05/03/2015
Q: UTOKEN – A CRYPTOCURRENCY OR NOT?
There is some mis-information spread around the web with regards to Utoken being a Cryptocurrency. By the end of this post we hope to clear this mis-conception once and for all.
Let us make it clear from the outset – Utoken is not classified as a Crypto Currency and in fact does not even appear in the Cryptocurrency index: http://coinmarketcap.com/
What is a Cryprocurrency?
The best definition for what makes a Cryptocurrency can be taken directly from Wikipedia ( http://en.wikipedia.org/wiki/Cryptocurrency ).
To take an excerpt from that page, a Cryptocurrency is “a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank”
The excerpt above immediately tells us what a currency like Bitcoin is and what a currency like UToken is not. For instance, Bitcoin is encrypted and actually created using a technique called mining. Back in the “olden days” to make a Bitcoin you would download a program onto your computer (a mining program) and “rent out” your computer resources to third parties. In return, you would be paid for your computer resources with an encrypted form of currency – the Bitcoin.
On the other hand, aUtoken is not generated through any mining device and so no encryption is required.
The best way to think about UToken is as you would any other currency you might use in your day to day life, such as the Dollar, Pound or Euro. Like the currencies mentioned, Utoken is backed by a Gold reserve, property investments, commercial interests, insurances and a bank. You can only get Utokens by buying them with everyday money of another currency, just as you can only get the dollar buying it with another currency.
Simply put, a Cryptocurrency can be created out of thin air, whereas the UToken, cannot.Utoken is clearly not a Cryptocurrency, but a true digital currency.
Why is this important?
Crypto Currencies are infamously volatile. For instance Bitcoin went from a few cents to over a thousand dollars and down to just over two hundred dollars in a few weeks. Still great if you owned Bitcoins before they rose, but not so good if you got your Bitcoins when the price was over $200 and worse still if you were to exchange goods and services for bitcoins before it’s price dropped. This volatility is due to the fact that these currencies ,once taken out of the digital domain, have no intrinsic value and their price is dictated purely on their popularity, volume and usage. In essence, a Cryptocurrency can be worth hundreds now and worthless within the next hour.
A currency backed by reserves and commerce on the other hand cannot be so volatile. Utoken has seen a steady increase in value not only because of its popularity and demand, but because of its reserve. Even if Utoken value ever did dip, it can never be as volatile as a Cryptocurrency. Investing in a properly managed currency like Utoken is relatively safe when compared to any Cryptocurrency.
Crypto-currency market cap rankings, charts, and more
