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What is the real value of a Minds Token?

CensorshipsucksAug 19, 2018, 5:05:33 PM

UPDATE:  This was written in August of 2018 and I stand by the fundamentals of this article   As of July 2019 a few things have changed for the better.  1) Minds tokens are no longer pegged to etherium and are now pegged to the Dollar 2) Minds was selling tokens at this time for about .25 cents whereas today they are selling for $1.25.  Both of these changes are great news for users.

Original Blog:

The current pricing of #MindsTokens is a bit fuzzy as it is more or less pegged to the price of Etherium.   They originally made the price one Ether for 2,000 tokens and this was roughly $500 at that time making each token worth about 25 cents.  In the last week or so Etherium saw a massive decline so at the current ratio the price of one token works out to 17 cents.   But does that make any sense?

No.  The price of a token being pegged to Etherium means that Minds is basically making a market for the Token which is tied to an asset that has no foundation and is prone to swing wildly.  If Etherium went to $5,000 would that mean our tokens are now worth 10x more?  Absolutely not.  And even worse, this policy is setting an artificial ceiling on price as we can never sell tokens for more than Minds is willing to in infinite amounts.   Right now that price is 17 cents and if you try to sell for anything more then only a fool would buy them from you when they can get millions right from the source for 17 cents. 

The value of a token should be based on what someone would be willing to pay to have 1,000 impressions on their content, be it a banner, an article or whatever shown on the Minds platform to a generic audience (not targeted.)   Major advertisers buy ads on social media every day and Minds will be no different.  So, what do advertisers typically pay for impressions?  Fortunately, they use a common term called CPM which basically equates to the Cost per 1,000 views, or one token for our purposes.  

"A banner ad on the homepage of the website for a major Midwestern newspaper could carry a $14 CPM, while a run-of-the-site untargeted ad is $9. More-generic advertising is less expensive. According to Marketing Charts, the global average effective CPM was $1.22 as of June 2013. This statistic includes advertising all over the Internet." - Quote from AZCentral.com

Going over to F*book I looked up what it would cost to boost one of my pages and they gave me this range of views for a $1,000 budget:  72,000 - 450,000.   This would equate to anywhere between 72 and 450 tokens for $1,000.  At the low end that would value each token (CPM) at $2.22 and at the high end, the value of ONE token would be $13.88.   

While I do not believe our tokens will ever be worth $15 dollars I would look at that as a potential dotcom bubble type, frothy market, absolute top end price.  At the other end of the spectrum, 15 cents seems very low to me, almost a steal.   If Etherium sheds another few hundred dollars and they keep the peg in place then we will see tokens going for a small fraction of what any other site would be charging.   One way to fix this would be to set the price of Tokens to a US Dollar peg instead of a floating crypto currency that's so volatile, but when Minds does this they set an absolute cap on the price of a token.  Even better would be to somehow allow it to trade freely.   

Once there's a liquid market for trading in Minds Tokens we will see what the true price is.  At first this will likely be a bit higher than where we are now, maybe 30-40 cents.  As the site grows we could very likely see an industry average for generic site type prices of around $1 to $1.50, and if we ever become a premier platform then all bets are off.    

I'm very much looking forward to the day when tens of thousands of tokens are traded on a minute to minute basis.   What an exciting time to be on Minds.