What If Uber Had a Cryptocurrency For Payment

Where does the value for cryptocurrencies come from?

US Dollars, Euro and pretty much any fiat currency you can think of are losing value every day due to inflation, which comes from the increase of supply of this currency. Bitcoin is deflationary, by design. Bitcoins are created through mining (computational process to validate transactions) and overall there only will be 21 million Bitcoins available. As of today we have around 16 million.

The dollar has no production limit on the amount, it can be inflated by decree of government or the centralized banking syndicate. Paper currency is generally inflated to try to outspend debts.

Did you know that the first Bitcoin trade was buying two Pizzas for 10.000 Bitcoin?

Bitcoin came to life in 2009, but it took almost one year until Bitcoin moved from being worth nothing to being worth 1 cent per Bitcoin. Half a year later the price already was at 8 cents, and in February 2011 it was worth one dollar. Since then the price has steadily grown and if the person that sold the pizza in 2010 would still have his Bitcoin today, the value would be more than $7 million. That must be the most expensive pizza ever.

In 2014, a new blockchain idea entered the crypto scene, called Ethereum. The Ethereum blockchain was launched in July 2015, as a beta version and was called Frontier, the full version that we see today is called Homestead and it was released in May of 2016. Ethereum has been around for a year and a half.

Why do both networks and their cryptocurrency gain in value over time, and why is Ethereum much quicker in gaining transaction volume, and still the overall Market Cap is not as high as with bitcoin?

The Hypothesis to this is: “There is a correlation between transaction volume, the available supply and the price.”

This means if a currency is frequently used (transactions) and the supply is low, the value is higher than if the usage volume is lower.

Ethereum has more than 60.000 transactions per day after it is barely 1 and a half years old. It took bitcoin four years to get to 60.000 transactions.

Ethereum has a market cap of around 1 Billion dollars with a transaction volume of around 60.000 per day and one Ether is worth around $9. Bitcoin has a market cap of 11 Billion, with a transaction volume of around 300.000 per day and one Bitcoin is worth around $700.

In addition it is also important to understand that the amount of tokens available affects the price as well, because “ask” for the token will be higher than “offer”. This is one reason why the cost per Bitcoin will always be higher than the cost per Ether.

Bitcoin now has 16 million Tokens mined, Ethereum has 86 million Tokens mined.

So what would this mean to the UBER Token?

Let’s assume that Uber would use a token to pay for the ride. Uber provides 1 million rides per day, which means 1 million payments from rider to driver (transactions) per day.

If we apply the previous hypothesis to the Uber scenario, what would this mean? We have 1 million transactions per day (3 times the amount of bitcoin) and we have a limited supply just like Bitcoin, therefore the value of the token will be quite high and will grow with every driver or rider being added to the product. In addition this will drive the growth rate of the community, as each member, especially the early adopters will benefit from having the token in early days. Remember the Bitcoin pizza.

It would be smart if Uber would cap the amount of token they create just like Bitcoin does and not inflate their system by mining tokens.

I am really looking forward to see this happen, just not with Uber.

Author: Bernd Lapp

https://swarm.city