LONDON (Bywire News) - Here at Bywire, an interesting problem did occur a few weeks ago. As we needed some cryptocurrencies (EOS) in order to interact with the blockchain and timestamp articles, we need regular demand to buy to replenish our supply. However, since the 4th of May, the EOS price jumped from 4.70 GBP/EOS to 9.30 GBP/EOS by the 7th of May, back to 6.50 on the 11th of May and up again to 10.00 on the 12th of May. While this is fantastically exciting when you are speculating on a price rise it is a bit confusing if you try to find a good moment to buy EOS to operate the business. Starting a meeting with a cost estimate for operating your smart contract and having a 10% change in the estimate by the end of the meeting is a rather interesting experience.
In my opinion, part of the problem is that no one can really tell what the value of a cryptocurrency truly is. Now, this is a rather religious debate where people either say that cryptocurrencies have no fundamental value, or people say the fundamental value is some incredibly high number. I prefer to say there is some value in cryptocurrencies as a value of exchange and because they allow us to operate smart contracts. However, I do believe no one can really put a price on the first one as it depends on the trust placed in the currency, which in turn depends on its price staying relatively stable. This is actually very similar to real currencies in that the actual value of a dollar banknote, the price of the paper it is printed on, is virtually zero, but the value is derived from the trust you can exchange that banknote at a later date for anything you want for more or less the same price as today. In other words, the fridge you wanted to buy is going to cost more or less the same tomorrow as today. This is however an extremely fragile trust that can change from one day to the next, one easily imagines the very low probability that the US defaulted on its debt. However that this happens in the real world as well as shown by the Swiss Franc on January 15 2015 when its price changed by 23% the day its peg to the euro was cut loose. So much for the stability of actual currencies.
For now, I will just regard all the price changes as speculation and take the smarter approach of buying EOS at the worst possible moment. However, there is a business to be run and articles that need to be timestamped so we cannot really avoid this.
(Written by Jetze Sikkema, edited by Klaudia Fior)