Should crypto-tokens pay dividends? I think so...

dana-edwards (74) in cryptocurrency • 7 years ago (edited)

Why aren't there more crypto-tokens like PPY?

Peerplays appears to be the only crypto-token right now which pays dividends to hold it. Originally Steem paid dividends in the form of "interest" on the Steem Dollar. The real question is should the new model for tokens be the tokens which pay interest to holders? Many of these ICOs are offering very high risk low yield tokens which only have value if the price goes up. Interest for holding the token can offset the risks of a bubble because if we look at the stock market then we find that typically dividend investors do fairly well even when the markets are in a recession.

Dividends reduce the risk of holding during a recession

Dividend investors can get their dividends regardless of the condition of the market. They can keep their stock, hold it, and receive the dividend when the market is in a panic. When the market is in a bubble they can sell their stocks. Dividend stocks actually pass the profit directly to the investors. Dividend tokens from truly profitable blockchain projects can in theory reward holders with interest. The best way to prepare for a crypto recession is the same way we would prepare for a recession in the ordinary economy and that is to buy recession proof assets. If it is a bubble, then Steem and Peerplays can do quite well in a bubble but if it becomes a recession they'll likely still do quite well as long as they continue to grow.

References

I do not offer investment advice. This post is not investment advice.

cryptocurrency peerplays steemit

7 years ago by dana-edwards (74)

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kriv (31) · 7 years ago

For a token with a real income return, you might want to check out the WTT token, which gives you the right to 50 years of rent-free capacity at a one of the world's low-cost power-cost regions (Washington state). It's for cryptocurrency mining, but you can just rent the tokens, if you don't want to mine. Projected return is 35-60% annually, at $1 token price. Obviously, when tokens are tradeable on an exchange in a few months, I expect them to appreciate in value to lower the yield. Best time is to get in now. Crowdsale is still open. http://bit.ly/wtt_token (Disclaimer: I am invested in the WTT tokens.)

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crypto-p (67) · 7 years ago

Hi^^ Thank you for sharing, I'm following you!

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moksamol (50) · 7 years ago

Very insight article and I observed that Steem price is less volatiled than other cryptos during fear sell off and bitcoin price dropping recently. Keep up the good work...

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marcusxman (53) · 7 years ago

It depends on the purpose of the token. Is it designed for long term investors or for speculators. What value does the token have to warrant interest payout...financial viability still applies to the crypto-world!

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4 votes

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ir3m0del (42) · 7 years ago

Couldn't agree more

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ppitonak (51) · 7 years ago

I think that your argument is wrong... shares of companies are not stable because of them paying dividends but exactly the opposite... they pay dividend because they have stable income (and therefore stable share price)
for tax reasons, it's much easier for an investor to have his assets appreciate in price then receive dividends - in most countries you can't legally optimize your taxes from dividends

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3 votes

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rockjon (60) · 7 years ago

I think crypto-tokens should pay dividends. A huge emphasis on investing on cryptocurrencies right now seems to be based on rapid trading speculation. If crypto-tokens paid interest to hold them I believe that there would be a much greater incentive to hold them.

I think my only concern is that typically the dividends paid by stocks is actually a share or distribution of the profit on an actual business. If cryptocurrencies paid dividends, it would definitely would have to be based on profits generated by that particular cryptocurrency as a business and not by virtually printing more cryptocurrency to pay out dividends. If more currency was just printed out to do this, it can seem counter-intuitive to stabilizing the price since the supply of currency is being diluted by creating more of it to pay out dividends.

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cryptowolf (40) · 7 years ago

Would the dividend model really work for ICO's? I ask because it would seem to be that ICO's are not built upon fiat capital to begin with so if they promised dividends, they would either have to pay in fiat or instead offer more of their coins, which don't have any value yet, this essentially meaning that you just get more coins per unit of fiat money rather than a return.

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dawidrams (57) · 7 years ago

They should if they are able to generate any income. But no to inflation.

