The Single Biggest Misconception About Cryptocurrency is….

I was reading a CNBC article titled “Most cryptocurrencies will crash to zero, Goldman Sachs says”. I agree with the part where Goldman Sachs head of Research Steve Strongin compares the current market to the “internet bubble of the late 1990s.” That’s what markets do. They swing from bubble to crash to bubble again. The word I use to describe that phenomena is capitalism. The Fed tries to dampen the swings, but, they’re not too good at that.

But what I was puzzled by was the Steve’s statement that “Contrary to what one would expect in a rational market, new currencies don’t seem to reduce the value of old currencies; they all seem to move as a single asset class.” Surprisingly, Steve believes in, what I believe to be, the biggest misconception in Crypto. And that’s that all cryptocurrencies are “currencies”. Now, some are currencies, including Bitcoin, Zcash, Dash, and others. But most are not.

I’ll use electricity to give a simple analogy. Soon after the invention of electricity, a restaurant decided to put in electricity. And then a clothing store put in electricity. And then a book store put in electricity. And yo you know what many people called those companies that were the first to utilize the new technology known as electricity? They called them “electric companies”, because they used electricity.

It’s the same thing with cryptocurrency. There’s a series of new technologies that effectively enables companies to tokenize what were previously called “frequent flier miles” or other types of customer engagement tools or rewards. Customers can buy or earn these rewards and then use them to get goods or services from the companies distributing them. Now we don’t call companies that issue frequent flier miles “frequent flier miles companies”. We call them airlines, and recognize that they have frequent flier miles as a feature.

That’s what most cyrptocurrency/utility tokens are. Every day, more and more companies are tokenizing parts of their customer interaction. But that doesn’t mean their currencies. And it certainly doesn’t mean that the value of other companies that are tokenized should go down. That’s just a statement made out of a lack of understanding of whats going on. Now I don’t think less of Steve for his lack of understanding of cryptocurrency. Most people don’t understand Crypto yet. It’s dense and confusing and takes real work to understand. But I am puzzled by people who go on CNBC and talk about Crypto, when they obviously don’t really understand Crypto.

So I’ll tell Steve the same thing I tell everyone who asks how they can learn about Crypto. Go to Medium, and follow the Top 50 Crypto Bloggers there. Every day you’ll get an email from Medium filled with Crypto knowledge written by some of those 50 bloggers. If you read their posts, and do the work to understand what they’re saying, pretty soon, you’ll be the first kid on your block to understand Crypto. It’s hard work. But it has a VERY high ROI!!!

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The Single Biggest Misconception About Cryptocurrency is…. was originally published in CryptoOracle on Medium, where people are continuing the conversation by highlighting and responding to this story.