What are Crypto Assets?
What
is a Cryptocurrency?
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
·
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
·
Equity Covered Security: An investment opportunity that replaces equity or shares, with -values
based on assets.
Polymath and BnkToTheFuture Disrupting The Legacy Securities Industry
·
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
·
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
·
Gold:
This idea is to understand Bitcoin or other crypto assets as like Digital Gold.
The Value in Bitcoin: Digital Gold
·
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.