Just because the continues to pretend there is , and tags most of them as securities, doesn’t mean that are doomed and have no future except for being labelled and treated like securities.
To the contrary, the model is a fundamental innovation of technology, and it will eventually gain its footing and respect with the regulators who haven’t yet seized the scope of the paradigm shift that encapsulate.
I’ve been thinking about and analyzing the phenomenon long enough to have acquired a significant depth in perspective [, , , , and on ]. What I’m seeing now is a significant lack of knowledge and understanding on the part of the gatekeepers of change. We could blame them for not trying hard enough, but we can also blame ourselves for not trying to better explain these changes.
Simplicity increases the chances that the general public, regulators and incumbents of all nature comprehend the need for change.
What makes the difficult to comprehend is that it is a multiple function abstract, and we are not used to seeing something that simultaneous a) has several functional properties, b) represents diversified units of value, and c) is embodied in a digital form that binds it all together. are a new beast, and if we keep wanting to fit them or classify them within the previous paradigms or lenses we have, we will fail to seize their beckoning.
So far, we have used separate artifacts to symbolize each of these functions. Then, came the that melded them together in a mush, causing our mental ability to also become mush.
For currency, we have had the dollar, yen, euro, pound, and scores of sovereign fiats.
For equity, we have share or stock units, and they are known as securities.
For financial instruments, we have derivatives, bonds, futures, options, swaps, etc. and they are typically administered by brokers, agents, custodians or exchanges.
For rewards, we have mileage points, airline miles, loyalty cards, and the likes.
For rights, we have government-issued identity cards, or share proxies that allow us to have a (voting) voice in the governance affairs of what matters to us.
Finally, we have a novelty: a singular representation of a digital asset as a uniquely transferable unit of value: the non-fungible that could represent a caricature-like version of a cat (eg ), a cartoon monster, a tank toy, or a purple sword won at a game, but could also represent a concert ticket, a collectible, or maybe something else not invented yet.
I believe that this classification covers all of the use cases for cryptotokens. Currency is used for payments, either for goods and services or for -related computer resources (eg gas). Equity represents ownership in a physical asset (eg ) or a proxy to some commodity (eg gold). Financial instruments include all of the existing (and new) financial services products that will eventually move to a purely digital format. Rewards embody what is also referred to as a “work ”, because some human or computer work has to be generated to earn these , either actively by doing something or passively by sharing something else of value (eg our data). A right could include a right to vote (eg governance related), or a right to access something (eg digital content or some actionable service). The digital asset represents what is also called in the circles as NFT (non-fungible ), and they represent natively created digital objects that live only in a purely digital form, and have no physical equivalent. Finally, there’s one more factor that can apply to any : they can be locked or unlocked, which means that their usage is tied to a time element.
A cryptotoken can be all of the above functions at once, or it can be some of them. Or, it could start as one thing, and develop into different ones, hence lies the puzzle and head scratcher that regulators and others are grappling with: how can we regulate, let alone understand this novelty concept that has many concurrent lives, when we have been used to seeing them and treating them as distinct units?
Furthermore, each can have many different permutations in how it can be created, earned, bought, sold, granted (or received), stored, or used. And the most important remaining feature is that these can be exchanged, traded or transmitted in a purely peer-to-peer fashion, without the friction of central actors.
As a chameleon symbol, the is a weapon that punches through societal, governmental, and business related constructs via a technology component that is powerful and potent. It collapses many constructs into one.
This brings us back to . It is erroneous to start with a securities framework for regulating how we want to govern the advent of . Not only is that starting point like fitting a square peg into a round hole, it’s like trying to apply something where it doesn’t belong. More importantly, it chokes the new business models that want to emerge out of these use cases.
Therefore, we need to recognize that the is a unique type of asset. For a lack of a better set of words, it is “a new asset class” that needs its own laws and . Unlike the “security” moniker that regulators want to box it in, the doesn’t always represent a personal financial interest nor an equity share of a financial stake into something else. It is a new type of proxy to our increasingly digital lives.
The needs to be given respect and it needs to be accepted as such. If the current regulators want to govern it, they will need to open their minds much wider, and one way to help them is by trying to explain it in a more friendly manner with a simple language like I’ve attempted here.
I don’t believe we have explained in a simple enough layman’s language, yet. That is largely why change makers quickly put their blinders on when they approach the topic, or they only see what they can comprehend.
I believe that regulatory headwinds are the most imminent hurdles facing , and we must work on those first, by making it easy for everyone to talk about , and to be accepting of the many applications that want to include them.
(Republished from )
Published at Sun, 28 Apr 2019 15:27:29 +0000
