Seth Klarman, in his book Margin of Safety, wrote:
‘There is the old story about the market craze in sardine trading when the sardines disappeared from their traditional waters in Monterey, California. The commodity traders bid them up and the price of a can of sardines soared. One day a buyer decided to treat himself to an expensive meal and actually opened a can and started eating. He immediately became ill and told the seller the sardines were no good. The seller said, “You don’t understand. These are not eating sardines, they are trading sardines.”‘
The sardines moved from being a traded commodity to a speculative stored value. Will some crypto currencies be no more than speculation, and their value short-lived? Vitalik Buterin has publicly expressed concern with this issue, noting a needed scrutiny over new ICOs and a need to understand whether their projects are sensibly positioned within crypto.
Without doubt, some cryptocurrencies will stand the test of time, but which ones?
At aXpire, we believe it is important to build sustainability into the business model, ensuring that our AXP tokens can be used in a meaningful way. For example, in the white paper on our web site, we describe how in the procurement world, AXP tokens could be used to facilitate an e-bidding process. We will be developing this idea, and adding others too, so that there is a long-term demand and value in the AXP token.
We are also building a P2P equivalent version of the software, demonstrating an additional form of value for the token, among many more to come.
If you think the sardine story is a bit of a one-off, give this some thought….Albert Wojnilower observed that the average holding period of U.S. Treasury bonds with maturities of ten years or more is just 20 days. If that is true, then they are being used to speculate on short-term interest rate movements, not as long-term investments. Similar to sardines, perhaps?