1/ The fact that people still ask questions like this shows how not-well-understood Bitcoin still is. Bitcoin token has value because it directly represents the asset it tokenizes: an unforgeable, costly and decentralized ledger. (thx @NickSzabo4 for the lovely term).
2/ Bitcoin token-asset relationship is closed-loop. There’s a direct, self-enforceable linkage between the token & the asset. The token doesn’t reference any input outside of the BTC ecosystem.
3/ This is typically not the case for “utility tokens”. They all reference external inputs via Oracles or other types of centralized solutions. i.e., they are open-loop.
4/ So these tokens cannot be worth as much as the assets they try to represent, but *only up to its weakest link*: how asset ownership is actually enforced. You have to discount this huge liability from the value of the tokens.
5/ Suggesting that Bitcoin can use an external token such as USD for its incentive structure is backward thinking. It wouldn’t work at all! (It also misses the entire point of this innovation.)
6/ Show me any specific example of an utility token & I’ll show you how easily the linkage between the token & the asset can be severed. (In some cases, the asset itself is of dubious value, such as a ledger backed by Proof-of-Stake).
7/ Otoh, all assets can be purchased with money. Having a good form of money means that we already have THE token. Instead of buying a token that’s useful for a specific use case, the money token can be used at *any point in time* to purchase these assets, whatever they might be.
8/ Not to mention that adding token to the system adds huge friction for the end users. Most of the times it hurts more than helps. Can you imagine the mental cost of managing hundreds of utility tokens to go through life? It’s absurd.
9/ When these companies say tokens are easier to “capture network value”, they really mean it’s easier to enrich the founders & early adopters. The UX sucks for 99% of the normal users. Let’s be real, who’s the winner here?
10/ Its the equivalent of having dollars, pesos, pounds, yen, renminbi, etc. in your wallet, and have to fork out the right currency & change at every merchant you go to. Its the epitome of needless inefficiency.
11/ PS: btw, the “ledger asset” gives Bitcoin token its intrinsic value. The fact that we are willing to pay more than the intrinsic value represents Bitcoin’s monetary premium (SoV, MoE). If people only use blockchain as a database, they wouldn’t pay for this premium.
