Cryptocurrency Use Case: Chicken or the Egg Paradox
By CryptoOneStop on ALTCOIN MAGAZINE
By CryptoOneStop on ALTCOIN MAGAZINE
Technological progress is like an ax in the hands of a pathological criminal.
Get ready for global tokenization.
The Critics
People tend to have very strong opinions about digital assets and their use cases. For example, many critics believe these assets have no intrinsic value and consequently will go to zero. Unfortunately, these critics pay little or no attention to developer activity. Developers are constantly improving and adding new features to their respective crypto projects. The cumulative effect of each iteration is a blockchain ecosystem with unique properties and characteristics.
Gold bugs often contend the superiority of precious metals is a result of their tangibility and real-world utility. However, they fail to realize the use cases materialized from their intrinsic properties. Given the properties of gold, we collectively determined it to be a reliable medium for value transfer and storage. Comparatively, I believe the same will apply to blockchain-based digital assets. Developers and the community will collectively decide on which blockchain to adopt for a particular use case.
Golden Road to Sound Money
To clearly understand how use cases led to the adoption in the digital blockchain space, let’s quickly review golds road to adoption as sound money. In the prehistoric era, humans primarily bartered as a means of value exchange. Barter typically involved individuals having surplus value (cattle, crops). The surplus-value would be directly exchanged for something deemed to have equal or greater value (clay pot, tool). Next came various attempts at creating a uniform unit of account. For instance, the Zhou Dynasty in China used small knives and spades, seashells were used in Africa, and tobacco in colonial Virginia. One of the big problems with these methods was controlling the overall circulating supply. Through discovery or overproduction, the “currency” could easily be inflated. However, these failed attempts had not been in vain. The failures helped determine the necessary properties for sound money.
The properties enable the utility.
Golds emergence as money wasn’t an accident. Before usurping the role of money, gold was culturally pervasive and geographically dispersed around the globe. Below are the reasons behind golds ascent to ubiquity:
The first metal is widely known to our species.
Found in a pure and workable state, making it easier to work with.
The first use case was ornamental in part due to its permanence.
Associated with royalty, deities, immortality, and wealth.
Golds popularity and intrinsic properties eventually cemented its role as global money.
In distinction, digital assets and their respective blockchains acquire characteristics through software development. Initially, these blockchains are developed with a use case in mind, however second layer developers have to choose a blockchain-based ecosystem to build on. During this stage, developers will have to select a blockchain-based on its unique properties. Here’s a small list of intrinsic and extrinsic attributes they may consider in the selection process:
This list is not comprehensive or complete.
Each blockchain-based ecosystem has the attributes listed above in varying degrees. Developers must do their due diligence in determining the optimal blockchain to build on. To illustrate, let’s assume a team is building an app to empower user authentication. The following considerations should be made:
scalability ~ must be able to accommodate millions of transactions
decentralized~ code must be open-source and accessible to everyone
Transaction cost ~ must cost next to nothing
regulation ~ should be acceptable in the target jurisdiction
accessibility ~ listed on multiple platforms and exchanges, mobile wallet support for ios and android
community ~ strong and robust community to help raise awareness
By selecting an ecosystem with the desired properties a developer team can leverage blockchain technology to build next generation applications.
The Future
Just as we found a use for gold after its discovery, I believe the same will happen for open-source blockchain-based protocols. Developers will create platforms on blockchains which compliment their product needs. As they build and scale, more needs are likely to arise. To solve this, I believe many protocols will become interoperable enabling cross-chain interactions. I firmly believe the next web iteration “web 3.0” will be a mesh of interactive protocols.
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