Crypto-new-asset-class
Moving beyond currencies
The first three posts (here, here) in the Crypto Canon describes blockchain by way of the Bitcoin protocol and currency was the focus. This entry, “Decrypting Crypto, from Bitcoin and Blockchain to ICOs” a video presentation given by Alex Rampell, opens the discussion is towards other assets (e.g., decentralized applications).
As a general partner at Andreessen Horowitz, Rampell describes the firm’s interest in the space — to find and invest in protocol that can be bootstrapped by network incentives (more on this later). Although the presentation doesn’t hang together in a single thread as tightly as the previous articles/video, these are the key ideas:
- Bitcoin is a store of value (not just a medium of exchange). This is contentious, but worth acknowledging.
- A ledger is a consensus on fact — a network of people agreeing on a truth. In the previous posts, this ‘fact’ was something along the lines of ‘Bob owes Alice X amount’ (i.e., a transaction). These transactions get stored on the blockchain, becoming an immutable ledger.
Facts don’t have to just be monetary transactions. They can be other things like Identity (i.e., are you a citizen of this country? can you vote?), Ownership (i.e., does this land title belong to you?) and even Certificates of Achievement (i.e., did you actually obtain a degree from here?).
Thus there are many exciting applications beyond currency and one of the central point of this talk is that cryptocurrencies are actually a new asset class.
3. Not just a new asset class, but one that enables decentralized applications. Rampell briefly gets into Ethereum and how it doesn’t share the limitations bitcoin has. Not just for storing transactions, you can store code on the Ethereum blockchain — meaning you can create any application you can think of. As we move beyond currencies, the world of possibilities open up and no other project illustrates this potential as well as Ethereum, which we explore next.
4. The final take-away, is that the rise of cryptoassets/cryptocurrencies allows protocols that want to cultivate network effects, a way around the chicken and egg problem by incentivizing one side of the platform before the other side is fully there.
This will be explored when we get to blockchain-as-platform.
