- What are the requirements for cryptocurrency
to be considered a cryptocurrency?
Is there a way of creating some sort of checklist
to determine what a cryptocurrency is?
There isn't really a canonical definition
of a cryptocurrency simply because cryptocurrency
is a marketing term and it has become a marketing term,
meaning that any currency that is based in some form
on cryptography, some form of cryptography
or uses cryptography in some way might be called
by some people a cryptocurrency.
What does that tell you about how it works?
It doesn't tell you much.
So the fact that somebody calls something a cryptocurrency
doesn't mean much unless you ask some followup questions.
So the interesting things are the checklist that you said
is a series of followup questions you can ask to see
if this is an interesting kind of cryptocurrency.
And of course that's highly subjective,
what is interesting to you, what is interesting to me.
I can tell you what my list is and it's a list
that I've tried to popularize.
So what's interesting to me is a cryptocurrency
that is truly open and truly decentralized
meaning that it differs from previous forms of currency
that we have and various other closed
and controlled blockchains and cryptocurrencies
that have been built since by being open and decentralized
so nobody has a control of the system
but it works on a basis of rules
and everyone can participate.
So I have a series of questions as a checklist.
The first question is, is it open?
What does open mean?
It means can anyone access it, can anyone participates
in the network without authorization, without vetting?
Pretty much can any computer
on the open internet simply connect to the network
and be part of it, then participate in the network.
There are new insists that of course, is it open to minors?
If has a mining algorithm, can anyone participate
as a minor without authorization and vetting?
Can anyone do a transaction without authorization,
inviting et cetera et cetera.
So open.
Is it borderless?
Does it operate across the entire world without concern
about national borders, geographic borders
and various artificial limits on its propagation?
Can you access the system from anywhere in the world,
anytime, anywhere by anyone.
So is it borderless?
Is it to neutral?
Neutral meaning that the system
does not discriminate transactions
based on source destination value or purpose.
A transaction is propagated on the system regardless
of who sent it, who they sent it to which source
and destination addresses are involved in the transaction,
how much was sent and what the purpose
which is outside of the system.
What the purpose of that transaction is.
So a neutral system will transmit transactions regardless
of source destination value or purpose.
It simply propagates transactions
just like a neutral intranet for its packets
regardless of source IP destination IP
or application that is being served
by that particular IP packet.
Is it immutable.
When you record something on this blockchain
or this cryptocurrency, can that transaction be reversed.
And of course this is not a yes or no answer.
After a certain time, does it become immutable
and how strong is that immutability?
So for example, in the case of a Bitcoin,
we can say with a fairly high degree of certainty
after six confirmations, the data in that blockchain
is immutable enough that you can put quite
a significant amount of value into it.
And you can think of immutability increasing over time.
The more confirmations you have, the harder
it is to reverse a transaction.
So after a 100 transactions, sorry, after a 100 blocks
or a 100 confirmations, the Bitcoin blockchain
is considered a beautiful enough
that you can spend the Coinbase transaction
which is the mining reward.
Maybe after a day, 144 blocks, it has a very high degree
of immutability after a month, the amount of energy
and money required to reverse the Bitcoin blockchain
is just staggering.
So immutable, that's another important criteria.
So is it open, borderless, neutral, censorship resistance,
is it immutable?
And you can add to that also is it publicly verifiable?
Meaning can anyone verify the transactions
that are happening?
Can you audit it basically as a transparent.
And you can keep adding other criteria depending
on the importance you give to these criteria.
But I think those are the most important for me
in order to determine whether a cryptocurrency
is interesting in that it is encompassing some
of the characteristics that we see in Bitcoin
that really made it different from everything
that came before.
Now, that doesn't mean that something
that doesn't fulfill these criteria isn't a cryptocurrency,
it just means that it's not interesting to me
because it doesn't represent the principles
and characteristics that made Bitcoin interesting
by being different.
So for example, if it's a controlled closed system
that only operates within one country,
I'm sure maybe that's called the cryptocurrency
by some people and maybe it's interesting to them.
It just, to me, it's incremental innovation,
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.
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