Which of the Top 25 Cryptocurrencies is most unique?
By Alan Hibbard on The Capital
Let’s apply “uniqueness” to the problem they’re trying to solve.
For reference, here’s a snapshot of the top 25 cryptocurrencies (by market cap), on Friday, June 12, 2020:
And here’s a list of the major problems that each is trying to solve (or, somewhat equivalently, the niche they play in):
Money
1. Bitcoin
Currency
5. Bitcoin Cash
6. Bitcoin SV
7. Litecoin
Privacy
16. Monero
22. Dash
Stable Coin
3. Tether
21. USD Coin
Smart Contracts
2. Ethereum
9. EOS
10. Cardano
11. Tezos
17. Tron
19. Neo
20. Ethereum Classic
24. Maker
Cross-Asset Liquidity Token
4. XRP
12. Crypto.com Coin
13. Stellar
Exchange Token
8. Binance Coin
15. Unus Sed Leo
18. Huobi Token
High-Speed Data Bridge
14. Chainlink
23. IOTA
25. Cosmos
So which coin is “most unique in the problem they’re trying to solve?” Well, there are two ways to interpret this:
(1) Which coin is attempting to solve a problem that no other coins are attempting to solve? The answer to that is Bitcoin because it’s the only coin that is trying to be money. [Note that any attempts to make money “faster” or more scalable are actually attempts to make it currency, which is a different use case. To understand the difference between Money and Currency, please continue reading.]
(2) Which coin is attempting to solve its niche’s problem in a way that’s significantly different than its competitors? The answer to that is highly debatable, but I think the last category I listed contains the most differentiated members: High-Speed Data Bridge.
Consider the problem of taking the temperature in a given place at a given time, and then pushing that data into a smart contract which then does something exciting. Here is a simplified explanation of how 3 major coins handle that same task:
- Chainlink uses an Oracle (smart contract) to vote on real-world temperature, which then becomes a data point for use in other smart contracts.
- IOTA uses a thermometer that already is connected to the internet, and simply “reads” its temperature and pushes that information (via its Tangle) to the entity that requests it.
- Cosmos uses a blockchain-to-blockchain “bridge” (Hub-and-Zone model) and accesses the temperature that’s already stored on a different (trusted) blockchain elsewhere on its “network of blockchains,” and pushes the data to the entity that requests it.
These 3 approaches are vastly different from one another, and of course, all three options can co-exist in the future (along with many others!).
Let’s return to the original question: Which of the top 25 cryptocurrencies is most unique in the problem it’s trying to solve?
I would say, somewhat surprisingly (but very importantly): Bitcoin.
Many users, developers, technologists, futurists, and “experts” of all different industries ridicule Bitcoin for being slow, inefficient, expensive, and outdated.
I would argue that these “experts” in their respective fields are missing what Bitcoin is: money.
Money vs. Currency
Money, by definition, is a long-term store of value. To be a long-term store of value, money must not be tied to a particular entity (country, government, corporation, university, etc.), because when those entities disappear, so does the value of their currency. Money must also be difficult to create and difficult to counterfeit. These properties, respectively, are Decentralized and Secure.
Currency, on the other hand, is a medium of exchange. To be a medium of exchange, currency must be fast to use (i.e. Scalable) and difficult to counterfeit (Secure). The tradeoff for these properties is that currencies are location-specific, which means they’re tied to a particular location or institution (Centralized).
This is the tradeoff of typical money (Secure and Decentralized, yet slow) and currency (Fast and Secure, yet centralized) throughout history:
The same tradeoff applies to cryptocurrencies.
And while cryptocurrencies can have additional (non-monetary) properties, such as smart contracts, the trilemma still applies. [Consider that gold and silver also have non-monetary properties, and you’ll see what I mean.]
Here’s the same triangle of the Top 25 cryptocurrencies:
Of course, this is an approximation, and no two coins have exactly the same tradeoffs (and, again, they also have non-monetary properties that don’t appear in this diagram), but this is a very helpful framework for understanding what certain coin are (and what they aren’t), and therefore which are unique.
In the final analysis, I’ll say this:
Any attempts to make Bitcoin faster or “more scalable” — e.g. BCH, BSV, LTC — are just an attempt to make a currency that is actually WAY TO SLOW compared to other currencies (hundreds of them).
If you want to “improve” Bitcoin, for example, you have to make a better money, which actually means it has to be Slower so that it can be more Secure and more Decentralized. As far as I’m aware, there’s no coin or project that’s attempting to do that, which makes Bitcoin as unique as it gets.
Thanks for reading!
You can find me on Twitter at AlanHibbard. I tweet about everything.
You can find me on YouTube at Somewhat Scholarly.
