Clearly, the cryptocurrency space continues to change and move forward. This is something that can be seen in a very easy way and that Timothy Enneking, the founder of Digital Capital Management, LLC (DCM), says.
The Crypto Space Continues to Change
Back in time, Bitcoin (BTC) was the only virtual currency operating in the market, and it was much more simple than now. After the bull market experienced by the digital space in 2017 things changed a lot. It is possible to see the expansion of Initial Coin Offerings(ICOs), and the surge of new digital assets other than Bitcoin.
At the same time, Enneking says that people started to pay close attention to blockchain technology and the technology behind digital assets rather than the cryptocurrency itself. During 2017, enthusiasts developed different taxonomies to better organize the diversified cryptocurrency space.
Enneking now believes that the space has split into three different spaces that create a trichotomy and where the word “crypto” does not apply to all of them. About it he mentioned:
“I label these three spaces “trading tokens,” “blockchain and “asset-back tokens.” Except for the first, I realized that there’s nothing even vaguely innovative about the names. The most important takeaway is probably that the latter two (and certainly the last one) have nothing to do with what most people think of as “crypto.””
The first category that he mentioned, “trading token”, is the most similar category to what people usually call “crypto.” He also says that the word “currency” is also not as good as token to describe these assets. For him, tokens are an information packet that is optimized for transfers between computers.
In general, these tokens rely on consensus algorithms based on blockchain technology or similar protocols. Nonetheless, most of the new projects do not rely on trading tokens. That means that there is not an independent driver of price information for their token, Now, these tokens depend on the advantages of the trust and reliability of the blockchain technology behind them.
Enneking says that the investments in these companies must be made in the early stages and not in the form of trading tokens. This will be changing the way in which companies plan their investments and how they receive their returns.
The DLT and blockchain space is separated from the token space. And he shows that “crypto” does not even apply to this second space. The third space is the one related to asset-backed tokens that represent another form of securitization. Thus, it has no inherent relationship to “crypto” per se, according to Enneking.
Trading tokens will eventually reach the trillion mark in the future. And indeed, back in 2017, the cryptocurrency market was close to that level in terms of market capitalization. For Enneking, this mark is going to be reached as soon as the next year or so.
He went on saying that the blockchain space could grow even further and reach double digits trillions in value. As he shows, it is just necessary to see the value of logistics chains being on the blockchain. One of hem just reaches half of that value.
Asset-backed tokens could end up reaching three digits trillions if a large part of the assets is tokenized. Real estate alone seems to be destined for blockchain, already has that value.
Nonetheless, he explains that there is a flaw in this analysis since it is possible to be double counting some of these assets two times in different categories. However, it does not matter how the taxonomy is developed. Crypto has given rise to a technology that will be much bigger and larger than virtual currencies.