{"id":8594,"date":"2022-09-28T19:12:16","date_gmt":"2022-09-28T19:12:16","guid":{"rendered":"https:\/\/mdr.foobrdigital.com\/?p=8594"},"modified":"2022-09-28T19:12:16","modified_gmt":"2022-09-28T19:12:16","slug":"what-problem-is-a-cryptocurrency-trying-to-solve","status":"publish","type":"post","link":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/2022\/09\/28\/what-problem-is-a-cryptocurrency-trying-to-solve\/","title":{"rendered":"What problem is a cryptocurrency trying to solve?"},"content":{"rendered":"\n<p>A good place to start with Fundamental Analysis of a cryptocurrency is asking the simple question &#8211;&nbsp;<em>what problem is it trying to solve?&nbsp;<\/em><\/p>\n\n\n\n<p>This may sound obvious, but it is very easy to be seduced by complex language and ambition, without thinking about what a cryptocurrency does and what real world problem it solves.<\/p>\n\n\n\n<p>If it doesn\u2019t solve a real world problem, it is unlikely to provide long term value. Hype can sustain interest during a bull market, but as with the dotcom bubble, businesses that lack a clear use case will eventually fail.<\/p>\n\n\n\n<p>We saw this during the ICO boom of 2017\/18 when projects generated astronomical investment and unrealistic expectations of future value on basis of flimsy concepts, often no more than ideas.<\/p>\n\n\n\n<p><strong>Dragon Coin<\/strong>&nbsp;is a good example. It raised $320million from an ICO and traded at an all-time-high of $2.40 in March 2018, but three years later, with its development abandoned, price is down 99.74%. The&nbsp; most obvious reason being it had no clear purpose.<br><br>Its website is poorly put together, which would be an immediate red flag, and it describes itself as the &#8216;Entertainment Token&#8217; but text attempting to explain what that means reads like word soup.&nbsp;<\/p>\n\n\n\n<p>Any crypto project should be able to articulate the problem being solved in a single sentence and you\u2019d expect to find it prominently on the project website and on page 1 of something called a Whitepaper.<\/p>\n\n\n\n<p>Here\u2019s what the first paragraph of&nbsp;Bitcoin\u2019s whitepaper&nbsp;says:<\/p>\n\n\n\n<p>This very succinctly explains what Bitcoin is and the problem it is solving. The remainder of the document then goes on to explain how Bitcoin solves the double-spend problem, in just nine pages. A good white paper should therefore cover:<\/p>\n\n\n\n<ul><li>What the project does<\/li><li>Why it is exists &#8211; details of the specific problem it solves<\/li><li>How it intends to solve the problem<\/li><li>The team behind the project<\/li><\/ul>\n\n\n\n<p>You can understand a lot about a project simply from a Whitepaper, such as the quality of the content, how succinctly it covers the what, why and how, along with the reputations of the people directly involved or supporting the project.<\/p>\n\n\n\n<p>Many early crypto Whitepapers were lazy rip-offs, copying text directly from the internet. Obviously the Bitcoin Whitepaper contains no details of the person behind it; it succeeded purely on the strength of the idea and clear understanding of the problem it was trying to solve.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A good place to start with Fundamental Analysis of a cryptocurrency is asking the simple question &#8211;&nbsp;what problem is it trying to solve?&nbsp; This may sound obvious, but it is very easy to be seduced by complex language and ambition, without thinking about what a cryptocurrency does and what real world problem it solves. If [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[459],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/8594"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=8594"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/8594\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=8594"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=8594"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=8594"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}