By now I believe most everyone has at least heard of Bitcoin but very little people realize there is a whole new world of crypto asset classes hiding in the 1's and 0's of the interwebz. In this post I will discuss the various crypto-asset classes that currently exist within the cryptosphere:
1. CryptoCurrencies: This is the type of crypto-asset most people are familiar with. Basically cryptocurrencies are forms of digital money can be trusted as they are tied cryptographically to a (hopefully decentralized :simple_smile:) blockchain. Examples of cryptocurrenices include Bitcoin, Dash, Litecoin and the Very Wow Much Moon Dogecoin.
2. Platforms: Platforms came into existence a few years after cryptocurrencies. Platforms where born from Bitcoin which was the first instance of blockchain technology. After experimenting with Bitcoin, some developers forked Bitcoin or even created brand new blockchains that leveraged the underlying blockchain technology that Bitcoin is built on to create decentralized platforms where people could build/host decentralized applications (dApps). Examples of Platforms include Ethereum #ETH, Neo #NEO, IOTA #MIOTA, EOS #EOS etc.
3. Security Tokens: The first killer app of Ethereum was the Initial Coin Offering (ICO). Once people realized that they could crowd fund their project by simply creating tokens on the Ethereum blockchain, ICOs started popping up left and right. You can simply think of a security token as a share of stock in a company as the token does not actually have any utility within the blockchain ecosystem. Unfortunately many of the ICOs / Security tokens generated during the 2017 crypto mania were fraudulent leading to the SEC's crackdown of ICOs. The SEC has yet to come out with offical guidance to distinguish the difference between Security and Utility Tokens, but says that it believes most crypto tokens to be classified as securities. That being said, I believe the governments of the world do not want to stifle innovation and are doing their best to get crypto regulation right.
4. Utility Tokens: I define Utility Tokens as crypto-assets that perform a specific function within a dApp or a blockchain. The token gains utility through curating registries, providing governance, or some sort of incentive. Examples of Utility Tokens include AdToken #ADT 0x Protocol #ZRX and Siacoin #SC
5. Crypto-Collectibles: While Utility and Security tokens are all essentially the same tokens just like every US dollar is like another US dollar, Crypto-Collectibles are crypto-assets that are unique in nature or have a very limited quantity. An example of a Crypto-Collectible is a CryptoKittie. You can irrefutably prove that you own a one-of-a-kind CryptoKittie due to the nature of how blockchains function. While Utility and Security tokens on the Ethereum blockchain bear the ERC-20 standard, crypto-collectibles follow the ERC 721 Standard which allows the tokens to have unique attributes. The crypto-collectible space is about to explode with all sorts of virtual land plots, shrimp farms, and virtual art.
6. Crypto-Fiat: Many central banks have taken notice of the advantages of cryptocurrency and plan to issue crypto-fiat versions of their domestic currencies. In fact, the Marshall Islands just announced exactly that. The new crypto-fiat will be called the Sovereign #SOV and will take the place of the US Dollar as the national currency.
7. Physical Assets Backed Cryptos: There are many projects that are attempting to create #stablecoins by backing crypto-assets with physical objects. For instance, Digix gold tokens #DGX are backed by physical gold. The Tether tokens are backed by actual US Dollars (supposedly :simple_smile:) The vision behind the #NEO smart economy is to tokenize essentially everything and create a fully tokenized future economy.
A lot has changed over the past year and I can only assume that there will be even greater change and even more crypto-asset classes moving forward. I am personally very excited about the crypto-collectible space as it has created a whole new investment vertical and it has only just begun! So what do YOU think! Would you add or subtract any of the different classes I listed above? What do you think the next crypto-asset to be created is?
Loving this crypto adventure!!
