Over the weekend, self made billionaire Mark Cuban tweeted out a series of tweets sharing his thoughts on how cryptocurrencies should be viewed and run similarly as a business.
With more than 10,000 cryptocurrencies available out there, increasingly cryptocurrency investors and traders will have to value cryptocurrency using real metrics.
Mark shared that cryptocurrencies is evolving now from “what is the potential utility” to “what is the current utility” and “how many users does it have”.
Mark also noted that cryptocurrencies are now “less of a bet on the future” and more a reflection of real demand.
The need for a revenue strategy
As with all businesses, cryptocurrencies should have a clear revenue strategy. While the underlying blockchain technology is important, offering a high transaction per second and lower gas fees is no longer enough.
“There must be current network effect and significant user growth,” tweeted Mark Cuban.
Mark also added that cryptocurrency is a product driven business. “Like any business, it needs customers, sales and profits.”
If a cryptocurrency is unable to generate any revenue and has no sales and profit, how is it able to share the revenue with token holders?
Cryptocurrency is a zero sum game
Mark added that in cryptocurrency, there is a lot of competition at every levels.
“And the crazier part is that the competition for developers and users is so intense and so important that EVERY L1,L2 is investing in almost anything. Why? Because they know their business is a zero sum game.”
If a cryptocurrency is unable to offer a high yield or potential return to a cryptocurrency investor or trader, he can easily switch to another cryptocurrency which has higher yield.
Hence, building a community and spending on marketing becomes even more important for each cryptocurrency. However, there hasn’t been any cryptocurrency whose marketing stood out.
“Without users, what value does a blockchain or L2 solution have? But, they still haven’t figured out how to sell. They pay premiums to developers and for liquidity and validators. But invest little Marketing to attract users.”
“Like all generational technologies, it takes a generation to grow up. Crypto is in the phase where users need to be educated and products and services need to be sold and deliver on their initial promises. Then, Crypto can mature to the point we wondered how we ever lived without.”
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