What does it take for a cryptocurrency to become victorious? Seven steps towards success.
“The strength of the community is the most important aspect as trust is the basis of everything…”
The crypto-market has undergone a tremendous change over the past years. We are not in the era of ICO promises, and people no longer make their decisions about projects based on blind faith. Consumers are influenced by much more conscious decisions than they used to be. It is evident that people’s trust in Bitcoin is the strongest, and all the other altcoins — including even Ethereum and Ripple — experienced significant losses last year. I will try to gather the factors that fundamentally determine and contribute to the success of a cryptocurrency. Unfortunately, there are several factors that would be quite hard to give concrete answers to. Therefore, subjectivity will obviously be unavoidable.
1) Trust: The very basis of trust in currency is based on who has control over it. The strength of the US dollar lies in the role of being the most prominent player in international trading, and it is also the most dominant currency in foreign exchange trading and the energy market. This is exactly why people’s trust in the “greenback” is so significant. Bitcoin can be looked at as an analogy to this as there are certain players behind Bitcoin — though not on a national level — that openly admit to having control over it. Moreover, Bitcoin has become a widely accepted means of payment in the business world too. If we take a look at the entire cryptocurrency trading on Coinmarketcap, we will see that the most telling message of Bitcoin is that it alone takes more than half of the market. Frankly, it would be difficult for any of the altcoins, including Ethereum, to compete with this fact.
2) Commitment to Technology: It would be hard to say that Ethereum is currently not in the lead in this department. However, it must also be seen that the importance of this category is much less significant when you look at cryptocurrency as a means of payment. The role of technological innovation is key, but if someone wants to purchase a car or a house, it is only secondary to current societal needs. Obviously, it would be logical to bring up smart contracts as a counter-argument, but their role and widespread use are yet to come. To be honest, I got into a conflict with myself when placing this category in second place because this category is substantial and also not substantial at the same time. Therefore, point numbers 2 and 3 are very similar to each other.
3) Active Community: The value of a cryptocurrency is exactly as much as people are willing to pay for it on the exchanges. You may bring up relativity as an argument, but the reality is that the price will always be what you see on the exchanges. Of course, there are subjective standpoints, but if we wish to purchase something with a cryptocurrency, subjective standpoints will not play any major roles. When I talk about the role of an active community, I talk about how many people trade with the given cryptocurrency and how much positive community role is taken by those who have confidence in that particular cryptocurrency. If we look at the current situation, we can see that Bitcoin barely needs any of it anymore. Because if someone wants to list their own coins on the exchanges, the very first and most important trading pair will be BTC/XXX.
4) Tools: Here, I am thinking of DApps and tools such as VR games; all of which can make a contribution to the value increase of a cryptocurrency. However, it will only have noteworthy results if the Active Community (point number 3) work becomes realized. The role of “Tools” and the “Active Community” work are very close to each other as these aspects are in synergy; meaning the better a tool is, the less community work it takes to achieve outstanding results.
5) Partners: Many of you will probably disagree with me for putting partnership to fifth place as you can achieve anything with an adequate partner. This is partially true! However, proper partners will only join the project if they can find the value in the points I have previously mentioned. It does not matter if you have good technology as long as the role of “Active Community” and “Tools” is low! Partners need a long-term perspective, which requires a strong market position; something that can primarily be measured in high trading and activity volumes.
6) The Team: By team, I am thinking of what players a project is capable of showcasing on either development or business side. However, compared to the previous points, its importance is significantly less. We know of several projects “with no team” that have succeeded. On the other hand, I can also mention examples of projects of 30–40 members that still have not achieved anything. Thus, this category profoundly falls under the subjective category. It is not the name of the developers that matters the most. It’s all about what technology they are able to come up with; which also leads us back to point number 2.
7) Media and Social Media Appearances and Events: Many people believe that the role of media appearances and events is extremely important, but I put them at the end of my list on purpose. The reason being due to the fact that I know countless projects that have traveled the world to showcase what they have, but they still failed to become successful. I have the same opinion on media appearances too. Media appearances are important, but only if the articles become efficiently utilized by the community.
Obviously, the preferences and credibility of these seven points can be debated. However, I still believe that if we disregard all factors and we only focus on the market solely from a cryptocurrency point of view, the validity of these seven points is justified. Every tool such as airdrops or bounty programs will only achieve results if the community takes on an active role. I believe that every point is in connection with each other. The intention of my article was to showcase that if a point that’s ranked higher is deficient, it does not matter how strong the lower-ranked points are. The result will be significantly lower than expected.