Altcoins: A Salsa Dance Between Zero and Infinity
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Altcoins: A Salsa Dance Between Zero and Infinity
Despite the uncertainty of value accumulation, meme coins still have value and should have value.
Navigating Web3 tides with focused insightsAuthor: Arad, Crypto KOL
Translation: Felix, PANews
As the altcoin space becomes saturated with cynicism, the conditions are ripe to re-examine old questions.
(PANews note: The term "cynicism" here refers to crypto participants being fully aware of their actions yet continuing them unapologetically.)
Why do altcoins have value?
If you ask seasoned crypto enthusiasts around you, most answers will be dull or superficial—typically something like, "Oh, altcoins have no real value, but I'll try to profit from them before they go to zero."
This answer is unsatisfactory because it fails to explain why an altcoin market worth approximately $860 billion exists at all.
"Cynicism is a good servant, but a bad master."
This article aims to explain why altcoins exist, how a multi-hundred-billion-dollar total market cap can be—and will continue to be—justified. This piece is dedicated to the aforementioned cynical crypto veterans.
Stock Exchange vs. Crypto Frontier
Stock speculation has long become common knowledge—everyone knows stocks are supposed to hold some intrinsic value.
People have witnessed numerous companies rise over generations, with share prices soaring accordingly. That path has already been traveled, leaving little room for imagination. There are two established ways to generate returns:
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Cash distributions via buybacks/dividends
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Asset liquidation net of liabilities
These paths are well-defined, easy to understand, and widely replicable.
The concept of stock exchanges dates back to at least 1602, or even earlier. Joint-stock companies trace their roots to ancient Rome.
In stark contrast, the crypto market remains poorly understood by many—even as millions engage with it daily. Unlike traditional markets, crypto lacks a widely accepted "social mimicry framework" (i.e., shared conceptual understanding).
Imagine you're a 17th-century farmer, far removed from the legal systems, enterprises, and global commerce beginning to flourish in cities.
As a 17th-century farmer, everything you produce is handmade and has clear use value. Your economic activity amounts to exchanging physical goods or metal coins. Most importantly, you might visit a major city only twice a year.
Thus, business models are entirely foreign to you—let alone financial ones.
You need a common-sense social framework—a "social mimicry"—to tell you: "Yes, it's valid to assign value to pieces of paper representing ownership in abstract, invisible enterprises, backed by abstract bureaucracies and foreign legal jurisdictions."
The 17th-century farmer corresponds to today’s non-internet user.
These people constitute the majority of the population (just like farmers once did). They've never engaged in P2P online commerce, bought or sold purely digital goods, experienced the power of anonymity, formed intimate relationships via the internet, felt full control over their own funds, or grasped the value of a borderless, deterministic financial system emerging from an unstoppable global state machine.
What's missing is the "social mimicry" that tells them: "Yes, you can assign significant value to cryptographically verified tokens claiming legal rights within a purely digital reality"... or something along those lines.
Now you can understand why people—even some crypto natives—might doubt whether tokens hold real value.
Because crypto tokens depend on expectations about an uncertain future.
We are now in uncharted territory. Paths to token monetization remain unclear across multiple levels; tokens face many unknown trajectories leading to various possible outcomes. Not only are the choices among paths unknown, but the very nature of these paths is also unknown. "We don't know what we don't know."
Yet despite uncertainty around value accrual, tokens still have—and should have—value.
Thinking Through Value Step by Step
We can assign implicit probabilities to favorable and unfavorable outcomes for token valuation frameworks. One possibility is that, at some point, no robust mechanism for distributing value to token holders will ever emerge. The other is that such a mechanism will eventually be discovered. We set probabilities without knowing what these paths look like, when they’ll appear, or what form they’ll ultimately take. For simplicity, assume a "bimodal outcome"—either it gets figured out completely, or not at all—with each assigned a 50% probability.
A second assumption: crypto will continue its slow integration into financial systems and global commerce (especially cross-border and/or natively digital businesses). If we assign a total value of X dollars to the global financial system and estimate crypto penetration at 20%, then the total valuation would be 0.2X dollars.
Given a 50% chance of "figuring it out," we can value crypto tokens at 0.1X dollars in expected terms.
Thus, an expected total market cap is established based on implicit probabilities.
The next step is to apply the same logic to individual tokens, introducing a second assumption: not just the probability of "figuring out" value capture, but also the expected dominance of that token's protocol within crypto, and thus its share of the 0.1X dollar valuation.
Here's the catch: this isn't about actually calculating a precise value for any given token. That would be foolish and naive.
Rather, it's about understanding this: although it's currently unclear whether token holders can benefit from a protocol’s success, subconsciously, this is exactly how—and why—the market can (and does) assign valuations in the hundreds of millions, billions, or even tens of billions of dollars to tokens.
Next time you find yourself—or someone else—dismissing a token due to zero value capture or mocking its holders, recall the assumptions above. Consider the possibility of future project success, and reflect on what those potential futures imply for its current valuation.
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