Among the many reasons why token sales or ICOs are used is one of the most important roles but few are truly aware of it. Their role in generating value in expanding markets while preserving that value for coin holders in falling ones. I had a couple of eye-opening conversations the past week which have led me to understand a few things much more clearly.

Allow me to try to explain what I have learned over the past couple of weeks about this dynamic. (Which, if you are only in this token sale to make money, it is time to pay attention.)

I received a DM from a twitter user name @Crypt0Leviathan that laid out the entire value proposition for Embermine’s token sale and the results were stunning. I have since worked out the math myself, and found it to be 100% correct. The fact that it was so easy for me to understand instantly makes me wonder why everyone does not already know this, or for that matter, why EVERY non-scam ICO does not fund out every time, regardless of what is behind it. (oh wait, the properly marketed ones DO) I do not know for sure what Crypt0Leviathan’s intent was in sending me this info, but in the end, I am sure it is because of money. Here is what they sent to me:

For the purposes of this illustration, we are assuming that the current USD price of Bitcoin is $2500, making an Ember’s starting value at $0.10/each for 100,000,000 MBRSs

ICO Minimum: 200 BTC ($500,000)
ICO Maximum: 4000 BTC (10 million)
ICO Ending Date: June 2nd

So let’s say that someone invests 100 BTC into Embermine’s token sale. They would receive 2,500,000 MBRS when the sale concludes. Making their current “value chart” look like this:

MBRS value: $0.10
BTC Value: $2500

Total BTC: 0
Total BTC Value: $0
Total MBRS: 2,500,000 MBRS
Total MBRS Value: $250,000

Total Value: $250,000

As long as the price of Embers either is increasing or stays roughly the same while the sale is accumulating, your perceived value in the ICO is still increasing because the BTC are being held, but are not being converted into the MBRSs yet. So their value stays equal with the market until that happens. Then the two coins will not only have separate relationships to the other currencies and independent values, but they will also establish a price ratio between the two. Most people equate value directly to the USD value, but there are potential trading pairs for any currency in crypto, creating any number of possible avenues of trade. Unlike just about any other market, however, you can directly trade any crypto for any other crypto. This fundamental difference is the power that makes the rest of this possible.

The #1 rule in crypto. Once your value is IN crypto, taking it out in fiat penalizes you both in fees and in loss of value inertia. So unless you are going to actually use that fiat value for a purchase, removing it from crypto is resetting multiplier factor and it also costs money and time to pass through the “membrane” that exists between these two financial markets. Much like the stock market, the only reason why you take value out of the market is to use it or protect it. Since stocks and securities require tremendous amounts of effort to move value from one stock and security to another, and almost never directly, and with all of the regulatory framework and friction that exists in transferring this value during IPOs and other stock offerings, there are few, if any opportunities in investment potential that quite match ICOs.

Since the key to evaluating an ICO is found in the potential for the new coin to generate more value over any period of time proportional to the source coin, it ultimately does not matter if that token increases in value against USD or not to gain or retain value. It just has to gain or maintain value relative to the source coin. Take this example:

MBRS Value $0.20
BTC Value: $2500
Total BTC: 100
Total BTC Value: $250,000
Total MBRS: 1,250,000
Total MBRS Value: $250,000
Total Value: $500,000

In this case, this user saw the value of the token hit $.20 each while BTC stayed even. Because Embers simply increased by $0.10 each, this allows the user, if so inclined, to sell Embers for Bitcoin at half the original price, because the price is expressed in terms of BTC, not USD. So this User sold 1/2 of their MBRS to return the original investment back to BTC. Now, not only do they have the original BTC amount back, but they still have plenty of MBRS too, and an increase in personal net worth. Of course, this works at any percentage, and interestingly enough, in both directions. But it is this essential element that crypto whales use to multiply their stake while at the same time diversifying their holdings and opportunities.

Now that we have established how the value multiplier works, we can also evaluate how certain scenarios, either engineered or natural, can create enormous opportunities for holders. Consider this example:

MBRS Value: $0.10
BTC Value $1250
Total BTC: 100
Total BTC Value: $125,000
Total MBRS: 1,250,000
Total MBRS Value: $125,000
Total Value: $250,000

In this example, every thing is done just like the last example, but in this case, the opportunity existed because of the value multiplier between MBRS and BTC moved, even while neither coin gained value relative to USD. And because we will always continue to evaluate value in terms of our fiat currency, that is only done because that is what we use to pay for things. Again, the goal on this is to diversify and increase opportunities for value. These two examples show some obvious mechanics, but the real shocker comes when BOTH occur. Consider this final example:

MBRS Value: $0.20
BTC Value: $1250
Total BTC: 300
Total BTC Value: $375,000
Total MBRS: 625,000
Total MBRS Value: $125,000
Total Value: $500,000

Now, even though that does not LOOK impressive, taking a longer examination of it reveals some pretty amazing things. For example, now you have TRIPLED your original Bitcoin total, and still have a very significant number of MBRSs. Of course, the user could have SOLD the 1,875,000 MBRSs for USD and made $375,000, and that is an option, but here, to take advantage of the Bitcoin drop (and likely recovery), the User used the multiplier to increase their holding in BTC and generate a market position that is very strong after a market down turn. And they were able to do it without investing a single additional dollar of fiat. They are able to do this because they were able to store the value in the ICO and its tokens it produced.

So if you know that Bitcoin is going to fall, or that demand for the crypto will cause MBRS to rise, or especially BOTH, one can use a token sale like Embermine to leverage that information to generate not only a ton of value, but avoid losing their accumulated value in the process.

So why did someone tell me all of this? I cannot say for sure, but what I can say is that I have many people looking at this project. Our investment group has said that they will invest as a group, close to the end. Of course they are, as if the sale does not close quickly, a severe drop in Bitcoin before it generate tokens does not evoke the multiplier, but rather, lowers the value of MBRS when it does get minted.

So, if I KNEW Bitcoin was going to tank, regardless of what anything else does, and I have a large number of BTC value for my group or myself to protect. I start looking at new/uncompleted ICOs as options for retaining value and once I have marked a candidate or two, I organize my efforts so that everyone is buying at the same time. This not only allows them to get the maximum number of coins possible as there is little competition, but it gives them clear targets they need to meet to either hit the minimum or to close out the sale entirely. Because as long as that sale is open, MBRS are pegged in value to BTC, and if the drop is coming, they want the sale to end, or maximum total reached so that the sale ends and the clock can begin ticking toward the minting of the new coin. So they will try to organize that it will get bought out as quickly as possible.

So that is the “cliff notes” version of what was sent to me. In short, If you think that Bitcoin is going to fall in value, or you think that MBRSs will rise in proportional value quicker than Bitcoin, you should buy some Embers. Soon. Because it is only a matter of time before EVERYONE figures this out, or the investor group starts everything, and the sale with sell out, or end.

So take this for what it is. Math. Will this happen? Is it already happening? I cannot say for sure. But there is no doubting the math. The only question is what are people going to do with this information now?