The first stock exchange in the world was founded in Bruges in 1409. Here lived the family van der Buerse, who regularly organized meetings of merchants in their house. A new form of international trade was born and other exchanges quickly developed in Europe. As more and more goods were traded in this way, the first specialized exchanges were established, such as the Antwerp Spice Exchange in 1460. However, there was still a long way to go before shares, securities and coins could be traded.
And while a good 600 years ago the merchants still met in person, today algorithms often meet on the stock exchange or crypto exchanges, with the aim of generating short-, medium- or long-term profits by buying and selling shares or crypto securities.
The price of a share or a coin on the trading venue is thus essentially determined by the intentions and motivations on the buyer’s and seller’s market. If the sellers dominate today, the price will fall, if the buyers dominate tomorrow, the price will rise.
What does this mean in concrete terms?
The moment an owner decides to offer his property – be it furniture, antiquarian books, shares or coins – on a stock exchange, a third party always comes into play for the a third party always comes into play who is willing to accept the desired price, so that the transaction can take place.
Many of us know this principle from Ebay Classifieds or from the well-known TV program “The Bidding Room”. Experts estimate the actual value of the item, the seller defines a “pain threshold” for himself and the dealers throw their bids into the ring.
Already here you can see that suddenly several values are in play – expert estimate, the seller’s desired price and the dealers’ bids. Three different values for one object, which previously may have had only an ideal value or an assumed value.
Can the actual value of the item change in such a short time? Or does simply every party at such an exchange (or in the mentioned program) see for different reasons an individual value in the object?
What considerations do dealers factor into their bids? What purpose do you pursue with the purchase object?
All of these questions and considerations can be transferred almost congruently to the trading of crypto assets on the Exchanges (stock exchanges).
The buyer will always strive to buy as cheaply as possible, in order to maximize the profit to be realized as much as possible.
At this point, it is worth taking a look at one of the legends in the investment business: Warren Buffett. His fans call him the “Oracle of the Omnipotent” because of his intuition for the right time to buy and the right values. Buffett’s strategy can be summarized in two simple principles:
- buy cheap, sell expensive
- know the intrinsic value of an investment and buy when the share price (external value) is below the intrinsic value.
In his valuation, Buffett thus considers intrinsic value and extrinsic value separately from one anotherand buys at the moment when the external value (share price) is significantly lower than the intrinsic value determined by him.
With this strategy, Buffet has made his holding company Berkshire Hathaway one of the most valuable companies in the world and has consistently given his shareholders incredible returns.
Let’s now move on to perhaps the most interesting part of the observation and transfer the motivations and strategies to trading crypto stocks.
How will the biggest profits be made here? Yes, exactly, profits! That is the motivation of 80% of investors in this market! When the price is high or when the price is low? When you buy expensive or when you buy cheap?
Undoubtedly, the price of a coin on an exchange can be compared with the price of a share on the stock exchange. But how does a private investor determine the intrinsic value of a coin?
First of all, it has to be differentiated what kind of Coins it is. For example, there are stable coins such as USDT and USDC, whose value always corresponds to 1 USD. In this case the inner value is equal to the outer value.
Then there are meme coins such as Shiba Inu or Dogecoin, which often undergo astonishing metamorphoses and become payment coins in the process. While at the beginning the intrinsic value was basically zero (meme coin = fun coin), especially the two coins mentioned are now integrated into payment networks and can be used as a means of payment.The intrinsic value has increased due to the development of usable ecosystems and a rapidly growing community. The external value is often very volatile and in the case of Doge Coin also strongly influenced by well-known oppinion leaders.
Let’s move on to a classic, the coin par excellence – bitcoin. Conceived from the beginning as a payment or equity coin, over the last 11 years, bitcoin has almost developed into an asset class of its own, in which institutional investors and renowned investment companies are now also investing.
Last but not least, we should take a look at the utility coins, which also include the MNDCC. The word “utility” alone indicates that the coin has a specific use. Utility coins basically work like vouchers. These vouchers can be exchanged in the associated ecosystem for certain services, offers or incentives.
These services are defined in the whitepaper of each reputable Utility Coin. The intrinsic value is therefore clearly defined by the initiator of the coin and is therefore completely independent of the price at Exchanges.
Everyone who wants to trade a Utility Coin on the exchange should be aware of this: The price here can be significantly below or above the intrinsic value of the Coin and has no influence on the voucher value in itself.
The voucher value deposited in the MNDCC is always 1 Euro. No matter whether the stock exchange price stands at 10 cents or at 10 euros.
Utility Coins like the MNDCC are not speculative investments, but sustainable and long-term oriented investments in projects with particularly promising potential.
If you paid attention now, you would do it like Warren Buffett: Buy MNDCC on the stock exchange!