Cryptocurrency founders love to talk. Podcasts, interviews, Twitter threads—you name it. They wax poetic about their project’s “game-changing potential,” dive into the intricacies of their “revolutionary tokenomics,” and endlessly pitch the vision of a decentralized future. But amidst all this noise, there’s one glaring omission in almost every discussion:
What does your crypto token actually do?
I don’t mean the high-level hopes and dreams or abstract phrases like “redefining X” or “disrupting Y.” I mean in practical, real-world terms: what tangible problem does your token solve, and why should regular people care?
Bitcoin and Stablecoins: Clear Use Cases
Let’s start with the obvious exceptions: Bitcoin and stablecoins.
Bitcoin is a decentralized, trustless store of value and a peer-to-peer currency. It doesn’t require middlemen, can’t be devalued by a central authority, and serves as a hedge against inflation. Its use case is clear, even if you don’t agree with it.
Stablecoins, on the other hand, serve a very practical purpose. They provide access to stable currencies like the US dollar, especially for people in countries plagued by inflation or unstable local currencies. They facilitate cross-border payments, remittances, and easy on-chain trading without the volatility of other crypto assets.
But now, let’s look at the other 20,000+ altcoins flooding the market.
The Altcoin Problem: What’s It For?
Ask most altcoin founders to explain the real-world utility of their token, and you’ll get one of three responses:
- A vague promise: “Our token will be the backbone of the decentralized economy of the future!”
- A technical distraction: They dive into complex jargon about staking, liquidity pools, or token burns, avoiding the core question.
- A pivot to tokenomics: “Our tokenomics are designed to incentivize adoption, with deflationary mechanisms to drive long-term value.”
In other words: smoke and mirrors.
The harsh truth is that for most altcoins, the token’s primary (and often only) purpose is to make the founders rich. The playbook is predictable:
- Reserve a significant portion of tokens for the team and early investors.
- Market the project aggressively to create hype.
- List the token on exchanges to create liquidity and attract retail investors.
- Sell reserved tokens into the hype, cash out, and leave bag-holders hoping for a miracle.
The Ecosystem Mirage
Some might argue, “But we’re building an entire ecosystem of decentralized apps (dApps)!” Sure, that sounds great on paper. But where’s the demand?
- What real-life problem do these dApps solve?
- How many people are actually using them?
- Do they serve any purpose beyond speculative trading or yield farming?
In most cases, dApps built around altcoins struggle to attract genuine, consistent usage. The only people engaging with them are speculators chasing returns—not actual users solving real-world problems.
The Elephant in the Room: Tokens as Shares Without Utility
Here’s the unspoken reality: most altcoins function like unregulated shares in a tech startup, but with no clear utility or dividends attached. The success of these tokens is tied to the speculative value of the project rather than its ability to provide meaningful solutions or services.
Imagine pitching a startup to investors with this business plan:
- “We have no product-market fit.”
- “We have no clear demand.”
- “But if enough people believe in us, we’ll all make money!”
Sounds ridiculous, right? Yet, that’s the foundation of most altcoin projects.
The Real Test: A Simple Question
If you want to see a crypto founder squirm, ask them this:
“What does your token actually do?”
If the answer isn’t clear, concise, and meaningful, you’ve got your answer: it’s probably just another speculative vehicle designed to enrich the founders at the expense of retail investors.
Closing Thoughts
Cryptocurrencies have the potential to change the world—but the overwhelming majority of projects today are distractions at best and scams at worst. For the industry to mature, we need to hold projects to a higher standard. We need to demand real-world utility, meaningful adoption, and transparency.
So, the next time someone pitches you on the “next big thing” in crypto, ask them the hardest question in the space:
What does your token actually do?
Related Reading: