Analogies for Cryptocurrency v0.1
The following is an attempt to make sense of the evolving cryptocurrency space as we inevitably move toward a future in which digital currencies are the norm:
Bitcoin (BTC): Digital Gold 2.0
Bitcoin, with a finite supply hard-coded into its decentralized framework and a lower inflation rate than all fiat currencies and Gold and Silver already, it is the soundest form of money humanity has ever had access to, supplanting Gold. And it is programmable, which is why it’s 2.0, because it can do what gold does as sound money, but also so much more and so much faster and with much greater reach. For just one example, everyone in the world with a cell phone has equal access to capital and store of value.
Ethereum (ETH): Digital Oil
If Bitcoin takes the crown as the native currency of the internet, then ETH, the asset that transacts on the Ethereum blockchain, is the lifeblood of the decentralized digital economy that is being built in real time. Ethereum enables the development of apps, financial services, games, etc. in a decentralized manner, making it synergistic with Bitcoin as this entire ecosystem gains adoption. Much like petroleum oil enabled exponential growth in the material world, Ether is the tool to enable growth in the decentralized digital world.
Monero (XMR): Digital (Private) Cash
As much as there will be other options for privacy with cryptocurrency, if you wanted to do the digital equivalent of handing a suitcase of cash to someone in the back of a car down a dark alleyway or if you wanted to stash your large inheritance of cash you preferred no one to ever know about, you would want to use Monero. It is an anonymous-by-default cryptocurrency, providing essentially the same services as an offshore or Swiss Bank account at a fraction of the cost and friction. It’s as good as cash under your bed, but with a much more stable and predictable inflation rate than its government-issued predecessors.
Stable Coins (USDT, USDC, DAI, GUSD): The Optional On-Ramps
Stable Coins are a version of digital currency that’s value is pegged 1:1 with the dollar. Essentially, in the form of Tether (USDT), Circle and Coinbase’s dollar coin (USDC), and Gemini’s (GUSD), etc., a company will mint one stable coin per dollar received into the system, representing people’s cash dollars digitally. Maker’s (DAI) is a decentralized, algorithmically derived stable coin that also accomplishes this feat in an impressive way, but for the scope of this piece, Stable Coins are Optional On-Ramps you can take at any time to get into the cryptocurrency revolution without concern of price volatility. They can transfer globally, instantaneously, and trade in and out with all other cryptocurrencies with ease.
Central Bank Digital Currencies (CBDCs): The Forced On-Ramps
If corporate and decentralized stable coins are optional on ramps today, then once China, USA, the EU, Japan, India, Brazil, Russia, Great Britain, and the rest of the world release their government-issued stable coins, known as Central Bank Digital Currencies (CBDCs), humans will have no choice but to be forced to use these new technologies that would be completely controlled by governments with full surveillance as a baseline and the ability to censor or restrict any person or transaction as they see fit. They are the Forced On-Ramps into the digital currency age. They solve a massive efficiency and logistical problem compared to the banking system of today, but not without the cost of bigger government and more, potentially endless inflation.
Litecoin (LTC): Digital Silver
Litecoin is a spinoff of Bitcoin that’s a little bit faster and a little bit cheaper to transact with. It shares the base code as Bitcoin so often good ideas that are implemented into Litecoin are adopted by Bitcoin, so there’s a synergistic effect with tech testing and community overspill. Currently, Litecoin is experimenting with a new privacy technology as an optional feature that has a lot of the tech enthusiasts in the space intrigued about. It’s not the most preferred coin compared to BTC and ETH, but I’m glad it exists as a backup and provides utility as a testnet for Bitcoin. Essentially, it has value like silver does to Gold.
Zcash (ZEC): Digital Poker Chips
Essentially, Zcash is a copy of bitcoin, so you can trust it like Bitcoin to a degree. Bitcoin is enormously more robust right now, but ZEC has one special opt-in privacy feature that is currently top of its class in technological privacy. But because it is opt-in, the entire network as a whole is a lot less private than the Monero network. To its benefit, it so far seems more accepted by US regulators who allow Zcash on US exchanges. Being a fan favorite of a number of tech billionaires who reference it in a positive light, one could imagine a high stakes poker tournament between billionaire buddies who opted into Zcash’s zero-knowledge proof technology to shield the press or maybe their wives from seeing their gambling habits. However, much like at a Casino where there are security cameras watching from above, it’s likely the government can employ some analysis company to figure out where the money came from and went, but it would be unlikely you’d be using Zcash if you were serious about avoiding the government. Still, if everything is auditable on these public databases (blockchains), privacy options will matter for law abiders too, even if they just want to gamble amongst friends.
Garbage Basket Graveyard: BCH, BSV, XRP
I am happy to say all the coins I’ve vehemently opposed have all died in comparison to coins I hold with high regard. Bitcoin Cash is a useless sping off, as is Bitcoin SV, they are not real Bitcoin. XRP is a private company issuing a coin and making a lot of false marketing claims. XRP is completely useless in the wake of stable coins emerging into existence and currently, Ripple, the company behind XRP, is getting sued by the SEC for fraud.
