The DASH-Digital Asset Sector Hierarchy™ Taxonomy Uncovered

Do you know what you don’t know about The Digital Economy?

“Defining the Digital Economy”™ © 2018 — Lori Jo Underhill— Four Digital Asset Classes and Digital Unit

This article might begin a bit philosophical for an economic writing. Try to stay with this for a brief paragraph or two. Hopefully it will begin to make sense.

Knowledge and Objectivity in Research

Knowledge gain and knowledge transfer is an interesting endeavor. We have all heard the assertion: “Knowledge is power.”

Perhaps this is true at some level.

The reality is that understanding the level of one’s own lack of knowledge; and understanding that ideas are filtered by both pre-conceived knowledge and pre-conceived perception is infinitely much more powerful.

In a knowledge attainment endeavor, objective enlightenment allows an individual to disconnect from any pre-conceived frameworks of knowledge or understanding. The enlightenment provides an opening to approach the topic objectively, to allow an absorption of information that might form into an alternative viewpoint or perception of circumstance.

The higher the level of pre-existing knowledge, understanding, or opinion about a topic; a higher risk exists of pre-conceived notion and commitment to an investment in a particular reality or outcome. This could cloud or obfuscate possibility for enlightenment, further understanding, or the possibility of an alternative to the current perception.

That is, the more knowledgeable or invested an individual is about a topic, the more invested that individual will be in the endeavor to fit any uncovered findings into a pre-existing framework version of reality or circumstance.

However, the more sophisticated an individual becomes at the process of knowledge gain (understanding that turns into learning) the value of acknowledging what is not known becomes invaluable. Approaching a topic without pre-conceived notion, or abandoning the collective group-think, offers infinitely more possibilities for innovative insight.

Objectivity is key to uncovering possible alternatives to the collective perception in the process of discovering what isn’t known.

Understanding the Digital Economy requires this type of objective perception. It helps to approach the topic with a clean slate and without pre-conceived notions about the way things are and the way they have been.

Suggesting here that the ideas offered require some objectivity, if only for a brief moment, to allow the possibility of validity. Sometimes, a shift in perception only requires a brief moment of objectivity to allow an opening of further enlightenment.

Embarking on the journey to do this work, it was necessary to let go what was known or understood about economies, currency, finance, and “crypto”. This was realized after several failed attempts to structure The Digital Economy based in the geo-political models in existence under sovereigns. The current collective group think is that Digital Assets are a “singular asset class”, when in reality it is uncovered by this research that “cryptocurrencies, or Digital Assets” are comprised of four Digital Asset classes plus an identifier with no external measurable economic value beyond function or utility.

Uncovering these insights and offering this view required a release of knowledge about what is collectively understood and perceived about stores of value, money, and economics in conventional finance and academics. Most of us alive today transact in an ecosystem of fiat currencies controlled by geo-political sovereigns, it is difficult for many to imagine another alternative or circumstance. The perception and understanding is that it is just the way things are and the way they have always been.

However, just because things are the way they are now, doesn’t mean it is the way it has to be.

The interest here is to contribute findings and insights into the world dialogue to create clarity and understanding about Digital Assets and the instruments operating in the Digital Economy.

Credentials and Context

Lori Jo Underhill, is an independent researcher, a Digital Economy analyst, ”Digital Economist.” No sponsorship at the present time or employed by any special interest in finance other than in association with a professional consulting practice.

The academic work, the DASH–Digital Asset Sector Hierarchy (DASH) is visualized in an independent project called CoinSector.

Credentials: Bachelor of Science in Business Administration (1984) and Juris Doctor of Law (2014), educated in the United States.

Creating a Digital Asset Taxonomy

“Defining the Digital Economy” is a deep dive into the Digital Economy, now under review at an economic journal, written during a pause after 10 months of deep research into the fundamental nature of over 2500 Digital Assets.

The paper opens with the statement: “The world was flat, and then it was not.” One day the collective group-think was that the world was flat, and then someone came along with ideas and some evidence that it was not.

“The way things are today doesn’t preclude evolution to a different truth tomorrow.”

The Journey to Create a Digital Asset Fundamental Framework

Most of 2018 was spent studying the fundamental nature of over 2500 exchange traded Digital Assets operating in the Digital Economy.

The research done during 2018 uncovered a functional (taxonomy), a fundamental framework, for Digital Assets trading in markets worldwide. The effort started as a personal exploratory and educational response to the lack of regulatory clarity, and lack of available fundamental information for exchange traded Digital Assets. It took many months, and many tries to determine the proper root characteristics necessary to create a functional extensible framework.

Many taxonomies for Digital Assets have failed, as there are usually assets that fall into a “hybrid” or “other” category, producing outliers. This is an indication of an inappropriate construct, as there should never be an undefined category without attributes. The reason this happens is that the defined attributes used to determine the other categories have crossover, proving that those attributes are not a proper foundation for a functional taxonomy.

The research and subsequent findings, visualizations, and writings about the DASH proves that a proper Digital Asset taxonomy should be based on the root foundational characteristics of the asset/instrument/software, and not the technology or use case. Many of the studies, taxonomies, and evaluations published worldwide focus on a second level attribute analysis. Testing against characteristics such as technology, function, and use case as root attributes for categorization causes the taxonomy to fail for several reasons. It doesn’t take the analysis of many subjects to have outliers based on those attributes. This combined with the fact that technology, utility, and use cases will inevitably change further supports the use of different foundational attributes in the design of a Digital Asset taxonomy.

After evaluating 2500 Digital Assets, there are no outliers when the DASH fundamental construct is applied.

The process to create the DASH construct and fully test the theories took 10 months, a lot of deep thought, consideration, trial, and error. It took four months and evaluation of over 250 exchange traded assets to determine the root characteristics (attributes) to use when evaluating each Digital Asset, and another 6 months and 2,200 to test the theories and refine the definitions.

There is a distinct difference between the process to identify the proper attributes of Digital Assets to analyze and create an extensible, repeatable, and reproducible taxonomy; versus performing the analysis for regulatory purposes.


The process to evaluate these “somethings” with regard to regulatory oversight is a three-step analysis.

The key is to start with appropriate assumptions. The only way to accomplish this is to drill down to the root characteristics, and proceed from there. Regulatory definitions should be constructed using the root characteristics.

Once the definitions are determined, it will be necessary to issue directives of standards for proper compliance. This process is more effective than identifying a particular technology and subsequently regulating it through law to accomplish compliance outcomes. That process will thwart and chill further technological innovation. Definitions based at a foundational level offers the world the opportunity to agree on the Digital Asset classes, even if jurisdictions vary in their use case oversights. Agreeing on basic characteristics, classifications, characterizations, and definitions offers the world context and classifications across geo-political and digital jurisdictions.


1. The first step includes the identification of the proper foundational characteristics, defining the Digital Asset classes by testing against the root foundational attributes, evaluating the similarities and distinctions between them, and separating them by asset class. This provides the proper basis for the taxonomy.

2. The next step is to evaluate the function, use case, technology, primary purpose, economic revenue sector, or attributes that create parallels and distinctions between them. This process separates each asset within each of the asset classes. This step determines sub-asset classes or separates assets by economic sector, work already completed in the DASH construct. The outcome is demonstrated in the current implementation of the DASH that is combined with actual exchange traded market data, visualized on These attributes can also be applied to Digital Assets not traded on third party exchanges. This will assist high-level decision making to determine the proper agency that should provide oversight.

3. Finally, the evaluation of the use case, technology, and applicability under current law is done at this level. This will determine the applicable rules to evaluate each Digital Asset’s use case and function. Determinations based on issues include, but are not limited to: custody, where the Digital Assets are exchanged, and terms for any investment contract or profit generation implementation on the Digital Ledger, to name a few. These evaluations should be done at this juncture.

Syren Johnstone, in a recent article, put forth the notion that a taxonomy could have a recursive or progressive effect. See: “Johnstone, Syren. “Taxonomies of Digital Assets: Recursive or Progressive?” Stanford Journal of Blockchain Law & Policy, 5 Jan. 2019, 2:04,”. A taxonomy can be recursive if the intent is to define the subject to deliberately place the subjects to meet the standard of an existing structure or framework. That approach is a reversed process, versus a progressive approach of first scientifically determining attributes, and then evaluating where the subjects fall by applying those attributes.

