A crypto token is worth money only because other people will pay for it, and they pay for different reasons. On some networks you have to spend the token to use the network. Ether (ETH) works this way, because every Ethereum transaction fee is paid in ETH. Some tokens are claims on reserves. USDC, for example, is redeemable 1:1 for US dollars against reserves its issuer holds. Others rely on fixed issuance rules that make new supply predictable, as Bitcoin does. Some give holders control over a protocol. And some have no stated mechanism at all: the US Securities and Exchange Commission (SEC) staff wrote in February 2025 that meme coins' value "is driven primarily by market demand and speculation." Knowing which reason applies to a token tells you what you have to check. It does not tell you what the price should be.
Value from required use: ETH and gas
Ethereum charges a fee, called gas, for every computation. The ethereum.org gas documentation (page last updated June 24, 2026) gives two reasons. Charging for computation keeps bad actors from spamming the network. It also prevents "accidental or hostile infinite loops or other computational wastage in code." The same page says gas fees "have to be paid in Ethereum's native currency, ether (ETH)."
That rule creates demand. Anyone who wants a transaction processed on Ethereum has to hold some ETH first.
How the fee is set
The fee has two parts:
- Base fee. Set by the protocol. Under EIP-1559 (created April 13, 2019; status Final), each block targets half the gas limit, and blocks can grow to the full limit. The base fee can rise or fall by at most 12.5% per block, depending on whether the previous block was above or below target.
- Priority fee (tip). Paid on top of the base fee. ethereum.org says the tip "incentivizes validators to maximize the number of transactions in a block."
Where the base fee goes
EIP-1559 states that "the base fee is always burned (i.e. it is destroyed by the protocol)." The proposal gives its reason: this ensures "that only ETH can ever be used to pay for transactions on Ethereum, cementing the economic value of ETH." That is the authors' stated design goal, not a measured result. How much ETH is burned depends on how much the network is used.
Value from issuance rules: Bitcoin
The Bitcoin whitepaper, published by Satoshi Nakamoto on October 31, 2008, explains how new coins appear. In its section 6, "Incentive," the first transaction in each block is "a special transaction that starts a new coin" owned by the block's creator. This does two things. It rewards nodes for supporting the network, and it puts coins into circulation without a central issuer. The paper says that once a predetermined number of coins is in circulation, the reward can move entirely to transaction fees.
In this design, value does not come from an issuer's promise. It comes from rules anyone can check. Supply grows on a published schedule, and people who secure the network are paid in the coin itself. The whitepaper does not say what the coin should be worth.
Value from reserves: USDC and stablecoin rules
A stablecoin's value depends on what stands behind it and on whether holders can redeem it. Circle's transparency page (reserve section dated as of Oct. 22, 2026) states:
- USDC is "backed 100% by highly liquid cash and cash-equivalent assets" and is "always redeemable 1:1 for US dollars."
- "The majority of the USDC reserve is held in the Circle Reserve Fund (USDXX)," which Circle describes as "an SEC-registered 2a-7 government money market fund." BlackRock manages the fund and reports its holdings daily. The rest of the reserve is held in cash, mostly at large banks.
- A Big Four accounting firm provides monthly third-party assurance that the reserves are worth more than the USDC in circulation. Circle says it discloses reserve holdings weekly.
These are the issuer's own statements. The page does not give a figure for the share of the reserve held in the fund.
What US rules now say
- GENIUS Act, signed July 18, 2025. According to the White House fact sheet published the same day, the law requires payment stablecoin issuers to keep "100% reserve backing with liquid assets like U.S. dollars or short-term Treasuries" and to publish the composition of their reserves every month.
- SEC staff statement, April 4, 2025. The SEC's Division of Corporation Finance said that offering and selling "Covered Stablecoins" does not involve securities. These are dollar-pegged coins redeemable one-for-one and backed by low-risk, readily liquid reserves. The statement also notes that holders receive none of the reserve earnings, which the issuer may keep. It is a staff view with "no legal force or effect."
A stablecoin is meant to hold its value, not grow it. It is worth a dollar for as long as reserves and redemption hold up.
Which reason gives each token value
Which stated reason applies to the token you hold?
| Token | Stated reason of value | Who states it | Source |
|---|---|---|---|
| Ethereum (ETH) | Needed to pay gas fees | ethereum.org gas page; EIP-1559 | Source: Ethereum gas and fees: technical overview | ethereum.org (ethereum.org), accessed Oct 17, 2026 · EIP-1559: Fee market change for ETH 1.0 chain (eips.ethereum.org), accessed Oct 17, 2026 |
| Bitcoin (BTC) | New coins as the incentive for nodes | Bitcoin whitepaper | Source: PDF document (bitcoin.org), accessed Oct 17, 2026 |
| USDC | Reserves redeemable 1:1 | Circle transparency page | Source: Transparency & Stability | Circle (circle.com), accessed Oct 17, 2026 |
The table lists stated reasons, not measured demand or prices.
Value from control: governance tokens
Some tokens give holders a vote over how a protocol is run. Compound's documentation, for example, says Compound III "is governed by holders and delegates of COMP." Every Compound III deployment is controlled by a Timelock contract, and COMP holders choose the Pause Guardian address. The value of such a token depends on whether the decisions it controls matter. Typical decisions are protocol parameters and how reserves are used. Any value from voting is indirect and does not guarantee a price.
When there is no mechanism: meme coins
The SEC's Division of Corporation Finance published its "Staff Statement on Meme Coins" on Feb. 27, 2025, and last updated it on May 5, 2025. It says meme coins "typically are purchased for entertainment, social interaction, and cultural purposes" and "typically have limited or no use or functionality." It compares them to collectibles and says their value "is driven primarily by market demand and speculation." Like the stablecoin statement, it has no legal force.
How to check a token's reason for value
| Reason | Example | What to check | Primary source |
|---|---|---|---|
| Required for network use | ETH | Is the token the only way to pay fees? How busy is the network? | ethereum.org gas docs; EIP-1559 |
| Issuance rules | BTC | Is the supply schedule public and enforced by code? | Bitcoin whitepaper |
| Reserves and redemption | USDC | What are the reserve assets, who attests to them, and who can redeem? | Issuer transparency page; GENIUS Act |
| Governance | COMP | What can token holders actually change? | Protocol governance docs |
| None stated | Meme coins | Demand and speculation only | SEC staff statement |
Three questions apply to any token:
- Does anyone have to hold it? Look for a fee, collateral or access requirement written into the protocol itself, not into marketing copy.
- Who can change the supply? Read the issuance or burn rule in the specification, and check who controls upgrades.
- If it claims backing, where is the evidence? Look for a dated attestation from a named accounting firm and clear redemption terms.
Limitations: the sources above describe how each token is designed to hold value. None of them shows whether demand supports any token's current price, and none predicts prices.
