where the true value of a token lies, let’s look at a case study of a promising cryptocurrency token.

According to their official whitepaper, Cashaa’s ultimate aim is to become a ‘one-stop-shop for financial needs’ by creating a blockchain-based platform that ‘enables its community to store, save, spend, receive, borrow and get insured, with a simplified user experience in a legally compliant way.’

Cashaa (CAS) tokens are the native tokens that would be used on this platform. To further quote the whitepaper, ‘the CAS token is a key component of the system that enables trading, lending and other upcoming services. It is the fuel of an internal mechanism of the Cashaa ecosystem, as well as part of the governance component of the CAS system.’

These are the revealed benefits of the CAS tokens so far:

1) Membership (Acquiring premium services in the Cashaa ecosystem)

2) Remittance (Lowering transaction fees for the currently 600 billion dollar remittance industry)

3) Lending (Providing the credit score for lenders)

4) Trading (Gaining the ability to trade cryptocurrency anywhere in the world)

5) Governance (Gaining the ability to participate in the governing mechanism of CAS usage)

There is a fixed maximum supply of 1 billion CAS tokens. Logically, as the Cashaa platform grows and more people start to use it, the demand for CAS tokens will increase. With a fixed supply and an increasing demand, there is not a shadow of a doubt that these CAS tokens will also increase in price once the platform gains traction.

This is true organic growth. Healthy growth. Growth that the management behind every cryptocurrency token should aspire to have. The Cashaa team understands this well, and as such is constantly devoting the main bulk of its efforts towards fostering such growth.

This is the reason why it is so important to understand the value of cryptocurrency tokens when investing (not gambling) in them. For when one truly invests in a token, they really are investing in the token’s team and their ability to fulfil their ultimate vision — not the ability of the token to suddenly pump by 10000% due to pure, meaningless hype.