Simply said, a cryptocurrency is a digital asset.
It was given the term currency because it was designed to act as a medium of trade in the same manner that fiat money does today. A blockchain maintains track of all online transactions and it keeps records of each transaction. It is also used to confirm ownership of certain digital assets.
The easiest way to understand digital assets is to use virtual tokens and coins as examples. These tokens and coins have value in the internal system and may be used to record financial transactions and other important data. Don't get confused by the terms "coin" and "token". Those are two different things but functions the same. A coin is a digital currency (just like Pi) that operates on its own blockchain. A token is a digital asset issued on a specific project and is derived from other projects' blockchain. Unlike a coin, a token doesn't have its own blockchain.
To give you even more examples: Bitcoin, Ethereum, Dogecoin, and Pi are coins while Axie Infinity doesn't have its own blockchain network so technically it doesn't have a coin. Since Axie Infinity is built on Ethereum Network, Axie Infinity can issue a token called Axie Infinity Shards ($AXS) and it can be used as a currency for governance, staking, and payment within the Axie Infinity Universe.
The use of cryptocurrencies as a monetary system is still the most profitable part of crypto. It allows users to exchange cryptocurrencies between entities in exchange for goods and services. Cryptocurrencies offer particular advantages since they are not governed by any central authority and processing expenses are often minimal to non-existent. The government has very little influence and regulates less, this indicates that cryptocurrencies are portable inflation-resistant, and have a clear transaction history.
Now that we've established what cryptocurrency is, let's look at how Pi Network will derive its value. Remember that even the core team does not know the price of Pi and no Pioneer does either. But I'll attempt to provide you with the information so you can grasp the basics of how the price of any currency is set. This way, you'll have a better understanding of how the Pi coin price will be determined. Also, let me add that the price will be set by us, the Pioneers, you're probably wondering how.
So what is behind the crypto value? Cryptocurrencies like any money gain value based on the extent of community engagement such as user demand, scarcity, or the coin's usefulness. Keep in mind that the majority of digital coins on the market are issued by private blockchain-related organizations. Some aspects of crypto value will be influenced by the image and efficiency of these companies such as project viability and perceived worth.Let's take a broad look at what makes cryptocurrency valuable. Then, we will look at the coin's utility. To make a cryptocurrency valuable, it must be useful. Any cryptocurrency is basically a representation of the use of blockchain technology which is a decentralized digital ledger so, in order to make your crypto coin useful, you must make it usable inside a certain blockchain environment.
Consider Ethereum as an example; you cannot begin utilizing the Ethereum network without an ether, a coin designed specifically to fuel transactions on the Ethereum platform. As a result, the value of Ethereum is determined by the demand for the network services.
Next is the scarcity of crypto. Scarcity represents the limited nature of the digital currency to make the coins more valuable. The demand should exceed the supply in the ideal case. For example, Bitcoin's limited supply never surpasses 21 million coins. As the most popular cryptocurrency on the market, Bitcoin is in high demand and has seen its value skyrocket. This demand for Bitcoin drives the growth in its value.
Some cryptocurrencies use a process known as burning which destroys a percentage of the coin supply. In this way, the supply is lessened to a certain percentage to increase the current market price of the coin or token.
Let us also remember that the value of any cryptocurrency is decided by the overall profitability and success of the project's development. Projects that evolve over time completing one milestone after another forming profitable alliances or releasing user-friendly software acquire more value in the eyes of the market makers.
To give further value to a cryptocurrency, another thing to consider is market capitalization. This is more important than the price of each individual coin. Market capitalization is a simple measure of the coin's market worth. The market capitalization is calculated by multiplying the total circulating supply by the coin's individual market price.
Let's have a look at an example,
If coin A has 20 million circulating coins worth two dollars each coin, the crypto's market value is 20 million multiplied by two equals 40 million dollars.similarly,
If coin B has 10 million coins in circulation, each worth three dollars; the market capitalization is 10 million multiplied by three equals 30 million dollars.Despite the fact that coin B has a higher individual value point appears to have a far larger overall value than coin B. As a result, the coin's market capitalization provides a more accurate representation of a cryptocurrency's true value.
In the case of Pi, a supportive community of Pioneers has grown and continues to grow with over 30 million active pioneers indicating acceptance of the coin. Many businesses and marketplaces have already been developed and are ready to accept and use Pi coin as a form of payment for the products and services they offer. The trade volume for Pi will be incredibly high given the number of Pioneers that we have so far, so in my opinion, the price of Pi will be defined by the availability of goods and services in relation to the amount a Pioneer is willing to pay for it.
For the actual valuation of Pi, I must not dare to say any amount, that's for sure. I am not saying $314 is not attainable but factoring out all the valuation methods as mentioned above, I think many might get disappointed but personally, I can only expect $3.14 as a starting price. That is only my personal opinion and don't take it with a grain of salt. Only time and the market will dictate the consensus value for Pi. Ask these questions to yourself: will a merchant be willing to offer $1200 worth o iPhone for 120 Pi? Alternatively, will you spend your 120 Pi for the same iPhone? It's all just a matter of perspective until we arrive at a consensus and unanimously price the Pi coin with a certain value.
What do you think is the consensus value of Pi? Please leave your answers in the comment section below.
