Tron – If You Want to Catch Fish Chum the Water

Overview:

A lot of hoopla over Tron this week, as the price moved from 1.0 to 2.9 pennies.  This is a 300% move and if you had the courage to throw 5k in Tron you are surely a winner.   Yet this is simply gambling and trading penny stocks or coins, may have huge returns when you are right, you have to take many losses along the way.  Not a way to invest for the long term by any means regardless of the hype you hear.

When ever I want to know about why a move happened I go to the experts and I am blessed to have some of the brightest minds as friends. I do not try to be smarter than everyone, I try to surround myself with people smarter than me.  So a quick text as to why the heck Tron is making a move, the first response that came back was “Enron 2.0”.  I about fell over because this is what I feel about Tron and other coins like this, but what do I know.

I am quick to question anything that looks to good to be true, and here is a perfect example.

BitTorrent:

BitTorrent is not new and has been around for decades.  I remember when everyone was downloading music and movies on sites like this trying not to catch a virus. BitTorrent has been around since high speed internet came about in the early 2000’s.  As a peer to peer protocol for sharing music and video BitTorrent was and still is popular for pirating, but does a coin hold any value?

The whole thing sounds like Long Island Ice Tea “Blockchain” to me.  Integrating a token with a platform is nothing new and will likely be old news soon.  I want faster download speeds I pay in BTT right?  Ok so there are 1 Billion, wait 1 Trillion BTT tokens (990 Billion to be exact) and regardless of the token count I always convert back to dollars.

Simple Math:

If 1 BTT became worth 1 penny, the entire eco-system would be worth 9.9 Billion dollars.  Seriously almost as large United Rentals corporation and larger than Tiffany & Co.  They would be 25% larger than BorgWarner and 35% larger than Harley Davidson. Quite impressive if it gets to that valuation.

The price move was based on the BitTorrent acquisition and airdrop, and the price tripled off its low.  This is probably the time to get out if you own inventory from lower prices.  The hype will subside and the true valuation will set in.  To put it simple, if nothing else changed, the market just gave BTT a 20 billion dollar valuation.

If you paid 2 cents more than you would have because of the airdrop that is exactly what happened here.  Now it is more complex than this but you get the point.


TRXUSD:

Hey I am impressed regardless by 50% moves let alone 300% moves, however there are finger prints all over this coin that it was simply a pump and dump news release.  Keep in mind this is a highly un-regulated industry and when you have a peer to peer software company that emerged from being a pirating company you can only think something is up.

Of course buying BitTorrent gave some legitimacy to TRX but the wrong type.  In reality TRX coin buyers literally handed Justin Sun another company and paid him to do it.  In the end all TRX holders get is a coin that will have minimal value in the longer term.

Now I am not saying Tron is a scam coin, maybe they become quite successful, but being successful and valuation to coin holders are two different things.  You have no stake in company itself other than being  a miner. Regardless if this revolutionizes peer to peer music an video pirating it is unlikely to create any wealth for token holders.

Utility tokens like XRP and others become only the value of what someone is willing to pay to use the platform.  If you like a Tron game application you may have to pay a few TRX tokens for it.  If the eco-system can become big enough than there could be some extrinsic value but you get no intrinsic value by owning the coin.

Competition:

What is great about cryptos is capitalism.  However with capitalism comes competition and if there are billions of dollars to be made, there will surely be competition.  The pot stocks are a perfect example.  Deregulation leads to competition which leads to pricing pressure.   The same will be true for tokenization.

In addition with gaming apps etc, do you think a company like Activision Blizzard is not going to compete?  As good as the games and gambling apps become on TRX companies like ATVI, TTWO, EA sports among others like Caesars, Wynn Resorts and Boyd will soon enter the game.  This can quickly make TRX as relevant as Napster.  Sure Napster changed the way we download music and videos, but if you invested in Napster coin, you were left holding the bag.

