Opinion: Crypto is not an asset, but a technology
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Opinion: Crypto is not an asset, but a technology
The true meaning of "Crypto" seems to have been distorted.
Navigating Web3 tides with focused insightsAuthor: JP Koning
Translation: Luffy, Foresight News
Call me a pedant, but I just don't like the term "Crypto." Back in 2011, it might have been an acceptable category when there was only one crypto—Bitcoin. But today, it's no longer a meaningful term; if anything, it leads to conceptual regression.
Take Fidelity’s chart above as a typical example, suggesting clients conservatively allocate 40% of their wealth to "stocks," 59% to "fixed income," and the remaining 1% to "Crypto."
This categorization makes no sense because, in many cases, Crypto *is* stocks; in others, Crypto *is* fixed income.
Take MKR tokens, built on the Ethereum network and ranked within the top 100 cryptocurrencies by market cap on CoinGecko. It sounds like it belongs under Crypto, right? But wait—holders of MKR have rights to MakerDAO's income.
MakerDAO is effectively an offshore bank. You get buybacks, voting rights, and residual claims on assets after creditors are paid in bankruptcy—this is equity! Yes, buying MKR economically resembles purchasing stock in a U.S. bank.
Likewise, DAI tokens are payment instruments (aka stablecoins) issued by MakerDAO on Ethereum, ranking 25th by market cap on CoinGecko. It also sounds like Crypto, doesn’t it? But besides being pegged to the dollar, DAI pays 5% interest. This firmly places it in the fixed income category—just like an insured interest-bearing account at a U.S. bank.
So what exactly is Crypto?
The term "Crypto" describes a database technology, not an asset class. Various asset classes—such as equities, bonds, options, savings accounts (or combinations thereof)—can be recorded and stored within crypto databases, just as MKR is issued on Ethereum, one of the most popular crypto databases. These crypto databases belong to the same category as Azure SQL or Oracle databases—all record assets, yet none are asset classes themselves.
Now you can see why Fidelity's suggestion that clients invest 99% in stocks + fixed income and 1% in Crypto is absurd. It’s a categorical error—akin to Fidelity advising people to hold 99% in equities + fixed income and the remaining 1% in assets stored within an Oracle database.
Telling clients to allocate 1% of their wealth to generic assets stored in an Oracle database isn’t just a category mistake—it sounds downright reckless. Oracle databases contain all kinds of wild financial instruments, including sports betting and end-date options. As for crypto databases, they’re notoriously rife with Ponzi schemes and other financial scams.
Crypto does not refer to an asset class but rather describes the database technology where assets appear. Best we can do? Let’s ditch the term altogether.
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