Why crypto assets are not an “industry”[Opinion]| coindesk JAPAN | Coindesk Japan

New concepts complicate the discussion. Not because it uses difficult terms, but because the terminology that has been around for years is not enough, and the right terminology does not yet exist. One example is a term I know to be imprecise, but I use it many times a day.

However, it is not about “crypto (crypto assets)”.

People who talk about cryptoassets often use the term “industry” to include projects that develop, issue tokens, or facilitate transactions on the blockchain. But is the term “industry” really the right word? I looked up some definitions.

• Investopedia in financial media: a group of companies considered related based on their primary business activity
• Collins in Dictionary: All persons and activities involved in the manufacture of a particular product or the provision of a particular service
• Vocabulary.com, a dictionary site: a group of manufacturers and companies that make specific products and services

can you somehow understand? According to the most common definition, an industry consists of companies that have a common purpose and engage in similar activities.

As far as I have seen the major crypto-asset related news sites recently, crypto-asset exchanges, NFT platforms, distributed lending operators, game development companies, new blockchains, custody services, data storage, asset management companies, etc. I saw the article. What business do they have in common?

Is technology the focus?

It can be said to be a promotion of blockchain technology. But should industry taxonomies focus on technology? Or activity?

For example, consider the healthcare industry. The common denominator is people’s health, and we use all kinds of technology to do that. In the insurance industry, the common purpose is to provide insurance to various organizations. An industry united by the desire to promote new technology rather than needs may not be called an industry.

In other words, does technology matter, or does it matter what you can do with it? Many would argue that technology is extremely important. You’re right, but no technology can impact the world without a use case.

The turmoil started in the tech industry. The term “tech industry” first appeared to describe a group of companies that develop computers and software, including IMB, Oracle and Microsoft, and later expanded to include robot development, headset development, payments, video conferencing and even mattress retailers. and expanded.

Judging from this pattern, it may be a matter of maturity. The “tech industry” was fine when its focus was on technology development rather than application. Because the use was still in its infancy. But a classification was needed, and other industries also wanted a “cool” label.

The cryptocurrency industry is in a similar situation. In the early days, the development of cryptography and blockchain technology was prioritized. But now the emphasis is on use cases as well, creating confusion in the taxonomy. But the trends have already been determined and the labels have been happily used.

Why is classification important

Consider why classification is more important than many people realize. The industry label is important because of investment expertise and indices.

A good venture fund can help one project find synergies with projects in different markets. And in the same way, good crypto investors can also uplift entire industries through connections and collective learning.

Just as the market is flooded with tech ETFs (exchange-traded funds) that include various companies, we will soon see crypto ETFs covering a wide range of industries.

And as the field matures, the labels blur and disappear. That is, when the substance of the project became more important than the mechanics, and when blockchain-based payment companies were included in financial services ETFs, Meta (formerly Facebook) and Nvidia (Nvidia) When tokenized stocks come to underpin Metaverse ETFs alongside native tokens like Decentraland (MANA) and The Sandbox (SAND).

Labels are also very important for regulation. Politicians seem to understand that “technology” cannot be regulated, but they can prevent tech companies from misusing data and becoming too big. Many still call for regulation of “crypto assets.” As if it were a single activity, not understanding that it has become too pervasive to be comprehensively regulated.

But the hope for terminology is also faint. The fact that we are not lumped together within the “tech industry” but referred to separately as the “crypto asset industry” confirms that what we are working on is truly innovative and unique. , also shows that the tech industry is finally evolving. The same thing will eventually happen to crypto assets.

terminology evolution

Terminology should evolve as technology evolves. At least it may be time to stop using the term “industry” when talking about technology and crypto. “Industry” evokes the image of manufacturing with real equipment.

What term should we use? “Sector” is too broad. Currently, it is often used for economic divisions such as “service sector” and “public sector”.

Personally, I think “ecosystem” is good. It sounds community driven, less technology specific, and more flexible about the ultimate goal. Inclusive and collaborative. And it sounds welcoming to people who aren’t involved in blockchain-related projects.

Habits are hard to change, so I’ll still use the term “industry” often. But I think I’ll give the “ecosystem” a try. The crypto ecosystem is worth more than it can be treated with outdated terminology.

Mr. Noelle Achesonis the former Head of Research at CoinDesk and Genesis Trading.

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Image: Pisit Heng/Unsplash (Processed with CoinDesk)
｜Original: Why Crypto Is Not an ‘Industry’