Investor Biases:

 

There are many biases that affect investors and one is confirmation bias, and or herd bias.  This is where one either ignores the evidence and only searches for articles or blogs that confirm their opinion.  In lieu of looking at the other side of the coin, they are simply looking for confirmation that what they are doing is good.

The herd mentality is self-explanatory.  This type of bias is based on safety in numbers or since everyone else is doing it I should too.  Our podcast this previous week was about the herd mentality or cognitive biases that are all around us and how to use them to your advantage.

The move in Tron appears to be based on these types of biases.  I have seen nothing that is being done that provides value to Token holders. Sure they are building Dapps, but what value do these bring to holders?  To the ownership yes, but to the actual token holders I just do not see it.  Feel free to comment if you have a legitimate fundamental reason why the value of TRX will grow to 20 billion dollars some day or around 30 cents.

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16 Responses
  1. Stoimen Bardarov

    I agree with most of what you said, but I have one very nice advice for you: when you see new coin and try to catch its value rather do some research what does the said coin provides as venture and tech. Because right now TRON is simply overtaking the crypto gambling space and if you are interested in straight numbers (which is the only thing that counts in such consideration) rather go check them at dapp.review. A penny-coin that has wagered over $1B (yes, one billion bucks) in less than 3 months is way bigger (in this particular thing) even than the BTC… And the online gambling industry (not the crypto one) is many times bigger than the enterprises your are comparing TRON to. Arguably one of the fastest possible transactions with close to zero fee is quite a tech, I tell you! 🙂

  2. Stoimen Bardarov

    P.s. more to the previous answer of mine: I am an ANTE (tronbet ante) holder which is a trc20 token. Now, when I invest I do it in small parts, never extending to more than 10% of my overall capital for investments. I have invested in ANTE $5000 late Oct. last year. I’ve sold on 12 times half of what I’ve bought in the start with an overall gain of 270% for 4 months… I can honestly say it is one of my best hits in the crypto so far….

    1. Andrew Gonci

      Thank you for the comment Stoimen, and I do not disagree with what you said. Very nice catch by the way, those are homeruns for sure! Can you clarify what you mean by a penny coin that wagered over 1 billion? Are you stating that people wagered over 1 billion on the dApp? That is good. My question is what value does the coin bring to investors. The application that takes a little juice off each bet makes money but I’m not sure where I see the future value for token holders. If a coin can create an insurmountable eco-system than I see some future value, but say Samsung partners with Boyd to do an app which you can trade in Bitcoin or Litecoin for online gambling? This is why I used Napster as an example, they led the way but Apple and Amazon now offer similar packages and it is integrated with their eco-system. I know there are many that like TRX and it is not a hit against TRX more a hit against buying to get a air drop at 200-300% higher than the coin just was.

      1. Stoimen Bardarov

        Thank you very much for your answer. Right on the question- yep, the dApp TRONbet alone made more than 65 000 000 mil. transactions in 3 months and is doing an alone avg. of $2mil./day. The value I see right now from a gambling perspective comes mainly from security (the casino does not touches your coins) and the fact that you can actually bet 1/1000 of a penny(because 0.00001 trx tax fee). Also, pure technically, it has arguably the best chain (TRON that). The thing is they “stole” a lot from the best developments (prior to start 2018) and integrated them in their own chain. On top of that they’ve copied the Eth virtual machine making by that way implementation of apps as easy as shit. Now I am hearing rumors (from serious investors) that in the middle of 2019 in the Jersey mockery Binance will list EUR/TRX pair, which will (reasonably) leads to another huge pump. But without going into deep tech details, the greatest achievement by far is TRON’s mockery with the P2P system (the BTT hype). They will upgrade!!! the way we’ve already tokenized the network traffic, and here I don’t talk about banners and cloud services. In personal plan I’ve switched a lot of my resources into such developments (having a torrent tracker site, 2 online gaming sites, few small internet/gaming rooms etc.) because of said small fees and lighting transfers. Microtransactions are HUGE market and TRON is positioning their venture pretty well in this in my opinion. Only time will show, but here I’ll go all guns blazing and will throw such a statement: for me TRON is the next Ali Baba.

  3. jlhequities

    They are all pump and dump coins for the most part. Most all alt coins are down 95-98.5%. That’s right at 100x your money back to the high. So people were willing to pay 100x more money 12 months ago. How many new “Whales” do you think that has attracted? I think a lot. Here are the odds, Throw $100 in coins ranked 11-110. So $10k total. How many out of 100 coins make it back to their high? If 1 does you get all your money back. 2 and you double it, 3 you triple it. This is how to play the pump and dump game. Buy $100 of 100 coins and hold 3-4 years and see how well you did. I bet you will be in profits by far.

  4. Kevin Meiner

    Andrew, every time you guys write about a coin other than Bitcoin you give me a great laugh because your bias is clear. You are true bitcoin lovers and you seek info from peers deemed smarter than you who clearly seem to share your opinions. It’s like reading stuff on Twitter, everyone’s coin sucks but mine. Let’s be honest, even bitcoin is irrelevant and worthless. It only has value thru supply and demand. It’s currently down 83% from it’s all time high and it’s been known to drop more than that in the past. If Tron is Enron 2.0 then wouldn’t Bitcoin be Enron 1.5? At least with some of these other coins you can transfer value around the world in seconds rather than 30 minutes with bitcoin. And when the blockchain gets busy, like it did at the highs near 20K, I had a Bitcoin transaction take almost 24 hours to clear and I got frustrated after 2 hours and went and bought XRP and completed the transfer in about 3 minutes. So, what value does Bitcoin hold over some of these alts that can move value just as fast as an email? Just besause a few “smart” people say Bitcoin is better? Seriously, I don’t understand it. Some people are so hard core in love with this slow crypto called Bitcoin they put on blinders, attack every other coin out there, and forget that there’s competition out there against bitcoin as well. I don’t buy things with crypto and have no need to so please help me understand why Bitcoin is so great and why do you value it over every other coin in the top 10 list. When you buy bitcoin you don’t have any stake in a company, so did you just buy into Satoshi’s ponzie scheme?

    1. Andrew Gonci

      Thank you for the comment. I pointed out clearly “Now I am not saying Tron is a scam coin, maybe they become quite successful, but being successful and valuation to coin holders are two different things.” I also stated “Utility tokens like XRP and others become only the value of what someone is willing to pay to use the platform. If you like a Tron game application you may have to pay a few TRX tokens for it. If the eco-system can become big enough than there could be some extrinsic value but you get no intrinsic value by owning the coin.” So it is not like I said this is crap central and you are a moron for investing, I said I do not like it because it is a utility token and other than BAT and XLM I am not going to load up on utility tokens.

      I think there is a difference between a utility token and something that is thought of as cash or money. BitTorrent is a great platform, in 2013 BitTorrent was responsible for 35% of all the worldwide bandwidth but that did not make BitTorrent a billion dollar company it sold for 125 million. Again usage and profitability are two different things, and I did not say Tron was a scam coin, I just do not see how you triple the price with an airdrop of 990 billion coins.

      The challenge with TRX is it is not creating something new it is disrupting an existing industry. I have 3 patents and my attorney told me this with one of them. If you disrupt someone like Apple, Amazon, Netflix or others, they are going to crush you. Not only that TRX is open source and can be copied. Bitcoin creates new wealth, TRX is removing wealth from others that will be the challenge for TRX and why I am not interested. However if you are a TRX holder fine, I just do not see the value other than utility, which can be copied by any fortune 500 company and implemented within their eco-system.

      Secondly other than crypto enthusiast nobody recognizes tron or Omisego for that matter. What gives anything value is perception. The $100 bill is really not worth anything other than it is a median of trade and barter. Bitcoin, Litecoin, BCH or even Doggie coin are medians of exchange. TRX is a utility token, I can transfer Bitcoin or Litecoin to forex brokers and trade, I can go on Apmex and buy gold with Bitcoin, I can get a coffee at the local coffee shop with litecoin or bitcoin, I can buy stuff on overstock.com with cryptos among many other sites, these already are being used in real world applications TRX may survive, nobody knows for sure, but to compare it to Bitcoin, is ridiculous. You do not buy gold or Bitcoin because it transacts fast.

