Synopsis: ‘Cryptocurrency’ is the most commonly-used collective term for the technology. Unfortunately, it is also a terrible misnomer, responsible for a great deal of confusion. This article explains crypto assets and why most people (who should know better) continue to get it wrong.
The Trouble With Calling It “Cryptocurrency”
“Cryptocurrency” is the most commonly-used collective term for the broader class of cryptographic assets. Unfortunately, it is also a terrible misnomer, responsible for a great deal of confusion. Crypto assets are difficult enough to understand already, which makes any muddying of the waters with poor nomenclature all the worse.
Even those who should know better (including me) slip back into calling them cryptocurrencies from time to time. But it is crucial to understand the following point:
Not all crypto assets are meant to act as currencies.
The word “cryptocurrency” has stuck in the collective public consciousness because of Bitcoin. Bitcoin was the first crypto asset, and (as of the time of writing) still the largest and best-known. Bitcoin’s original mission was to be a peer-to-peer electronic payment system, utilizing cryptography. In other words, a digital currency. It wasn’t long before people merged “cryptography” together with “currency” to form the catchy-sounding “cryptocurrency”.
People know that dollars, euros and other government-issued currencies all essentially operate the same way. They also understand that Bitcoin is an alternative currency. But then comes the erroneous leap in logic – people mistakenly assumed that all the new crypto assets were pursuing the same mission as Bitcoin. As a result, the term “cryptocurrency” is frequently used to refer to the technology as a whole, and thus betraying a lack of understanding; not all crypto assets are designed to facilitate payments.
Different cryptos have highly varied use cases, far beyond currency. Crypto value can lie in many different places. “Cryptocurrency” still has a meaning – albeit a narrower one than that which has entered into common parlance.
All ducks are birds, but not all birds are ducks. Similarly, all cryptocurrencies are crypto assets, but not all crypto assets are cryptocurrency.
Crypto Assets – A Better Name?
Chris Burniske and Jack Tatar prefer the term crypto assets. In their recent book:
“The native assets historically have been called cryptocurrencies or altcoins, but we prefer the term crypto assets… The terms cryptocurrencies and altcoins convey only a fraction of the innovation that is occuring in the cryptoasset economy.” – Cryptoassets: The Innovative Investor’s Guide To Bitcoin & Beyond
Even so, people will still continue to call it ‘cryptocurrency’ in order to help beginners build their understanding using a concept which is more readily relatable.
Imagine that a time-traveler arrived from the year 1955 to the present day, and you were tasked with explaining the Internet to this person who had absolutely no concept of it. How would you teach them? Well, it wouldn’t be a good idea to throw them in the deep end. You might start by explaining email. It would be relatively straightforward for our 1955 denizen to come to grips with the usefulness of instant electronic letters, which could be sent to anyone in the world for free. You could call a personal computer an “electronic mailbox” to build their initial understanding. Then, once the groundwork was laid, you could start to introduce all the other things the Internet could do, like videos, online shopping and social media.
The problems inherent in centrally-controlled money are the easiest to understand. Once that groundwork has been laid, people are better-equipped to more confidently extend their understanding beyond this, and delve into what else crypto can do.
A rose is a rose by any other name. I personally don’t prefer “crypto assets”, or “cryptocurrencies”.
I sidestep the debate and call it by what both terms have in common: “Crypto”. And this is why it’s in the title of my book.