Why The Overlooking Of Value In Cryptocurrency Is Not Going To Work

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We see it with the stablescoins. The incessent need is to back it by something. This entire thought process is flawed. What happens when the asset backing the coin drops a great deal?

In this video I discuss how the overlooking of value building is fatal within cryptocurrency. Whatever the coin or token, the key is to build value at the organic level. This is not done through messing with the tokeinzation or trying to short cut the process.

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all Stablecoin must be backed by some asset not be in the air that is, when the emergency occurs, being able to respond to the users who trusted is the main benefit of it

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all Stablecoin must be backed by some asset not be in the air that is, when the emergency occurs, being able to respond to the users who trusted is the main benefit of it

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I agree. We need more value or use cases for the stablecoins. It's too hard to really make sure it's fully backed if everyone were to cash out at the same time.

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Summary:
In this video, the speaker discusses the concept of backing currency with collateral, focusing on stablecoins like UST, USDC, and Tether. He argues that simply backing a cryptocurrency with collateral does not give it value, emphasizing the importance of utility and use cases in determining value. The speaker also questions the value of fiat currency, particularly the US dollar, and criticizes the belief that the dollar's value comes from being issued by the US government. He emphasizes the need for cryptocurrencies to have utility and reasons for people to hold them, rather than just being backed by something of value. The speaker highlights the issue of stability and volatility in cryptocurrencies, especially in relation to their use as a medium of exchange.

Detailed Analysis:
The speaker starts by addressing the trend of backing cryptocurrencies with collateral, pointing out that this does not inherently give them value. He mentions examples like UST, USDC, and Tether, highlighting the liquidation of collateral by Tether and questioning the logic of backing currency with collateral. The speaker argues that currency derives value from utility rather than collateral backing, criticizing the misconception that currency must be backed by something to have value.

Moving on, the speaker delves into the valuation of fiat currency, particularly focusing on the US dollar. He challenges the belief that the dollar's value comes from being issued by the US government and dismisses the idea of the dollar being a petrodollar. He asserts that the value of a currency lies in its utility rather than external factors like gold reserves or government backing.

Furthermore, the speaker discusses stablecoins like UST, Luna, USDC, and Tether, examining their lack of inherent value beyond being backed by collateral. He questions the lack of utility and use cases for these stablecoins, emphasizing the importance of building value through functionality and investment opportunities rather than mere collateral backing.

The speaker also addresses the issue of volatility in cryptocurrencies, stressing the need for stability when using them as a medium of exchange. He contrasts the volatility of high-tech stocks with the relative stability required for a currency to function effectively in transactions.

Moreover, the speaker expresses concerns about the potential risks associated with backing cryptocurrencies with collateral, highlighting the challenges that arise when the value of the backing asset fluctuates. He warns against the potential pitfalls of not establishing intrinsic value for cryptocurrencies beyond collateral backing.

In conclusion, the speaker underscores the necessity of creating utility and use cases for cryptocurrencies to build value and ensure their viability as a legitimate alternative to the existing financial system. He hints at exploring this topic further in future videos, emphasizing the importance of addressing these issues within the cryptocurrency space.

Notice: This is an AI-generated summary based on a transcript of the video. The summarization of the videos in this channel was requested/approved by the channel owner.

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