When Traditional Finance and Cryptocurrency Collide: Why Single Token Models Can’t Succeed at Everything.

Introduction

For long, cryptocurrencies have existed in their own silo, far removed from the world of traditional finance. It ran by its own rules and economic models. Crypto investors in most parts have had limited exposure to traditional finance and the instruments it has. Now, however, the two worlds are gradually colliding; which means that the economic concepts of traditional finance are becoming increasingly applicable to crypto as well. Therefore, it is very important for crypto investors to understand the underlying concepts of traditional finance and how they translate to crypto.

This article is a study into the same, by exploring some key characteristics that define some of the traditional financial instruments and what they mean in crypto; why most crypto networks cannot succeed at all the challenges at the same time; and why one particular network; VeChainThor, has the best answer to the puzzle.

Part 1 A: The Medium of Exchange:

A fallacy that I am increasingly seeing in the cryptosphere is the comparison between fiat money and cryptocurrency. Crypto enthusiasts are quick to point out the seemingly unlimited supply of Fiat (As opposed to the fixed/ deflationary supply of most cryptocurrencies), its inflation, the very low yields one gets from Fiat savings deposits etc. Sadly, these remarks show a very limited…