The crypto market is currently home to thousands of new currencies, however, the legitimacy of these remains uncertain. Prominent Bitcoin advocate, Andreas M. Antonopoulos shared a video detailing about identifying a cryptocurrency.
‘Cryptocurrency Is A Marketing Term’
The cryptocurrency industry has witnessed the birth of several new coins. Bitcoin, the first cryptocurrency to be dropped into the market. Almost 12 years in the financial world, Bitcoin still remains on the top. However, most of the other cryptocurrencies enter the market claiming to fulfill the shortcomings of Bitcoin. While some claim to offer faster transactions and a few others like Monero offers better privacy. The list goes on as almost everyone in the field has been eyeing the creation of a better Bitcoin.
Bitcoin evangelist, Andreas Antonopoulos published a video on his YouTube channel Bitcoin Q&A, titled ‘What Makes a Currency a Cryptocurrency?’ In this video, Antonopoulos pointed out that there isn’t a statutory definition of the question “What is a cryptocurrency?”
Cryptocurrency has evolved into a marketing term which suggests that any currency based on cryptography might be called cryptocurrency by certain individuals. However, this barely gives out any information about the whereabouts of the cryptocurrency and even fails to recognize if the cryptocurrency is interesting.
Andreas Antonopoulos’ Checklist To Identify A Cryptocurrency
To overcome the hassles of identifying the ‘interesting factor’ of a cryptocurrency, Antonopoulos has formulated a checklist. This checklist is a list that the Bitcoin educator has also reportedly tried to popularize.
1. Cryptocurrencies Are Decentralized
Decentralization is one of the most common terms you would come across if you have been a part of the crypto community. The reason behind the creation of the first cryptocurrency was to escape centralized blockades. Antonopoulos in his list pointed out that a cryptocurrency should be accessible to anyone without the need for authorization or vetting.
“Can any computer on the open internet simply connect to the network and be part of it and participate in the network?”
Basically anyone, anywhere can own cryptocurrencies and send them to anyone without any third party or intermediary.
2. They Are Borderless
Being borderless has been one of the factors that any cryptocurrency should boast of. From small scale to large scale cross border payments cost an exorbitant amount of money, due to exchange rates and exchange intermediaries.
A system that could be accessed from any part of the world by anyone at any given point of time is what makes a cryptocurrency truly borderless, Antonopoulos suggests.
3. They Are Neutral- No Bias!
A system that does not discriminate transactions based on the source-destination, value, or even its purpose is considered to be neutral in nature. Any system that would carry out a transaction without taking into consideration the information pertaining to the source is classified as a cryptocurrency.
For owning a cryptocurrency you don’t need a particular origin, color, caste etc. the source is always a public key!
4. They Are Immutable- Truth Prevails!
The magnitude of the immutability of the currency is also a part of the Bitcoin advocate’s checklist. Using Bitcoin as an example, Antonopoulos suggested that the immutability of Bitcoin was fairly high. Citing the fact that the data in the Bitcoin blockchain becomes immutable after six confirmations. As the number of confirmation keeps increasing, it would be harder to reverse a transaction, he added.
Once confirmed, data on public blockchain cannot be modified.
5. Publicly Verifiable
The last criterion on the list is if the currency is publicly verifiable? This would focus on the auditing of a transaction or the network’s transparency. Publicly accessible ledger is at the core of every cryptocurrency providing the much needed transparency and enabling tracking to transactions.
In a public blockchain like Bitcoin any one read/write but no one can modify anything in this ledger hence it acts as a single source of truth for all the parties in transaction.
Bitcoin Is The Standard Benchmark
Bitcoin is undoubtedly considered the standard for all cryptocurrencies and Antonopoulos revealed his inclination towards the coin as he considers it different from the rest. However, Antonopoulos suggested that coins that do not tick off every category on this list shouldn’t be stripped off its label of being a cryptocurrency as a few others might consider them interesting. Despite this, the Bitcoin advocate suggested that coins that do not fulfill these criteria are more of an “incremental innovation.”
Elaborating on a closed and controlled system he said,
“To me, it’s more like a database and not particularly interesting in its technology and certainly not very interesting in its political and social implications.”
Every industry has its own share of exploiters and the cryptocurrency industry has them in abundance. The crypto market consists of 5,000 altcoins and most of them are fake. Antonopoulos’s checklist could be used as your own in order to steer clear of fake and scammy cryptocurrencies.
Let us know what you think makes a cryptocurrency?