Why Don’t Investors Spend Their Cryptocurrency

One could think that Bitcoin’s primary purpose should be to replace fiat money for transactions. Yet as time goes on, Bitcoin and other cryptocurrencies often serve more as a store of value than a replacement for cash. Many are in fact quite reluctant to spend their digital cash.

Why don’t users spend cryptocurrencies?

This reluctance to spend one’s cryptocurrency holdings can be attributed to a few different reasons. First of all, most people believe the value of their digital currencies is going to continue to increase. This isn’t an entirely irrational assumption, but baked into it is a very positive belief about the future performance of their investments.

The more likely outcome is some cryptocurrencies will go up and then sharply drop out of existence. This possibility should be mitigated by selling or spending some of the profits from a cryptocurrency so you can at least gain back the money you originally invested. The second reason why people don’t spend their cryptocurrencies is tied to the first: it is not yet convenient to spend Bitcoin. There is no solution currently available that would enable for a fluid interaction of the exchange and in-person spending parts of the ecosystem.

Finally, you have the issue of the costs associated with selling cryptocurrency. Every exchange has its own fee structure and design, but as a general rule, users can expect to pay fees on a per transaction basis. This is fine if you are just looking to unload your cryptocurrency, but if you expect to be trading frequently, then this can be a significant cost.

The trading industry

Paying trading fees is frustrating and represents a holdover from the old world, where an exchange was entitled to make money off of you for every bit of value they provided you. In the new world, not all companies operate based on the idea of capturing maximum value in the short-term.

As a result of these trends, most people don’t end up actually spending the money they accumulate. They continue to hold it and follow a similar investment strategy to Warren Buffet’s well-known “buy and hold” strategy, but with much riskier assets. Investors are then left open to the potential of a massive downturn in the economy, all because they are too cheap to sell their currencies.

This leaves a hole open for a new competitor to jump into the space and provide massive value to the users who would like to sell their cryptocurrency without paying extortion-level prices. One new entrant is the Tokia, which provides a lot of value at very little cost.

How Tokia changes things

Tokia works to provide a free cryptocurrency exchange as long as users buy 1,000 of their tokens or more. In this way, it is structured a lot more like a membership service than a per trade business. And their services don’t apply only to trades. They also cover conversions, transfers between accounts or withdrawals of funds.

Cold storage is another service some users find to be in short supply in combination with their trading platform. Often it is necessary to download a separate wallet service and transfer your cryptocurrency at a cost. Tokia offers a bundled service where cold storage is provided on demand, which gives a fully secure multi-Blockchain offline storage system to secure funds. This takes a lot more of the risk off the table than other exchanges and increases convenience for customers.

Going back to the original issue of dealing with the inconvenience of spending cryptocurrency, Tokia has created a multi-currency debit card that allows users to make automatic withdrawals from their accounts. It converts the currency on-demand, which allows for a seamless connection of the exchange to the real-world spending habits of cryptocurrency owners.

Tokia is new to the marketplace but is already proving its worth. In just seven hours and 14 minutes, it was able to reach the soft cap of its ICO. This presale stage was discounted by approximately 47 percent but is still a very good indicator of the future demand for this coin.

Judging based on the current climate, Tokia has a bright future if it can build up enough users to cover all of its costs. The business model is sound, and just needs time to be proven.

 

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