A high token price gives a project crucial staying power, believes the CEO of IOHK, Charles Hoskinson.
Mention token price in the company of developers and many will hold their noses. In a lunch interview with the back in 2018, Ethereum’s creator Vitalik Buterin said that he felt an obsession with price had muddied the waters around cryptocurrencies and created the wrong incentives.
“The idealistic early coders, who wanted blockchain to transfer power from corporations and governments to individuals, last year started getting overtaken by get-rich-quick schemers. Some ICOs were scams. Buterin watched in dismay as his blockchain was flooded by mercenaries making a fast buck,” opines the article.
But Hoskinson, who began as an Ethereum co-founder before leaving to set up IOHK, the main developer house behind the Cardano project, thinks differently. While there are certainly other factors that count towards a project’s success – a strong consensus mechanism, say – he firmly believes the market should, and does, have the final word.
“Ultimately people do what they make money with,” he said, in a call with CoinDesk. Token projects that prove to be commercially successful end up inspiring imitations, meaning that “the market will basically decide what the standards are.”
“I’ve been in the space so long that I remember when Peercoin [the first to use proof-of-stake] was in the top 10, I remember when Primecoin [which confirmed transactions eight to 10 times faster than Bitcoin] was in the top 10,” Hoskinson said.
These coins have struck on something palpable for cryptocurrency users. Over time, new projects have come along that have built on their successes, improved on some of their failures, and gradually succeeded them on the cap table.
Now, Tezos and Cardano are the biggest PoS-based coins by market cap; Bitcoin Cash and Bitcoin SV are the most prominent projects offering a more scalable Bitcoin. In comparison, Peercoin and Primecoin have, over the years, faded into obscurity.
Hoskinson argued that the only way you can beat your competitors is to at least do what the most successful one is doing, and then try and do it even better.