  5. ERSOZ SOZER

    to use a trx dapp you should freeze some of your trx for the bandwith and cpu usage; so if trx dapps manage to attract a huge user base that means lots of trx will be freezed; this means demand for trx will increase.

    for the supply side trx coins are premined so there will be no new coins.

    capped supply and higher demand will increase the prices; this is attracting the trx investors actually…

    1. Andrew Gonci

      Yes they would have to build a huge eco-system. Maybe they do, but what type of valuation do you put on that?

      The question is how do you value a utility token? Eco system would be one way, but how would you put a valuation on it? That is the question.

  6. Stoimen Bardarov

    Andrew, don’t get me wrong on my replays. Both you and Marc are one of the best in terms of education in the TV roam, and I truly admire and value your work and efforts. For sure you are better traders than I am, but there is a very high chance I am much better in networks and system administrating than you both 🙂 Also, I am not some kind of hard core fan of TRON, as a matter of fact there are even more things than I hate (in the current situation of the crypto space and TRON in particular) than things I like. Being a product from China is a huge concern for any of the assets I have…. I won’t go into some absurd claims I have a friend who has a cousin which mother talks with.., but here is what I will share. China is the leader in communications already and G5 networks are already implemented in different parts of the world. They are about to use this (I am not saying it will be TRON) token system to pay for the traffic, which is quite a game changer. For example Baidu already operates with a lot of local ISPs only via crypto payments in ETH and TRON, something many outsiders (nonchinese) don’t even know. This is actually the missing value you were asking in your previous answer in my opinion. As I said the option to pay $0.0001 in a matter of seconds is a very huge step. On top of that they are developments in very late stage of atomic swap servers, which will make possible to pay WITH crypto to a online store that does not accepts crypto payments at all! I think there is no need to explain what will happen if that becomes a working solution (there are literally tons of legal implications in this). Sure there are a lot of fanboys already that are claiming TRON is the new bitcoin, lol. But in my ventures I am already starting to use this token because of it technical details, not because of its price. That should tell you something more and different than the pure TA aspect of the whole thing. Thank you once again for your just and reasonable opinions!

    1. Andrew Gonci

      Thanks Stoimen! Appreciate the compliments and comments. Again I am not a Tron hater, I just look at Tokens from a utility point of view and not an investment. As I mentioned Tron may develop an eco-system which is great, but owning the token you do not own the platform and many great ideas from great companies were copied and done better by others. A perfect example of this is Xerox which developed the GUI interface or IBM which developed the first cell phone. Both Apple took to the next level.

      The challenge with utility tokens is their potential value or market cap and does an Apple or Amazon come in and take the idea to the next level. I am not a code writer though I did take Fortran in college ;).

      But this is what makes a market difference of opinion, and I value honest and good opinions! Thank you again for contributing!

  7. Matt Allyn

    I’m not a basher of any coin. I really like the Linda platform but last year I brought $1500 of tron back in dec 2017 it was worth 120,000. Guess what I didn’t sell. They are moving along on their roadmap, where I see other coins just not doing much.

  8. Andrew Gonci

    Thanks Stoimen! Appreciate the compliments and comments. Again I am not a Tron hater, I just look at Tokens from a utility point of view and not an investment. As I mentioned Tron may develop an eco-system which is great, but owning the token you do not own the platform and many great ideas from great companies were copied and done better by others. A perfect example of this is Xerox which developed the GUI interface or IBM which developed the first cell phone. Both Apple took to the next level.

    The challenge with utility tokens is their potential value or market cap and does an Apple or Amazon come in and take the idea to the next level. I am not a code writer though I did take Fortran in college ;).

    But this is what makes a market difference of opinion, and I value honest and good opinions! Thank you again for contributing!

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