Tron – If You Want to Catch Fish Chum the Water

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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.

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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