Why utility tokens can make you rich

Utility tokens are tokens that have the sole purpose of being used within a closed (payment) system.

A common misunderstanding is that when more people are using a utility token, the token value will rise. While in fact, this is not the case. The value of a utility token goes up when the relative demand rises compared to the supply.

This has nothing to do with the usage of the token.

There are several crypto exchanges like Binance, Next, and Blockport that use a utility token as an internal payment system. These tokens are distributed during an ICO, IEO, or by Staking to collect funds to build the platform, and resultant is an expectation that token holders will use those tokens to pay for the products and services. The platform later sells the token back to the user to create revenue in fiat currency. This business model works for many platforms because they collect funds that they can use to pay for services outside of this closed environment. This model does not benefit the users of the platform because they have no right to any of these funds. The only thing that gives the token a certain value is the willingness to pay of the user, the willingness to pay for product & services. If these payments huge transaction fees users will shift to other platforms.

You can compare it with tickets for rides at an amusement park. The tickets have a certain value because guests have a willingness to pay for the rides. When the price to buy the tickets increases the demand for the tickets will decrease, due to basic economics for supply and demand.

So, are all utility tokens a bad investment?

The simple answer is NO. A relatively fair way of redistributing the profit towards stakeholders is by ‘burning’ tokens. This is a process in which the company buys tokens back through exchanges. From there, the tokens are transferred to a wallet that doesn’t have a private code to access it. The idea is that no one can access the wallet and therefore the token supply decreases. When the supply decreases but the demand is stable, the price per token increases.

At the time of writing, many tokens like Binance have proven that a utility token can give returns more than any other protocol.

The three questions investors should ask themselves before investing in a utility token are:

1. How will this token make me money?

2. What is the chance of it doing so?

3. Is the amount of potential profit worth the risk?

Taking the case of cryptocurrency platforms, investors will make money because the platform will burn tokens. This decreases the supply and therefore increases the price of the token. The chance of doing so is tied to the profit that the platform makes and so the number of users of the platform. The amount of potential profit is also tied to these metrics and gets divided by the amount of distributed tokens.

So to round this up, the only way an investor can make money on utility tokens is when the company behind the utility token has a way of distributing their profit to the token holders. The potentially distributed profit, divided by the number of tokens, is the return on investment an investor is able to make.

So How LILLION (LIL) can be a good opportunity?

Lillion is working on different kinds of E-commerce and service platforms where the end-users and merchants can buy sell products and services in the same way they do it on traditional platforms but with using crypto tokens including Lillion (LIL).

What Kinds of Platforms?

Lillion is introducing a Travel platform where users can book Air tickets, Hotels, etc., and an E-Commerce platform where users can buy sell products, online casinos, online game betting, and much more.

But the question remains why will anyone use Lillion (LIL) instead of cards, banks?

The answer is vLIL, on every purchase users will be rewarded with the same amount of vLIL, which can be bought by merchants for featured services, and burned back to the contract after the transaction complete.

So now hopefully you are getting it, so if a user buys a product worth 100$ ($1 = 1 LIL) using Lillion he will be rewarded with 100 vLIL so now suppose the traffic on the platforms is huge and merchants will want to showcase their products to all of the users, to get featured places merchants will buy featured services which only can be bought by vLIL.

So in a way, if the cost of vLIL goes to $1 the product is free for the user, and because every user will want to collect more vLIL users will buy more Lillion (LIL) from the exchange and the charges Lillion platforms takes on every transaction will be burned, so the supply of Lillion will go down which will increase the demand & price.

If you like wants to know more about Lillion , follow here on Lillion website, Facebook, Telegram , Linkedin and Twitter.

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Lillion

Lillion

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We build an ecosystem where good users and good companies can interact efficiently and don’t waste time and effort on fighting with fraudulent actors.