Thanks for sharing this @lukestokes, really interesting take on financial value.
Over the past week, I've been lucky enough to work alongside a token economics expert with an extremely deep understanding of how to create value based on Utility. His name is James Waugh, and he himself, myself and another colleague actually review an ICO in my latest post on DTube - there might be some interesting concepts that he talks about in it that interest you.
Anyway, to respond to your video - I think that financial value is very much so something that emerges at the moment of transaction, but is based on certain intrinsic microeconomic properties, as well as some macroeconomic ones too.
For example, when reviewing an ICO (which is my job), I always look at the microeconomics of the token - how supply and demand can be balanced through a monetary policy to drive up price is something that really adds to the perceived value of an asset. Then, looking at utility in general is also important - like you said, creating something that people want, that can improve their life if they have it. This is something that I'm really trying to work on in the ICO space, and have been contemplating publishing an article about what I perceive to be tokenomic value.
Thanks again for sharing this Luke, I'd love to talk more about this with you.
Great comment. Couldn’t it also be argued that when you evaluate “utility” you’re really just looking for some reliable metric that will indicate investor sentiment toward financial value? Something can be really useful from a utility perspective, but still highly undervalued financially. At the same time, Ponzi schemes like Bitconnect can be totally useless and provide no real value be still be highly overvalued financially.
All that said, I agree, the ICO space certainly needs more attention on what value they are actually providing to the market virtical they claim to disrupt.
Thanks for the reply - I think that that is the point of utility in my opinion. Like you said with your air example, utility alone is worthless. I am going to be working with some ICOs on their token economics, and the key thing that people don't seem to realise is that the only goal of an ICO regarding its price target is to create a bottle neck system. This is composed of a utility, that is complimented by a sensible yet lucrative supply and demand structure.
To take Bitconnect, for example, it did have value. All ponzi schemes and pyramid schemes have value while the scheme is sustaining itself, as their value is the monetary velocity they create, which coupled with volume creates what I like to call monetary momentum (this will be one of the next big terms for tokens in my opinion, I think I'm the first to have used it). They have a value in the sense that demand keeps on going up, as does its utility (momentum) - this creates a bottleneck, but the issue with schemes like Bitconnect is that when the scheme crashes, so does all of its momentum. If momentum is at 0, when you times momentum by utility value (although assigning a figure to utility is difficult), you essentially get zero.
I think things being overvalued and undervalued is a simple matter of smart economics - it's something that I have had to learn myself, and have not been able to find a book that teaches me it thus far. I have been considering writing a 20-30 page article all about evaluating tokens, how it can be done etc. and using past tokens to showcase to some extent that my methods work. My main issue at the moment is finding the monetary support for such an article - it would take a couple of weeks to write at least, so getting financial support to not work on other projects is difficult, but a way around it that I have been thinking of is to post it in snippets on Steemit - I would really prefer to have it as an e-book and then break it up on Steemit though. Hopefully it could be used as a guideline for ICOs. Let me know what you think, I'm pretty analytically minded so I like to try and apply models to everything, which doesn't always work - I think it does in this case though.
Hey Luke, apologies for the slightly unrelated comment, but I was thinking - I just did a post about the distribution of SP on Steemit, Voting Circles and Whales. I'm thinking of doing a follow up post to tie in negative economic consequences/behavioural economics. It ties in to value and Steemit, what would you think of that? I also gave you a mention in my latest post, I'd appreciate your feedback!