For most people Cryptocurrency is a mysterious thing. Its magic money.
To some it is a dream to others it is a nightmare.
Yet there are two increasingly large divides growing in this new space.
They are decentralised coins versus centralised coins. Then there is the gulf between coins and tokens.
These divisions are important. Bitcoin is a decentralised coin. Ripple is a centralised coin. Essentially, the difference represents two poles of a political arc. Centralisation represents the established world where power radiates from the middle and is dealt by an elite. Oligarchs, bureaucratic mandarins, aristocrats, royal families, political representative, it’s the same old system of power distribution we all hate to love.
Decentralisation is where, like the origins of the internet revolution, power is distributed across an organic and ever shifting network. Most would consider it an anarchy, in the derogatory sense and more interestingly in the political sense.
The polar difference between centralised and decentralised is an old schism, each threatens the wellbeing of the other. In history it was monarchists versus republicans, anarchists versus totalitarians, dictatorship versus democracy. Any system controlling the allocation of resources is the battlefield of politics and blockchains are where computing meets politics.
But let’s forget politics lets stick to thinking about money. So which quadrants are going to hold the long-term value?
For a start tokens are not Cryptocurrencies, they are securities. So right there you can bifurcate the universe of Crypto. When you buy a token you are buying part of an enterprise, virtual or otherwise. When you buy a crypto-coin, you buy a money.
When you buy a token you will do as well as the undertaking does and if you invest in a ‘cold fusion’ ICO (and there is one, I kid you not) you will lose your shirt. If you fund a great business via their token you will do well. Its the same game as stock picking, just wildly more risky.
When you buy a cryptocurrency you are buying money. Investing in Crypto-“currencies” is like investing in wildly volatile foreign exchange and it is therefore an exercise in judging economics and politics.
This is the ADVFN Crypto index which is an unweighted index of the following cryptos. It is made up of 1 coin of each, in a similar way to how the Dow is done and not weighted by the total value of each crypto.
You can see there is a roughly equal share of minable and non-minable cryptos in it.
You can check out the Crypto hit parade here. https://uk.advfn.com/cryptocurrency
Now the interesting thing is, when you look at the unweighted index and the naked price of Bitcoin you see this:
This tells me that for now, all Crypto, Tokens, Coins, Pos stake coins, unminable coins and tokens, are all driven by the monster brand and popularity of Bitcoin which is the basic and originsl a minable proof of work cryptocoin. None of the fancy innovations or permutations have much effect on the overall picture.
This won’t go on forever. At some point the market will bifurcate and one quadrant will win out.
I think it will be minable coins, but many think it will be non-minable coins or that tokens are the way to go.
Nobody can know but as the market develops the first investors to spot that fork in the road will make a lot more money than those that jumped on the wrong horse.
I think the anarchists of decentralised currencies have the advantage, in the same way the dot-communists slew the AOL’s and centralised highly controlled walled gardens of online and mobile. Certainly a new generation of centralised system grew up like the Apple Appstore, yet they are marked by a much more open platform structure than the totalitarian content structures of old. What is more, the decentralised anarchy of the web still drives the whole online ecosystem however much the Google/Facebook style centralisers struggle to embrace, assimilate and destroy it.
As such I’m on the look out for the next wave of cypto-anarchy that could up end the centralisers. When it comes, a gusher of billions of dollars, perhaps trillions of dollars of value will pour forth and I’ll be there grabbing my slice. That gusher is on its way, its just a matter of time.