The research that produced the DASH construct first identified the attributes, and then classified and identified the Digital Assets using those attributes, which ultimately determined where they fell. Pigeonholing classifications to fit into existing regulatory infrastructures, or classifying them based on the wrong characteristics, is an inappropriate and ineffective process, unless the research is deliberately being done to promote a subjective outcome. Objectivity in approach is key to create transparent common understanding and frameable context.

Where We Are Now

Johnstone also suggests in the same article that there are potential risks of defining Digital Assets too soon.

In a contrarian view, the benefits to proceed and create formal legal definitions and context for Digital Assets, far outweigh the current risks.

Like Darwin’s theory of evolution…if a caveman identified what he observed to that point, there might be only two or three generational progressions. Just because we don’t know what the future will bring, doesn’t create a useful or solid argument to wait until we actually know. We will never know. As we evolve as a species, so will finance and technology. Creating context now is useful to open the opportunity for further evolution. Lack of definition and context creates fear, uncertainty, and thwarts progress.

It may not be perfect, and it may be nascent, but it is what it is.

The October 2018 UK CryptoAsset Task force report identifies three Digital Asset classes. Unfortunately, these three asset classes are based on second level functional and technological assumptions.

Regulatory language, classifications, and definitions of Digital Assets should be based on root foundational characteristics offered by the DASH construct. The construct offers extensible applicable attributes similar to assets already operating, functioning, and regulated in the world’s economy. These attributes will stand the test of time. Use cases and technologies inevitably change.

Once definitions are agreed upon, necessary directives can be issued for compliance around functions and actions. This is a more effective process than identifying, “legalizing”, standardizing, or regulating a particular technology that will accomplish desired compliance outcomes. Any determination to regulate a particular technology thwarts further technological innovation.

A January 9, 2019 EU — ESMA Crypto-Asset advisory report Annex — Legal qualification of crypto-assets — survey to NCAs evaluated only 6 subjects, calling for the need to distinguish between Digital Assets. See: “”. Regarding the ESMA Legal Qualification of Crypto-Assets Annex Survey Report: Tucked away in one sentence in the Annex 1 is the partial sentence that states: “…there may be a need to distinguish between the different types of crypto-assets.” The research of over 2500 Digital Assets has accomplished an extensible, reproducible, and reliable taxonomy (DASH) that accomplishes just that…6 subjects is not appropriate to make any determination that will stand the test of time.

A visualization of the DASH — Digital Asset Sector Hierarchy is here: The UMI-DASH is the combining of the DASH Digital Asset fundamental framework, with aggregated Digital Asset Market Data described here:

After the launch of the visualization and UMI market indices project, “Defining the Digital Economy” was written. The work identifies and defines four Digital Asset classes and one identifier with no economic value. Please see the graphic for the basic structure.

The DASH (Digital Asset Sector Hierarchy) construct offers an integrative approach to defining Digital Assets. The construct is the Digital Asset version of the GICS® (Global Industry Classification Standard) published by Standard and Poors® and Morgan Stanley® in 1999 to classify and categorize industries for equities and financial services products.

Existing regulations in developed geo-political sovereigns largely already cover these assets. The definitions identified out of the work offers coherent regulatory guidance supporting a seamless integration of these four Digital Asset classes worldwide. Clarifying opinions and directives for individual cases might be necessary from each individual regulatory body; however, this construct offers broad context, clarity, and definition.

All of this is quite useful for “Defining the Digital Economy”™ © 2018. Coming Soon.

For more information visit LJU and Associates to learn more about the DASH — Digital Asset Sector Hierarchy™ methodologies and related content.

Visit for a visualization of the DASH — Digital Asset Sector Hierarchy™ construct.

Lori Jo Underhill B.S., J.D. is a Digital Economy Analyst, “Digital Economist”, Bachelor of Science in Business Administration from Arizona State University in Tempe, Arizona, USA, and Juris Doctor from Southwestern Law School in Los Angeles, California, USA. She currently works as an Executive Consultant with over 30 years’ experience in hardware and software technology and media.