I wonder why nobody buys PeerPlays and why they are listed only on one doggy exchange...

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dana-edwards (74) · 7 years ago (edited)

Exactly and they can generate income. It's just not enough of these kinds of tokens exist and that is why it's a "bubble". It's not because developers cannot create them but because they just haven't. Ethereum or Graphene offer all the tools necessary to create profitable platforms. Steemit honestly isn't yet profitable, but it can easily become profitable. Peerplays also can easily become profitable, maybe even easier than Steemit.

More focus should go into making projects profitable and sustainable for the long term. This requires a different mindset which frankly is not compatible with some of the political idealism we see. To be profitable long term requires targeting the mainstream rather than the crypto-anarchist. It's a matter of demographics, marketing, and then monetization, not so much a matter of politics or fancy cryptography. Without these bread and butter mainstream projects you cannot have a sustainable and profitable ecosystem for the research projects or activist driven projects.

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charles1 (68) · 7 years ago

It depends on the crypto token. Note that due to the volatility, holding crypto´s can be risky as you are not 100% sure of the future. However the established once due bring in good ROI over time and its ok like that

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hebro (53) · 7 years ago

Will be great for any of us!

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saithe (48) · 7 years ago

Yes holding coins should be rewarded but only if they are helping in maintaining the network. The idea of a masternode is really a good thing for it rewards people with certain people who runs the nodes to keep the network going.

There should also a mechanism in place to prevent whales from taking most of the dividends. It should balance out with everyone in the network.

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juvyjabian (72) · 7 years ago

Maybe they already have that in mind, it could be that they're just waiting for the right time where they can sense that the coin is at its level where it will stay for a long time. Im not talking about bitcoin and other profitable coin but those that are just new. Im not also sure if my point is really a point. Im just too dumb yet when it comes to crypto.

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lgs8235 (59) · 7 years ago

thank you~~

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jdc (52) · 7 years ago

I think Beth offered dividends.

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cambocleve (39) · 7 years ago

I agree with your post, I am a peerplays token holder. It was the first ICO that i decided to invest in, I just wish it was available on either Poloniex or Bittrex so i could buy some more.

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protegeaa (61) · 7 years ago

I love the idea of crypto coins making payouts. This is one reason I hold Digix, which will pay rewards for active voters. In fact, they paid out ETC from the hard fork to holders this past month, and that has gone very well.

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dana-edwards (74) · 7 years ago

Digix reminds me too much of E-gold.

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protegeaa (61) · 7 years ago

How so?

The team is first rate, they have 465k ETH from the crowdsale that hasn't been accessed yet, and they're about to release a stable coin that will give traders an alternative to tether.

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dana-edwards (74) · 7 years ago

Where is the gold? Is it in a central location? Can a government confiscate the gold? Can the vault be robbed physically?

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protegeaa (61) · 7 years ago

Those are great questions. The gold is held in a vault in Singapore, which is audited regularly be a third party. It is also insured.

Singapore has been incredibly forward leaning in cryptocurrency and will be a friendly jurisdiction for Digix (and others) to operate in. Their crime rate is also very low.

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davidcrowley (25) · 7 years ago

Smith and crown did a great piece on the various use cases of ICO tokens. As they mention the issue with divdend / profit right tokens is they look like unregistered securities which potentially gets them in trouble with the SEC at some point. https://www.smithandcrown.com/token-rights/

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brendanwenzel (52) · 7 years ago

I think a few others brought up the one question I keep thinking about with a dividend payment system is what currency/coin should the dividend payment be made in? You would have to acquire the token holders' information to be able to release a fiat currency dividend to them, but you could maybe do a bitcoin dividend with just their Bitcoin address. I like where you're going with this train of thought though! It seems possible, just has to be thought out ahead of time and have a defined rule to add into the original articles of the business.

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exan (55) · 7 years ago

Congratulations @dana-edwards
You took 93 place in my Top 100 of posts

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