Generating real value with real workSweetcoin is Sweetbridge’s loyalty token, designed to give intrinsic reward value to users that increase as the economic activity in the network increases.Therefore, my thesis is that Sweetcoin could end being worth even US$1,000 a coin or more if enough economic activity is generated in the Sweetbridge network, for example, by using the liquidity protocol.Let’s start with stating the obvious. I am biased. After all, I am the staff economist at Sweetbridge. I love this project and the ideas behind it, but even more, all the brilliant people at Sweetbridge who are working to make this vision a reality. IMHO, it is one of the best blockchain projects in the crypto space right now. So I’m optimistic about the future of Sweetbridge and Sweetcoin (SWC).Sweetbridge has the expertise and the capacity to transform the global supply chains, worth about $50T per year. The Sweetbridge network has the potential to generate significant, real (non-speculative) business value. There is a strictly limited supply of Sweetcoins. All of this makes me very optimistic about the future of the SWC price.How do we do this?At Sweetbridge, we understand that our ambition of onboarding even 1% of the Fortune 500 business is not a trivial task. But, at the same time, against any other project we are positioned to be one of the most capable blockchain projects to do this.Not only with the skill of our 100 team members but also the level of experience of the management team. They have proven they can convert Fortune 500 businesses into clients. Take a minute to investigate the team and what they built in the Internet age.The team leaders have built innovative solutions which were widely adopted by huge players (Apple, HP, Nestle). Coupled with their knowledge of blockchain they have one of the most refreshingly mature approaches to ICOs and blockchain that will massively aid in seeing Sweetbridge through to the long term result we are all seeking.Future Expectations of SweetcoinExpectations about the future are a very important factor when people are buying financial assets. That is — any assets really: cars (will it be reliable in the future?), phones (how long will the battery last in 2 years?), houses or crypto-tokens.With long-lasting assets, like crypto-tokens, the expectations about the future value is possibly the most important factor. In the case of more traditional asset classes like gold, shares, or real estate, there are familiar, known models that people use to estimate and quantify the expected future value of the asset. With crypto, not so much. Everything is brand new and unfamiliar, including the models used to predict the future value of crypto assets.It is not unusual in the early days of any industry (remember Microsoft missing out on smartphones?) that many people are wrong while making models and predictions, including predictions about crypto assets.One of the most common mistakes people make is predicting the growth potential of a crypto asset based purely on its current price. The bias goes something like this: “the cheaper the coin is at the ICO, the better the investment is.” It’s like saying that stocks that trade at lower prices are worth more than the stocks traded at higher prices. Or like saying $100 worth of pennies is worth more than a single $100 bill.This translates to the “buy for a penny, sell for a dollar” investment strategy. I understand how someone who bought ETH at $0.10 and sold at $700 might develop this bias. But it’s a bias, not a fact, and it’s just not true. In this case, many people mistake luck for skill or strategy. No one expected crypto to explode like it did in 2017; not even the people who created crypto, not even during the first half of 2017. A lot of people got rich by accident and a lot of other people saw this and now want to be a part of the same thing. But they don’t understand the complexity of what happened and why. They just hold on to what they can understand: one crypto asset that was very cheap got expensive, so it will happen again in the future to other cheap crypto assets.Price Per Coin vs Market CapI bring this up because I hear some people saying that the SWC ICO price is too high and it doesn’t provide enough growth potential. Currently SWC is offered at $3.09 (stage 4.04 https://sweetbridge.com/crowdsale) per coin.This information alone doesn’t mean anything. You need to know at least the supply of the asset and the total amount of tokens to have any reference point. The total supply of Sweetcoins is strictly limited to 100,000,000 (100M) SWC. By comparison, the total amount of EOS is limited to 1,000,000,000 (1B) tokens, 10 times more. EOS sold about 90% of the supply during the ICO collecting about $4B. This means the average price per EOS was about $4.40. To compare this to the SWC price, we need to divide the EOS supply by 10 (to have the same amount of coins), so $4B divided by (900,000,000/10) EOS equals… $44.4 per coin, not so cheap.Or, alternatively, we can multiply the supply of SWC by 10 and arrive at the price per dSWC (i.e. deciSWC, deci= one tenth of something) or $0.309. Suddenly it looks like SWC is a great investment opportunity, being offered during the crowdsale for under a dollar!Quantifying Real