With the introduction of Bitcoin, blockchain technology was introduced as a medium to disintermediate money.
As the ecosystem began to gain recognition, few understood blockchain’s true value proposition: the disintermediation of trust.
Trust is a primitive that encompasses all of human coordination, meaning, it encompasses every industry and economic activity there is. Vitalik and his team implemented a crucial component over blockchain technology with the introduction of Ethereum: Smart contracts.
Smart contracts are nothing but code that enable the creation and execution of functions requiring trust, without trust: From issuing securities and conducting governance to facilitating lending/borrowing and managing supply chains.
Tokens went from being limited:
- To the function of money (currency tokens),
- To the function of utility (utility tokens),
- To the function of ownership (security tokens).
We’re still witnessing this new asset-class mature.
Tokens today come with various characteristics and perform various functions, which is why most “alt-currencies” (as the ignorant call it) are neither alternative to any other currency, nor are they currencies to begin with.
Food for thought: Calling any token that isn’t Bitcoin an alt-coin is like calling any stock that isn’t Apple an alt-stock.