Prominent Blockchain Consultant: Crypto is Not A Singular Asset Class


Jill Carlson, a blockchain for business consultant and the co-founder of the Open Money Initiative, recently published a blog post in which she noted that crypto is “not an asset class.” Carlson, a Harvard and University of Oxford graduate, explained that Bitcoin (BTC), the flagship cryptocurrency, is often associated with the larger digital currency market.

Bitcoin Should Not Be “Bundled” With Other Cryptos

Currently, there are around 2,000 different cryptocurrency projects that are based on various types of consensus protocols and have varied use cases. As the first cryptocurrency, Bitcoin often receives negative coverage from mainstream media outlets as it gets associated with a large number of scams in the crypto space, Carlson mentioned in her latest blog post.

Moreover, Carlson argues it is incorrect to refer to crypto as an asset class because it now consists of several different asset classes. As crypto enthusiasts know, the crypto market has grown to include utility tokens, stablecoins, tokenized securities, smart contract-enabled token issuing platforms for building decentralized applications (dApps), among others.

Bitcoin Is A Monetary System, No Need For Constant Innovation

In her blog, Carlson also shared a tweet from prominent Bitcoin developer and educator, Jimmy Song who clarified that the long-term success of the world's most dominant cryptocurrency does not depend on constant innovation. Song, a computer science graduate from the University of Michigan, believes bitcoin is not a “tech play.” He stated that we must focus on improving the stability and security of the Bitcoin protocol as it supports a peer-to-peer (P2P) electronic money system.

By referring to crypto as a “singular” asset class, Carlson thinks we're doing the nascent industry around digital currencies a “disservice.” New investors, entrepreneurs, and large financial institutions that are planning to enter the crypto space may get confused if we continue to refer crypto as a “asset class”, Carlson wrote.

Fundamentally Incorrect To Apply Same Analysis To All Cryptoassets

She added that “applying the same fundamental analysis” to the world's gold bullion markets, the “pre-IPO valuation of Dropbox circa 2008”, and the “sanctioned Venezuelan debt markets” would not make sense as they're fundamentally different types of financial instruments.

Similarly, the crypto markets now comprise of a multitude of emerging asset classes that need to be treated differently from each other. Most of these new forms of assets may not yet be considered a “flight to safety”, according to Carlson. She also acknowledged in her blog that the crypto space has evolved considerably over the past five or six years. It has matured to the point where we may refer to crypto as an asset. However, we must carefully define how we want classify cryptos, Carlson noted.

She recommended maybe not “referring to crypto as an asset class at all”, as it's just the “medium by which the asset is created and delivered.” Normally, people don't refer to the foreign exchange market as a group of “SWIFT assets”, Carlson pointed out. SWIFT is the bank-to-bank messaging system used in cross-border transactions. Because SWIFT is just a part of the medium that is used to transfer money, we do not refer to fiat currencies as “SWIFT currencies.”

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