Today, I was talking to someone who is a fund manager and very skilled in financial management. I wanted to know if he had any knowledge of cryptocurrencies or would like to explore a particular cryptocurrency. However, from what I understood, he did not have a great opinion of BTC or any cryptocurrency, for that matter. He wanted to invest, but not right now. Only after stability is achieved and good regulations are in place.
He asked me to technically explain the technology and where the use case can be. That was when we were standing on a toll collection booth. So toll collection itself can be a great example or use case for cryptocurrencies. So we can introduce a toll collection system and get the payment using a cryptocurrency.
Initial Coin Offering
A new blockchain has to be created that will track all the transactions happening. A new cryptocurrency will have to be created on that blockchain as the primary coin for the blockchain. The next thing is to determine the price and supply of the cryptocurrency. An initial coin offering has to be created where the coins are listed for sale, and people purchase those coins.
Demand and supply
If we set the price of the coin initially, then later the demand and supply is generated. The number of coins available can either be a fixed value or an unlimited value based on the demand and supply. After the initial coins are fully sold off, the market is created based on demand and supply. If there are more buyers and fewer sellers, the buyers would want to even purchase for a higher price, and the sellers would sell for a higher price. Based on the demand and suppl,y people work out the market.
Use cases for the coin
The coin can have multiple use cases. A rewarding model can be created for the node operators. A fund allocation can be done there. In addition to that, people purchase the coin and use that for toll payments. The toll collectors use that fund and sell it back in the market again to get funds for their usage. In addition to this, a staking reward can be introduced where people might be interested in staking the coin and get rewarded with a decent APR more than what the banks are offering. This way, an economy is created around the coin, and it will be self-operating.
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