I am pretty new to the crypto space. I can see how the polkadot network itself can be valueable as for a place for other projects to develop on. But I have trouble understanding the value of holding its tokens. As the token is not protected by anyone other than its owners, what would prevent the price to become inflated or a very big cooperation from just buying most of the tokens and thereby just taking over the entire system?
Hey @Kippen thanks for your questions
Here are a few values of holding tokens, as I see them:
Altruistic interest: Investing money is investing intention and energy. Polkadot is self-described the biggest bet against blockchain maximalism. I submit that maximialism, whether in blockchain, legacy tech companies, governments, or individuals is the engine behind humanity’s present bullet train toward extinction. Betting against maximalism is an affirmation of life and an altruistic act. If it’s a bet that has to lose, it’s a bet I wouldn’t regret having made.
Self-interest: It has value as a speculative investment for self interest. Buy low sell high. Polkadot is going up. Remember at one point Ethereum and Bitcoin cost pennies.
Staking: once you have tokens, you can “stake” them on trustworthy validators to help secure the network. By doing so you can earn up to 20% APY.
Voting: participate in a decentralized and autonomous governance of a self-sovereign group that has real economic power to enact change in real life.
Maximum supply, block rewards, the components that determine the rate of inflation, are hard-coded into the protocol. The network can only execute what it’s programmed to do.
They can do that. At a certain point however there would be diminishing returns and I picture it destabilizing and draining the value of the token as everyone bailed the now compromised ecosystem. Everybody else would probably spawn and migrate to a new Polkadot, leaving the rich buyer to his worthless blockchain.
Polkadot isn’t perfect, but it’s extremely well thought out and headed by extremely intelligent people. I encourage you to dig a little into the literature. There’s a lot of info out there. Good luck!
I had the same question myself. So I researched Polkadot extensively and wrote this article about it. I hope you find it useful.