There is a lot of different visions and speculations about what crypto assets are and at the same time the technology is evolving in time with more functions and use cases. This scenario is creating some huge misunderstandings from new and old crypto enthusiasts.
The first vision of crypto assets and “The Why" they were named Crypto Currencies was the Satoshi Nakamoto’s WP “Bitcoin: A Peer-to-Peer Electronic Cash System”, 10 years ago, as every technology, we know how it’s started but is impossible to predict how it’s evolving in time.
The original vision of this technology was “only” to “Debank” people and transfer values without intermediaries or entities to trust. Sorry for the “only”, but I added it because this vision was huge at the time, and started an awesome revolution, but now it sounds an obvious feature of every crypto related project thanks to the evolution of this fantastic technology.
In fact, after the second generation of Blockchain Technology with the introduction of Logic Transactions (Smart Contracts, Dapps, Decentralized Data, Decentralized AI etc.) the technology made a huge milestone in terms of opportunities and use cases.
Today, in general, a crypto asset is a programmable store of values, based on the request and demand for the use of the technology behind, with infinite use case and undiscovered potential.
Every enthusiast, influencer or new project have his own vision about what a cryptocurrency is:
- Electronic Cash: Replace FIAT currencies for worldwide transactions
Cryptocurrencies are money, not equity_Developer incentivization and the power of holders_tokeneconomy.co
- Utility Token or Utility Coin: An utility is a digital asset without any price correlation with tangible or non-tangible assets. A utility crypto asset has values only by the request and demand for the use case. For example SingularityNET for AI and data usage, EOS, ETH or AION for miners and usage or INXT, SIA, STORJ for distributed file usage.
Utility Tokens: A General Understanding_“A digital token of cryptocurrency that is issued in order to fund development of the cryptocurrency and that can be…_medium.com
- Equity Covered Security: An investment opportunity that replaces equity or shares, with -values based on assets.
Polymath and BnkToTheFuture Disrupting The Legacy Securities Industry_Polymath is excited to announce that it is working with BnkToTheFuture (BTTF), a global online investment platform for…_blog.polymath.network
- Dividend-Based Security: An investment opportunity that replaces equity or shares with a fixed % shared of the company earnings.
How Security Tokens Will Transform Traditional Finance_By Adrian Ciaffoncini_hackernoon.com
- Tokenized Assets: The tokenization of tangible and non-tangible non-financial assets is the idea of cryptos based and covered on real-world assets like homes, cars etc. or even assets like IP, websites, data etc.
The start of tokenizing real world assets_Stephen McKeon first wrote about this in August of 2017. In his post he detailed how the limiting factors would…_medium.com
- Gold: This idea is to understand Bitcoin or other crypto assets as like Digital Gold.
The Value in Bitcoin: Digital Gold_Flashback to 2017 and most crypto-traders can probably relate to the incessant pump and dumps by whale groups. 2017 was…_medium.com
- Scam: Ponzi schemes, fake Blockchains, DAGs Tokens without use cases related etc. A lot of these no valuable coins or tokens have a market cap, supported by centralized exchanges and mass media hype, but in the future, they’re part of a huge bubble.
Every of these visions could be real if they are programmable, but for now some of this visions have some technical and legal limitations:
Not Programmable:
Equity Covered Security or Tokenized assets concepts are based on a huge misunderstanding, because today isn’t possible in tech terms. In the crypto market, the price of a crypto asset is only driven from the request and demand for it.
The idea to create tokens or coins that are covered by tangible or intangible assets in a decentralized way, today, is technically impossible.
Some companies are trying to do this but it’s not compliant in legal and in crypto related decentralized standards terms, because the only way to create this kind of assets is to build a centralized system to fix the price.
With a centralized fixed price, whats the difference between this kind of assets and an off-chain coin developed in a regular web 2.0 website like video games currencies or Ponzi schemes like currencies? This concept is possible in the traditional equity or Bond market, but maybe will be never possible in the crypto market.
Technological Limitations for mass adoption:
Electronic Cash is a possible vision in tech terms, but today cryptocurrencies have some technical limitations in transactions/second and the huge problem of the volatility of prices that are limiting the mass adoption.
What’s working today:
The Utility vision is already on and the most compliant form in legal terms to use this technology.
Dividend-Based Security is possible in tech terms without a centralized control if the company earn and transact only in crypto using simple smart contract features. More informations are here: Understanding the DAO accounting | Github: https://github.com/slockit/DAO/wiki/Understanding-the-DAO-accounting
The Gold?
The idea of Digital Gold, as I wrote in my article: “What if Bitcoin could be surpassed in terms of values? Is that possible??“ or from another article from Hacker Noon: “Etherium is Not “a Commodity”, and Bitcoin isn’t “Digital Gold”” In tech terms, this Idea sounds stagnant because in this field everything is changing more quickly than in other sectors.
Some years ago the idea of Bitcoin like Digital Gold could be plausible, because Bitcoin was the only way to exchange crypto with FIAT and because every exchange at the time worked with Bitcoin as a standard for prices.
Today, centralized exchanges work with Bitcoin, Ethereum and maybe EOS and AION in the future as standards, FIAT is exchangeable with BTC, ETH, BTH and other cryptos, and the 90% of decentralized exchanges are using ETH as gold, so this vision could be a dangerous mystification.
Cryptocurrencies could have a lot of different case of uses and forms, thanks to their programmable core. In the future, we’ll discover a lot of new uses of this fantastic assets. The most important thing to understand their value is to don’t try to find a similarity with existing assets, but understand them as they are, a new unedited kind of asset, a programmable store of values.