ValueI’m being silly here only to show that the ICO price of a single coin has nothing to do with its value or the price increase potential. So what’s driving the coin value? Ultimately, only one thing: the demand. In a situation where the supply is limited, an increased demand has to push the prices up. This happens with gold, real estate, and limited supply crypto assets, including SWC.Sweetcoin is a reward token that has a real utility value that will drive the demand, aside from (hopefully instead of) the speculative demand. This is why we are able to propose a model to quantify and estimate the future value and price of SWC.A more detailed presentation of our approach, assumptions, and the numbers can be found in our article: How much is Sweetcoin™ (SWC) really worth and other relevant questions around the Sweetbridge Crowdsale. For now, let’s use the most conservative scenario mentioned there, the lower valuation bracket. Where there is no Sweetbridge network growth, no new users, and no new economic activity.Under any scenario, including this one, the value of SWC is different for users and non-users, who only buy it to hold it (let’s call them HODLers). The HODLers can only realize the value of SWC if they sell it to someone else. The demand of SWC, hence the selling price, is driven by the future potential to generate value by providing perpetual rewards. This means SWC can be used over and over again, they don’t ‘burn.’ Under the conservative, zero-growth scenario, the reward value will be the same each year, so the future rewards potential each year will also be the same. In our model, we estimate that the value of this perpetual future reward is four times the value of the annual reward per SWC. In the base case, where the reward per Sweetcoin is at the minimum level of $0.84 per year, the value for HODLers equals $3.36 per SWC.Users, on the other hand, will realize the value of the rewards every year on top of the resell value mentioned above. This is why every year the total realized value for users increases. In the base scenario, the total value of SWC grows from $4.20 after the first year ($3.36 + $0.84) to $7.56 after 5 year of using it ($3.36 + 5*$0.84). It is clear that value for the users will be always higher than value for non-users. This is by design. We want to create an economy that supports real users and delivers more value to real use cases instead of being overly ‘whale-speculator’ friendly.Estimating Future PriceKnowing the relationship between the amount of reward per Sweetcoin and its intrinsic value, we can ‘reverse engineer’ the amount of rewards and the Sweetbridge network activity required to support different levels of SWC price. Put simply, we can answer the question: “What needs to happen in order for SWC to be worth $10 (or $100)?”Assuming there are 50,000,000 Sweetcoins(1) in circulation, the total amount of rewards in the Sweetbridge network has to be around $125M per year in order for the Sweetcoin value to be between $10 (for non-users) and $20/SWC (for users). $125M in rewards translates to $250M of total fees in the network at an average cashback rate of 50%. Consequently, in order to have a ten times higher SWC valuation, between $100 and $200, the total amount of network fees needs to equal some $2.5B per year.To put things into perspective, let’s take a look at the recent (2017) Fortune 500 list (http://fortune.com/fortune500). The smallest company on the list, number 500, ABM Industries, has an annual revenue of $5.1B. The average revenue per company on the list is around $24B. The highest grossing company, Walmart, generated almost half a trillion dollars ($485B) in 2017. The total revenues of all the Fortune 500 companies is equal to $12T (trillion).This means that even the smallest company on the list that starts using the Sweetbridge liquidity protocol for just 50% of its invoices can generate $250M in the Sweetbridge network (pushing the price of SWC to the $10-$20 range). Naturally, the same company using the protocol for all of its invoices would generate $500M in the Sweetbridge network, pushing the SWC price to the $20-$40 range.In the case of the average amount of revenue on the list ($24B), it is only required to use the liquidity protocol for about 10% of the invoices in order to generate $250M in the Sweetbridge network. On the other hand, if an average Fortune 500 company decided to use the liquidity protocol for all of its invoices, it would push the price of SWC to the $100-$200 range. And, if only 1% of the Fortune 500 revenue used the protocol, this would translate to a price of Sweetcoin in the range of $500-$1,000.(1)There will actually be 32,542,198 Sweetcoins in circulation after the crowdsale stage. Let’s use 50M here for the following reasons: 1) the simplicity of the calculations, 2) recognition of the additional coins in circulation after a few years of drip sale and early mining, 3) in order to be on the conservative side of the calculations: dividing the rewards by the smaller number of coins (32M) would produce a higher price per SWC.How much could Sweetcoin be worth in a few years? was originally published in Sweetbridge on Medium, where people are continuing the conversation by highlighting and responding to this story.