If an appcoin could manage to reduce transaction costs by an order of magnitude versus Bitcoin, then it should be expected to defeat Bitcoin and all the other appcoins too. Not everyone buys the appcoin to interact with the system, of course. It is, furthermore, not necessary to assume that the app must be forked to remove its dependence on the appcoin. But necessarily as a given number of users learns to hold their appcoins for lower and lower periods of time, the value of the coin must decrease and the price of app services in its own appcoin must increase. There is thus an economic incentive to provide services which make the appcoin as invisible as possible so as to provide access to the app with as little hassle as possible. However, after understanding the economics described in this article, investors will no longer be so innocent as to see value in an appcoin. You just create an app, and then make it less convenient by creating a cryptocurrency (or “appcoin”) that is required to use it, some of which you sell to investors to pay for development of the app.
Furthermore, the more that investors realize that other investors also understand the worthlessness of appcoins, the less successful will the appcoin be as a method of funding projects. The value of the app is a matter entirely of the service it provides, whereas the value of the appcoin partly due to the value of the app and partly to its competition with other currencies. If there are two currencies to choose, there is a relative disutility of holding the one which has the smaller market cap. There is an opportunity cost for all time spent holding the appcoin because better currencies are available which can be expected to provide better opportunities. There is a concept called constructive fraud, which can apply when a seller misrepresents a product in spite of an ethical duty represent it correctly. This is because the value of a currency is due to the value of the network of people holding it, which is a logically separate concept to the network using the app. Wrong. As will be shown, whereas the value of a stock is related to the value of the company that issued it, there is no such connection between an appcoin and an app, and there is consequently no reason to expect the appcoin ever to become valuable.
Once that happens, the appcoin is simply another altcoin. Because any appcoin must compete with Bitcoin, there is inherently an aversion to holding the appcoin rather than Bitcoin. Then it must be more like only 50 people sharing 1000 appcoins, with 20 each. In fact, it’s not like that. It’s like they’re trying to invent a barter system again except improve it by adding trade barriers and a bunch of imaginary extra goods that aren’t useful for anything but that people are required to trade with for some reason. It’s just like selling stock in a company, right? In the case of appcoins, I do not think that the issues discussed in this article are very difficult to understand, so I would suspect someone who spent a lot of time working on them to have come to some understanding of the problem with them and the ethical problem of selling them.
As a comparison, if someone were selling a perpetual motion machine or homeopathic medicine, then obviously he is making false claims about his product. If the users of the app cannot avoid holding the appcoin entirely, then they would prefer to hold it for the shortest time possible. On the other hand, the value of an appcoin can move completely independently of the value of the app itself. Hence, a stock can be a perfectly legitimate investment if the company issuing it is not fraudulent. Consequently, there is a reason to expect growth of the company to increase the price of its stock. The only reason they can be used now is that the issues are not yet generally understood to be a scam. This means that an app can always improve by transitioning to use Bitcoin instead of the appcoin.2 Since we are talking about open source projects, it is always possible for anyone to fork an existing app and make the changes himself. For this reason, appcoins should not be considered a valid investment and are inappropriate as a means of funding open-source projects. I do not know whether the appcoins that already exist were sold under intentionally false pretenses; I merely consider it to be a likely possibility.
