Cryptocurrency
Not a Velocity Problem: My Perspective on Payment Tokens by Kevin Xu
According to Kevin, Cryptoeconomist at Token Foundry, “There has been a lot discussion addressing the token velocity problem: Kyle Samani (Multicoin Capital) and Vitalik Buterin (Ethereum Co-Founder) have both written about the issue, and Ryan Selkis mentioned it recently as well. The general consensus is that for many tokens, the price goes towards zero in value over time because there’s no […]
According to Kevin, Cryptoeconomist at Token Foundry, “There has been a lot discussion addressing the token velocity problem: Kyle Samani (Multicoin Capital) and Vitalik Buterin (Ethereum Co-Founder) have both written about the issue, and Ryan Selkis mentioned it recently as well. The general consensus is that for many tokens, the price goes towards zero in value over time because there’s no incentive to hold the token.”
Notes From Jon Najarian
I enjoyed the velocity problem read immensely. There is no doubt in my mind that you are correct about market makers and how and why they would be part of the ecosystem.
The problem most of the 1600 cryptos have is that the velocity simply doesn’t exist. If the issuer doesn’t have a business that can truly use the tokens and use them in significant numbers per day/week/month, the token is indeed doomed.
There needn’t be 1600 competitors to precious metals, or whatever limited supply asset (art, collectible autos etc). Most tokens will never become the scarcity model that Bitcoin has become and therefore a token must achieve the velocity you speak of or die.