Emergence of cryptocurrencies as another avenue for investment class gathered steam with the launch of Bitcoin in 2009. However, cryptocurrencies are one of the several parts available for investment under the crypto assets class. Others include non-fungible tokens (NFTs), fungible tokens, stable coins, altcoins, etc.
However, cryptocurrencies have found preference over others due to its early introduction as well as adoption by individual investors. Blockchain, on the other hand, construed to be crypto assets but it isn’t.
Of course, there’s no value attached to Blockchain, but benefits accrue to miners as a reward for mining a Bitcoin. But for now, let us focus on crypto assets and understand its advantage as well as distinction with the Blockchain.
Crypto assets resolve the double-spending problem with unencrypted digital assets such digital money. It is easy to falsify transactions or records related to digital money because it is easily replicable and there is no way to chart out its history of origin.
With crypto assets, however, the existence of a distributed ledger that is updated and verified through networkwide consensus solves this problem. The provenance of each crypto asset can be tracked by all.
Thus, each crypto asset has the attributes of physical property with an immutable chain of title. It is possessable, scarce, and has a clear record of prior ownership.
Understanding the value proposition of Blockchain Technology separate from crypto assets
If you wonder whether there is a value proposition of Blockchain separate from crypto assets, the short answer is no. Early narratives about crypto assets and blockchain segregated the two constructs—Bitcoin was the application, but the real value lay in blockchain technology.
Such narratives are, however, mistaken. Without crypto assets, blockchain technology is merely a shared database that cannot record transactions.
Crypto assets are the mechanism for recording and securing transactions and transmitting value on the blockchain network. Without crypto assets it is impossible to create smart contracts, which form the basis of decentralised applications, or maintain a chain of provenance for digital assets.
You need to login in order to Like
