What’s a Pseudo Cryptocurrency?
Blog Article Published: 11/25/2019
By Kurt Seifried, Chief Blockchain Officer, CSA
You may not have yet seen the term “pseudo cryptocurrency,” in fact it (as of 2019-08-22) it only shows up 2030 Google search results and a quarter million without the quotes. So if nobody is using this term, why does it matter?
Currently, we have a number of established cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Zcash, Mondero and so on. They tend to share two major characteristics:
- They are decentralized, meaning no single central authority controls them entirely
- Secondly, they can be used to represent value, with varying degrees of stability, or in the case of Bitcoin: buckle up!
The term pseudo cryptocurrency is not completely established yet but appears to be in use for two main reasons. You want to talk about a cryptocurrency that isn’t decentralized enough and is part of a scammy initial coin offering. Or you want to talk about something that has many of the properties of the established cryptocurrencies but isn’t a currency.
The first case isn’t too interesting, there are many new cryptocurrency projects that are not decentralized or “pure” enough, and to be clear there is a place for these.
The second case is much more interesting, like most new technologies we started with a single ambitious use case (“replace all the banks! 2EZ!”) that has morphed and grown to other use cases (e.g. inventory tracking and food safety) and we’re even starting to see hybrid projects. Measuring and tracking value is a core activity for many businesses and projects. Still, you probably don’t want to actually be a currency as this means you’ll have to deal with the SEC (in America) or their local counterpart, and if you’re really unlucky, you may end up in front of a Senate hearing getting grilled on just what exactly it is you’re planning to do.
Many systems that store and distribute information (privately and publicly) can also allow you to conduct transactions with it. For example, a résumé or CV cannot be spent to buy a candy bar, but a good résumé or CV can definitely help you get a better job so you can buy more candy bars. You can’t “spend” your résumé, but you can increase the value inherent in your résumé through training, experience, certifications and so on that can then be used to get a pay raise or a better job. Measuring that value is where the pseudo cryptocurrency comes in. Allowing the market to abstract the value into a standard form makes it much easier to examine and compare résumés. For people using the system, they can listen to what the market values and get certifications that actually provide them with more value.