Blockchain has somehow been wrapped up in the umbrella that is cryptocurrency. Of the 2,000+ cryptocurrencies that are in the market, a vast majority of these are not intended to be utilized as currency. Instead, many of these cryptocurrencies are truly just blockchain platforms that are meant to have other blockchain projects built on top of them.
I would like to pose the following question: Are smart contracts currency? I personally don’t think so, but based on definitions they could be. According to Dictionary.com, currency is something that is used as a medium of exchange (Dictionary.com). Investopedia states that smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code (Investopedia). Smart contracts are used as a medium of exchange between platforms, thus the argument could be posed that they are indeed currency. However, if you observe the platforms that produce these smart contracts, they do not claim to be currency.
Let’s examine Ethereum, a cryptocurrency that creates smart contracts. On their website they claim to be an “open-source platform for decentralized applications. On Ethereum, you can write code that controls digital value, runs exactly as programmed, and is accessible anywhere in the world.” Essentially, it is a platform where transactions can occur; therefore, I would argue that it is not a currency. For example, you would not say that Facebook (FB) is a currency. FB meets the descriptions above for a currency because the platform is used as a medium of exchange, but FB itself is not currency (although it is trying to create its own currency, Libra). However, you can purchase FB stock as an investment vehicle. I would consider Ethereum to be in this category as well, as an investment vehicle as opposed to a currency.
There are multiple blockchain projects like Ethereum (EOS, Tron, and Waves just to name a few) that are listed on exchanges and can be purchased and sold today. I would argue that these blockchain projects are not intended to be currencies and are instead platforms. These projects are in a unique position because they can be listed on exchanges; therefore, giving every day consumers the ability to invest in their projects. This is historically unheard of!
To put this in perspective, imagine if you had a startup and tried to have an IPO in the regular stock market so that people besides angel and institutional investors could get involved, before having a working product. It would basically be impossible. However, if you are able to create a blockchain project and label it as a cryptocurrency which would then give you the chance to be able to raise millions quickly, you would probably try to do that. That’s exactly what multiple companies did in late 2017 and early 2018.
I want to challenge the cryptocurrency and blockchain communities to take a deeper dive into this conversation and figure out a different way to describe cryptocurrency and blockchain projects. I believe there should be more than one blanket way to describe these projects other than call them all “cryptocurrencies”. What do you suggest?